Reports have shown that home prices dropped in November of 2010, which has many analysts concerned over negative equity and has led to more homeowners seeking out assistance when it comes to underwater home loan affordability and principal reduction options. Obviously, negative equity has become a huge problem for many homeowners in areas across the nation as home prices have seen steep declines over the past months and have left many homeowners with a mortgage that is vastly more expensive than their home’s worth.
An article on CNNMoney.com stated that, with continued drops in home prices, “…more analysts will be calling for a double dip in home prices.” It goes without saying that homeowners have grown frustrated over their situation as many see their house as an investment which can be sold in the future for profit after they have retired and, for this reason, many have seen little incentive to stay in their home as they believe the value which has been lost will not be recouped for quite some time, if it ever truly does return.
There have been programs which have offered homeowners affordability on their underwater mortgage payment and there are also some refinancing opportunities for underwater homeowners. Home loan modifications have been one way that homeowners have been able to find the affordability they needed to avoid the loss of their home and the Home Affordable Refinance Program has allowed homeowners to refinance their underwater mortgage in certain situations, with the hope of providing a lower monthly mortgage payment.
Yet, there are also some state-specific assistance plans which may offer principal reductions and certain mortgage servicers do offer earned principal forgiveness programs on homes that are underwater but the homeowner continues to make on-time mortgage payments. Obviously, some homeowners have been able to take advantage of low home prices but homeowners who are attempting to overcome their negative equity situations have been crying out for more options, like principal forgiveness, but this is an issue which many servicers feel to be unhelpful as most financial institutions are only concerned about providing affordability rather than forgiving a percentage of a homeowner’s principle.
While there are some homeowners who feel home prices were inflated, which has led to such a vast drop in property values, there are still factors like unemployment which have caused foreclosures across the nation and homes left sitting empty, which obviously also contributes to property devaluation in certain areas. However, despite the fact that home loan prices did drop and some analysts feel they may continue to do so, when it comes to affordability on underwater mortgages homeowners do have options for lowering their mortgage payment to a more affordable level, even though they may have negative equity in their home. While it’s understandable that some want to see a forgiveness of their principle in extreme cases, there are still these options available to help homeowners avoid foreclosure and at least keep a roof over their head while, hopefully, home prices begin to rebound in the future.