Traditional Refinancing Options For Underwater Homeowners–Are There Ways To Lower Mortgage Payments With Negative Equity?

Homeowners are still looking for more traditional methods to refinance their home loan when negative equity is in place, and due to the fact that some individuals facing an underwater mortgage situation are simply looking for more affordable monthly payments on their home loan, rather than a way to get out of their negative equity situation with the use of principal reductions. Obviously, as negative equity is a problem for many homeowners here in September, it’s hoped that proposed housing assistance plans which may arise in the future can address this issue, but questions over whether officials will offer either changes to current programs or new proposals, as well as address the issue of jobs in a helpful manner, still remain.

However, homeowners are seeing incredibly low rates at the present time with some 30-year mortgages averaging around 4% and 15-year mortgages around 3%, which has been an attractive opportunity for homeowners who may stand to see a substantial decrease on their home loan interest rate if they refinance. It goes without saying though, when homeowners owe more on their home than it’s actually worth, traditional refinancing options are usually not available and this has left some homeowners in a position where they might find more affordability on their monthly mortgage payment obligation but are unable to do so as a result of their current equity situation.

Yet, this is a situation where some homeowners have made contact with their mortgage servicer to inquire about either proprietary programs available from in-house initiatives that could allow them to refinance or even consult with representatives from their servicer or housing counselors from the HOPE Hotline as a way to look into options like the Home Affordable Refinance Program. However some homeowners have been able to refinance with the use of cash-in options that could potentially help them when it comes to negotiating with their servicer to offer them a lower rate.

There have been some rare cases where the negative equity situation that a homeowner sees on their mortgage has been minimal and they were able to make up the difference when it comes to refinancing for a lower rate, but this is not necessarily a common occurrence and it will come down to a particular mortgage servicer allowing the homeowner to apply cash towards their principal at the time of refinancing in exchange for potentially receiving a lower rate and more affordability on their home loan.

Obviously, not all homeowners are going to be able to meet the difference between what they owe on their mortgage and its current worth, but in situations where a homeowner may be able to benefit from refinancing, advisers have urged these individuals to at least consider the overall costs, their ability to meet these costs and qualify for a lower rate, and speak with representatives from various banks as to whether this would be possible.

Some homeowners have hoped to get a more affordable rate on their home loan and begin to apply as much money as they can towards their monthly payment in the hopes of getting out of debt sooner, as some homeowners may have refinanced to a shorter mortgage term, but it may be a situation where these traditional refinancing options are simply unavailable for certain homeowners at the present time. While options like HARP or even state-specific principal reduction plans may help reduce the gap between what a homeowner owes on their home and their property’s current value, since every homeowner’s negative equity situation is going to be unique, consulting these housing counseling resources and officials from a homeowner’s mortgage servicer or other financial institutions will be more helpful when it comes to looking at underwater refinancing options through either traditional or negative equity focused programs.