Upside Down Refinancing
If you find yourself in an upside-down position on your mortgage, it can be a disheartening experience. This occurs when you owe more money on your mortgage than what your house is currently worth. If you want to refinance during this time, it might be difficult, but you do have some options available.
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FHA and VA Streamline Refinance
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If you currently have a mortgage that is guaranteed by the Federal Housing Administration or Veterans Administration, you may be able to get some help. Both of these organizations offer a streamline refinance program. With this program, you do not have to have your home appraised or go through the normal approval process. You can refinance even if you are upside down on your loan. This can help you lower your mortgage payment even if other refinance programs would not allow you to qualify.
Home Affordable Refinance Program
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Another option that you have when it comes to refinancing an upside down mortgage is the Home Affordable Refinance Program. This is a government program that was designed to help people who are upside-down on their mortgages. With this program, you can get help setting up a refinance with your existing lender. The lender will get some type of financial incentive from the program if they are willing to refinance your loan. You have to be up to date on your mortgage payments to qualify for this program.
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FHA Short Refinance
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If you have an FHA loan, another program that you may be eligible for is the FHA short refinance. This program is an option for people who are currently upside-down on the mortgage. With this program, you can actually get part of the principal of your loan reduced instead of only getting a lower interest rate like you would with a streamline refinance. This allows you to potentially save a large amount of money on your monthly mortgage payment.
Loan Modifications
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Another option that you may want to consider is a loan modification. A loan modification is like getting a new loan from your lender because the terms of your loan change. The lender may reduce the interest rate on your loan or they could change the repayment term. Some lenders will even waive late fees or late payments. To get a loan modification, you typically have to negotiate with the loss mitigation department of your mortgage lender.
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