Negative equity has continued to be a problem in various areas of the nation and there are predictions that in the latter parts of 2011 home values could decrease even further, which has led many to question whether home loan refinancing for negative equity homeowners is still either an option or even worth the costs, as there are those who are growing more frustrated with the fact that their property value continues to decrease as we enter into summer. Yet, there are opportunities that homeowners have when it comes to addressing issues related to the devaluation of their property as ongoing programs and the continued need for options like principal reductions are still being made available to homeowners through various programs.
One option that homeowners may have at the forefront of addressing negative equity issues tends to be either the Home Affordable Refinance Program or initiatives that may be available in certain states from the Hardest Hit Fund. Homeowners who are in a position to refinance their home loan but may have negative equity in place could be either in a situation where they can qualify for HARP or a principal reduction opportunity from programs run by state housing agencies which could either lower their principal or offer funding to help them become current if they are facing a specific negative equity situation.
Many officials believe that even though reports have stated more jobs are being added in the private sector, unemployment has led to a situation where the number of foreclosures has been staggering over the past months and have brought about cases where homes are simply sitting empty and potential foreclosures that are on the horizon could add to this backlog of properties which simply do not have the buyers available to absorb this inventory. When these homes are sitting empty and falling into disrepair, they can drive home prices down and since further economic problems are being felt across the nation related to high levels of unemployment, many officials believe that these home prices may fall further in the coming months before finding bottom.
It’s frustrating for homeowners at the present time especially when mortgage interest rates are quite low and may be at a point where homeowners who would otherwise have been able to refinance for more affordability simply cannot due to the severity of the negative equity situation on their home. Yet, homeowners do still have plans like the FHA short refinance program or the Principal Reduction Alternative initiative that may also bring about certain benefits to those who are facing severe negative equity and run the risk of losing their home as a result. Home values will likely remain a problem for years to come, but homeowners who feel that walking away is their only option are being asked to explore these plans before giving up, as strategically defaulting is simply making the negative equity problem worse as, again, this has left homes simply sitting empty in a market where there are not enough buyers to correct the problem.