Recent reports have indicated that there are some housing markets that are seeing improvements in home prices, but these increases have been incredibly small in some cases, and there are still overall indications that the average home values currently being seen in the housing market are down from this time last year, which has simply prolonged problems with negative home equity that consumers are facing. However, it has been stated that there are plans currently in the works to help these underwater homeowners refinance their mortgage, which has been an issue that many have closely watched over the past weeks since more homeowners have called on changes and opportunities in terms of underwater refinancing.
While the details of these plans have yet to be released that there are options that homeowners hope to have when it comes to refinancing their underwater mortgage, as current opportunities do not allow for the majority of homeowners in this position to benefit from lower rates that are currently being seen in the housing market. It’s hoped that the coming weeks will bring these opportunities which have been speculated about over the past months, but even when homeowners have forthcoming options to potentially refinance their underwater home loan, there are still some who consider defaulting as a result of decreases in equity.
Initiatives like the Home Affordable Refinance Program and the Principal Reduction plan that has been used by some banks over the past months have given some relief to homeowners in negative equity position, as there may be options for homeowners to refinance their underwater home loan or get a reduction in their mortgage principle so that their repayment timeframe and overall home loan costs may be lower. Yet, it’s plain to see that not all banks are offering this opportunity nor does every homeowner qualify for this type of underwater assistance, as negative equity may be a problem for some but not all homeowners are having trouble making their payments.
It’s in this particular area that we have seen homeowners consider and even take the steps to strategically default on their home loan, as some feel that even when refinancing opportunities and new programs arise they are still going to be paying a substantial amount more on their home than it’s actually worth and, even after paying off their mortgage debt, their home’s value may not have returned to a profitable level. Despite the fact that there have been some small improvements in home prices, we are seeing overall prices at a much lower level than in previous years, which again for some homeowners has been substantial in terms of their price reduction.
However, it’s hoped that homeowners who will hold out for these new refinancing initiatives for those facing negative equity will be able to take advantage of rates that are currently at record lows and, as a result of this refinancing option, homeowners may be able to get out of debt faster or at a lower overall cost despite the fact that they have seen equity disappear from their property.