Lowering Mortgage Payments On A Home Loan–Traditional Refinancing And Underwater Homeowner Refinance Options

Lowering a mortgage payment on a home loan is still a major concern for many in the housing market, despite the fact that there are various aspects of housing which have been changing over the past months and, in some ways, have made both home buying and even refinancing difficult for consumers. Yet, when it comes to affordability, there are some hindrances that homeowners have faced when they are attempting to refinance their home loan for a lower rate and monthly mortgage payment.

Reports have shown that not only are interest rates on home loans is still quite affordable, and for some, they remain under or around 5%, there are also indications that home prices are still declining in some areas as well. Obviously, 2010 saw problems in the housing market related to negative equity as Housingwire.com reported that, “Home prices in 25 metro markets… declined by 3.8% in 2010,” and many of these areas in California, Nevada, Florida, and Arizona, just to name a few, are still experiencing economic distress in the housing market.

Understandably, homeowners in these areas where negative equity has been a problem over the past year are unable to take advantage of low home loan interest rates being available, as this may take the option of a traditional refinance out of the equation for these individuals. While there have been some homeowners who are in a mild negative equity situation who were able to apply cash to their mortgage principal when they refinanced, which gave them the opportunity to find more affordability in their home loan and monthly mortgage payment, there are still programs to address underwater home loan issues that may bring more refinancing activities in the coming months.

In particular, the FHA short refinance program, which has seen a great deal of opposition of the past weeks, is hoped to be more effective this year as more servicers reportedly have signed on to help homeowners through this initiative, while others may be offering simple principal reductions or refinancing through the Home Affordable Refinance Program. Yet, when it comes to opportunities for traditional refinancing, consumers do still have the option of either refinancing to a longer mortgage, like a 30-year fixed rate home loan, or a shorter option, which could lower the overall costs they will pay once they had erased their mortgage debt.

Yet, factors like a homeowner’s ability to pay the costs associated with refinancing or simply being able to qualify for a more affordable rate or the option to refinance are all still issues stemming from negative equity in the housing market. While, again, there are some options for underwater refinancing, more homeowners who may be seeing foreclosure due to their financial troubles are obviously adding to the inventory of empty homes in the housing market, which is leading to decreased values in various areas.

However, homeowners who may need more affordability and a lower monthly mortgage payment on their home loan do still have modification options, traditional refinancing, if they qualify.  Also, it’s hoped that in the coming weeks and months, options like the FHA short refinance program and plans to keep unemployment from causing more foreclosures will address issues that if corrected could lead to more stabilization in the housing market and, hopefully, gains in property values in the future.