Homeowners Underwater Refinancing Options
Homeowners underwater refinancing option are very narrow these days. Those who have exceeding mortgage balance of their property, know very well the ineffectiveness of trying to refinance. Refinancing options for underwater mortgages are limited because many lenders require some sort of equity in property. The ideal amount of equity for lenders is at least 20 percent.
Even with such constraints, the borrowers have different options, for example, the “Making Home Affordable” program by the government. Below are some new home underwater refinancing options for the borrowers.
Underwater Refinancing Option #1 HARP
Upon meeting a certain criteria, you can secure refinancing through HARP (Home Affordable Refinance Program). This plan allows the borrowers to secure refinancing loan which is 105 to 125 percent of the total value of the property.
Usually, every underwater loan does not qualify for HARP. If you are on your way to foreclosure, or there are felonious payments in the last 12 months, you will be automatically disqualified from the program.
To secure HARP, you must have a rational payment history, good credit score as well as a buildup of present home financing and detailed lender guidelines. Also, HARP is not meant for everyone, while lenders have closed many HARP loans due to various ineligibility issues by borrowers. According to lenders, if HARP refinancing can escape you $300 to $400 of the monthly mortgage payment, it can give you a difference of either keeping or losing your property.
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Underwater Refinancing Option #2 HAMP
You can qualify to secure HAMP (Home Affordable Modification Program) even with underwater mortgage and missed out payments.
In order to qualify, you should prove your financial hardship. Your mortgage must be owned by the lenders who are signed up with the Treasury. For this program, the government finances up to $1,500 to the lenders to process the loan, however, the lenders have got the ultimate right to approve or disapprove the HAMP application.
HAMP might be a very simple solution for many borrowers, but there are also some very strict HAMP qualification guidelines. Also, the home should be your primary residence, the amount of mortgage should be less than $729,750, your present monthly payments should be more than 31 percent of the present gross income and you must prove the disability or difficulty to make payments.
Upside Down Mortgage Refinancing -Reality Check
The underwater borrowers, who are unable to qualify for the new home underwater refinancing options, should also, realize the fact that these plans do not always work for everyone. Unfortunately, at present there are no underwater refinancing options for borrowers backed by the government.
In spite of these barriers, you should not stop negotiating upon loan modification to your mortgage lender. Many lenders are ready to offer different patterns of loan restructuring as a substitute to the foreclosure, however, these are not backed by the government.
Unfortunately, when facing no new home underwater refinancing options, you should inquire about any chances of a short sale. This means that you are ready to sell your house on market price with the remainder amount of loan absolved by the lender.
So What Is The Next Step?
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