Underwater Mortgage Help Has Arrived - Image by ##http://www.flickr.com/photos/tgaw/5038831375/##Flikr## License Creative Commons
For homeowners that have underwater mortgage, help has arrived in the form of a refinancing program by the US government. This help is for homeowners who are at high risk of losing their homes.
Due to the recent crisis, a lot of homeowners are struggling to have their loans refinanced to be able to afford the monthly payments. However, the lending standard is that a refinancing can only be acquired if you have at least 20% home equity. This leaves underwater mortgage homeowners in danger of defaulting and losing their property. Being underwater means having negative equity: the value of your home is less than your mortgage. We all know that housing prices have been going down at breakneck speed in recent years and this has caused 22% of homeowners nationwide to need underwater mortgage help.
What is underwater mortgage help for
Suppose you are a hardworking individual who made the mistake during better times of paying a low down payment on your home and taking out a loan for the rest. You have been honoring the monthly mortgage payments even if the worth of your home has continued to decline just to keep that roof over your family’s head. What now?
What is the intent of the government underwater help program
Under the government’s underwater mortgage help program, if you have a clean credit rating and are able to take home a paycheck regularly, you are eligible to have your mortgage refinanced even if you have zero equity. You may even get refinancing even if you are underwater by 5%, meaning your mortgage amount is 5% over the present market value of your property. If you are able to refinance with this underwater mortgage help plan, you get a very low interest rate that was a result of the administration’s bail out strategy. The rate will remain unchanged until the amortization period ends which could be as much as 30 years.
The administration of Obama declares this underwater mortgage help program was designed to help up to 5 million homeowners who have been responsible and current with their mortgage payments despite being underwater. It is literally a life line thrown into the water to help conscientious homeowners from drowning and hopefully they will be able to resurface and breathe comfortably again.
Your application for underwater mortgage help
When applying for refinancing under the underwater mortgage help plan, the homeowner is required to present proof of income from all revenue sources, latest tax return, second mortgage (if any) documents, payments on other loans including credit cards, car amortizations and student loans. Your mortgage must also be a conforming loan, which has a typical maximum amount of $417,000 and up to $729,500 for homes in high priced areas. Jumbo mortgages are also not covered by the government’s underwater mortgage help program.
It doesn’t automatically mean however that every homeowner who is deep underwater may avail of the underwater mortgage help. You qualify if you have been current in paying your monthly mortgage payments. One problem is that the participation of the lender is entirely voluntary. Even if you qualify, you have to find out if your lender is offering the underwater mortgage help that you are looking for. That is kind of the rub in the underwater mortgage help program.
