Negative Equity On A Home And Mortgage Refinancing–Help Available To Homeowners And Hindrances For Lower Underwater Costs

The issue of negative equity on home loans and has been heavily reported on due to the fact that there are many homeowners across the nation are still suffering from a situation where they owe a substantial amount more on their home than their property is actually worth.  Even as we are early into May, many states are still facing these problems, which some feel may be present for years, and homeowners are fearing the loss of their home as a result.  However, homeowners have been able to explore various options for help, but before this process begins, it may be beneficial for homeowners to understand what hindrances may also be in place that could prevent them from lowering their underwater home loan costs.

Many homeowners are aware of programs like the Home Affordable Refinance plan and the FHA short refinance program which could allow for certain homeowners with negative equity to find more affordability on their home. Going into the summer of 2011, many homeowners are still struggling with negative equity and interest rates on home loans have reportedly dipped recently, which could put some individuals in a position where refinancing can be helpful when it comes to finding more affordability on their mortgage, but when negative equity is a problem, traditional refinancing is usually not available.

Yet, some homeowners have attempted to find help from simple principal reduction options that some financial institutions are offering or forgiveness plans that may come with specific home loan assistance programs. While many homeowners have not seen a substantial amount of principal forgiveness options available, there are some banks and federal programs that can offer a reduction in a homeowner’s principle, as opportunities through FHA short refinance program, as an example, offers not only refinancing but principal reduction opportunities as well.

Homeowners do have some hindrances that may stand in their way when it comes to finding more affordability on their home loan, and before homeowners begin exploring underwater home loan assistance opportunities, understanding what roadblocks may be in their way could be helpful when it comes to guiding homeowners into a more affordable negative equity situation. While refinancing may be available for some, obviously, not all homeowners are going to find the assistance they need as underwater home loan refinancing is not necessarily widely available despite federal and state assistance programs set in place to help certain individuals.

Also, one of the common themes that has been seen over the past months when it comes to dealing with negative equity is whether a homeowner faces default or foreclosure as a result of their inability to pay their mortgage when negative equity is in place. Understandably, there are some homeowners who are also facing the same issue when it comes to principal reductions, as some banks refused to offer homeowners a mortgage principal reduction if they can meet their mortgage payment.

Homeowners are still being advised against walking away, though, as this can do a great deal of damage in a homeowner’s financial life, and even in severe situations where negative equity is in place, there are still these options available and, of course, homeowners who have not seen substantial drops could see property values rebound in the coming years. While there are not always assistance plans available to homeowners with negative equity, exploring these federal options and plans from the Hardest Hit Fund are still being advised by counselors as we enter into the early part of May and homeowners are still seeing trouble in relation to their homes value.