Underwater Mortgage Refinance Program for Lowest Interest Rate

Jan. 9, 2014 - PRLog -- An underwater mortgage loan can lead to a foreclosure if mortgage payment becomes impracticable, unless the borrower finds recourse through an underwater mortgage refinance program, at the earliest. The diminished value of a home prevents the homeowner from selling that propery, unless there is enough cash to pay the loss out of pocket. It also prevents the homeowner from refinancing under normal conditions. The Obama administration brought in the MHA(Making Homes Available) programs to tackle such situations.

Some programs under MHA, like HARP, are specifically meant to bring what is owed for the home and what is being paid for the home, more in tandem with it’s present valuation. Some of the preferred underwater loan refinance programs that were designed to help through MHA are Home Affordable Refinance Program (HARP) and FHA Refinance for Borrowers in Negative Equity (FHA Short Refinance). To qualify for the Home Affordable Refinance Program (HARP), homeowners should have been paying their mortgage regularly for the last twelve months. Only then can the problem of not getting a traditional refinancing, owing to diminished value of the home, be solved under HARP. There are other criterias also that need to be satisfied before qualifying for this program.

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FHA underwater mortgage refinance program can be considered either through FHA Refinance for Borrowers with Negative Equity or through the FHA Streamline refinance program. FHA (Federal Housing Administration) is a part of the National Housing Act of 1934. FHA Streamline refinance program is meant for catering to the mortgage situation of the existing FHA customers. With an attractive refinancing option through this FHA Home Mortgage Refinance Plan, a substantially reduced mortgage rate could be hoped for. The borrower should not have allowed payment lapse on this mortgage, to qualify for this program. A lender participating in this program would have to be in agreement to the lowering of borrower's monthly principal and interest payments, or, under certain circumstances, the conversion of an adjustable rate mortgage (ARM) to a fixed-rate mortgage. With the streamline refinance process, cash out refinancing is not possible.

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FHA Refinance for Borrowers with Negative Equity or FHA Short Refinance is meant for homeowners who are regular with mortgage payments but owe more than the value of their home. The eligibility criteria for FHA Short Refinance states that the mortgage should not be owned or guaranteed by FHA, VA or USDA. It works for a borrower when the loan amount is more than what the home is worth and when the said home is the primary residence. Borrowers can decide on a loan plan after carefully considering their individual situation.