Short Sale Homeowner Programs On Underwater Mortgages Offer Relief From Negative Equity But Problems May Not Benefit

Some homeowners who are negative equity position are still looking for ways to rid themselves of the financial burden that come with owing more on a home than it’s actually worth as a some reports here in September have stated that homeowners who are in a negative equity position may make up around one-fourth of all homeowners across the nation. What this means is that there is a high number of homeowners facing a problem that may have few solutions outside of servicer-direct aid, which can be coupled with federal programs, or short sale opportunities that may allow them to sell their home at a loss but be free and clear of the remainder of their mortgage debt.

There are some banks who are using this option more than others, as homeowners continue to limp along in the housing market that has seen few increases in property values, especially increases that would be helpful enough to reverse the amount that homeowners have seen disappear from their home’s equity. Yet, the homeowners who have been attempting to find more affordability on their underwater mortgage have found that, in cases where the negative equity situation homeowner faces is severe, there may not be enough options available in terms of what will include these individuals.

Simply put, homeowners who are in a severe negative equity situation may not meet certain qualifications that federal programs have in place, and this has led to a call on the part of homeowners for changes or new opportunities to be made available. Yet, some are still finding success when it comes to short sale programs, but questions arise as to whether this is always going to be beneficial for a homeowner who is an in negative equity position. While this topic is one that can bring many opinions, homeowners may see a decrease in their credit score if they participate in a short sale program, and this leads to a personal decision that a homeowner must make.

In some instances, homeowners have been seeing their credit score drop as a result of financial troubles related to a mortgage, but this does not necessarily mean that homeowners are in a bad financial position or will want to see their credit score drop as a result of a short sale or foreclosure. It’s because of this that some homeowners are looking to be refinancing opportunities like those from HARP that are currently available but others want more inclusion in these programs, meaning that they hope changes will come in the qualifications that homeowners must meet before they can get this type of aid.

Obviously, there are homeowners who are not concerned about what a short sale would do for their credit score but simply want to be rid of their underwater home loan payment, however, this is an issue where advisers want homeowners to pay careful attention at what the drawbacks will be, along with the benefits, of a short sale as homeowners are obviously in a frustrating position when negative equity is a factor but it’s hoped that homeowners will look for affordable options to help them with their payments and simply wait until potential solutions arise that may be of help in areas like financing or principal reductions if the drop in equity has been drastic.