Help For Those Who Owe More Than Their Home Is Worth
With market conditions in a constant state of flux and a predominance of homebuyers taking advantage of low down payment mortgage loans, the prospect of “underwater” homes is on the rise. Essentially, since the value of your home can rise and fall over time with the housing market, homeowners who purchased a home in recent years and made a low down payment are at risk of owing more than what the home is valued in the present market. If you find yourself in this situation, however, don’t despair.
Although it can feel hopeless to be underwater on a loan, there is help available for many eligible consumers. The federal government’s Principal Reduction Alternative (PRA) program, part of the Home Affordable Modification Program, is designed to help homeowners get a loan modification or principal forgiveness from lenders in order to stay afloat and stay in their home. A modification can mean an interest rate reduction, a lower monthly payment or a loan term extension, and principal forgiveness means the lender may actually pay part of the principal value of the home for you in order to ensure the amount you owe is less than the market value of your home.
If you’re concerned you may be underwater on your home loan, don’t wait to reach out for assistance. If you’re planning to sell, it’s critical to get your loan afloat – after all, selling while underwater means you could get fair market value for your home sale but still wind up paying off part of the loan.
Interested homeowners can learn more about Principal Reduction Alternative here or by speaking with their mortgage lender.
Image via Flickr/loanmodificationkey