Recouping Negative Equity Property Value Losses–Homeowners Combat Home Price Drops And Look To Increase Home Value

In the first quarter of 2011 many homeowners saw continued decreases in their property value and as there are mixed reports here in May as to what the summer and later months of 2011 may bring, some homeowners are preparing for decreases in their value, while others are more optimistic that home prices may rise. Yet, there are some who are taking advantage of practices that may help homeowners combat the decrease they have seen in their property value and, in certain cases, some homeowners had even looked to increase the worth of their home in the face of decreased property values in their area.

Yet, depending on what a homeowner’s goal is in relation to combating their negative equity, there are some who may be able to make adjustments to their home or additions that could increase their property value to a point that will recoup some losses they may have seen, while other homeowners who may need more affordability can overcome negative equity through certain financial maneuvers.

For homeowners who are looking for more affordable home loan payments, refinancing has been one of the more popular ways that this has been accomplished, and since home loan interest rates have been incredibly low in the recent weeks, this has been a viable option for those not in underwater position. Yet, for homeowners facing negative equity, traditional refinancing may not be an option, but there are cases where homeowners can use cash-in refinancing as a way to gain more affordability on their mortgage payment. Homeowners who are not in a severe negative equity situation may be able to apply money towards their mortgage when they refinance to pay the difference in their property value and mortgage debt, which may allow for certain refinancing options to become available and lead to more affordable payments or a lower interest rate as well.

There are, however, some homeowners who are renovating their home and remodeling in such a way that it could increase their home’s property value, which could be beneficial for those in a negative equity situation as well. While this option will, again, not work for homeowners with severe negative equity, homeowners who may have seen a slight decrease in property value or who have seen their home’s worth drop but not to a point where they are underwater have used remodeling as a way to add value to their home in order to combat or even prevent negative equity on their mortgage.

Understandably, these opportunities are not helpful for all homeowners as there are some who have seen such substantial decreases in their property value that there may be little to be done in terms of recouping those losses, save a mortgage servicer offering a principal reduction. While there are some programs directly from banks or federal programs that can offer underwater refinancing and, in limited cases, mortgage principal reductions, homeowners at the present time who may be able to meet their mortgage payment but have seen a severe decrease in their home’s equity are being prompted to ride out this difficult time in the housing market, as actions like walking away from a mortgage can be a drastic step in the wrong direction, even though homeowners may be in a frustrating situation.