Are you underwater on your home but need to lower your monthly mortgage payment? Or maybe you want to switch from one type of mortgage to another. For whatever reason, there are options for refinancing your underwater mortgage. That’s right. Even if you owe more than your home is worth, there are programs to help nearly all types of borrowers. Here are the most frequently asked questions about refinancing an underwater mortgage.
What is an Underwater Mortgage?
An underwater mortgage is when a homeowner owes more on a mortgage than your house is worth. For example, your home is worth $250,000, but you owe $300,000 on the mortgage; that means you are underwater, or upside-down on your mortgage. This is also referred to as negative equity.
Why is Refinancing Beneficial?
For underwater borrowers, refinancing simply means getting a new mortgage to replace your old one with the goal of reducing monthly payments, lowering your interest rate, or changing your loan program from an adjustable-rate mortgage to a fixed-rate mortgage. In most cases you do not need to have equity in your home to refinance if you qualify for one of the specialized refinancing programs that have become available over the past several years.
Can I Qualify for Refinancing?
For many borrowers there are now options to refinance your current or investment home no matter how underwater you are. Find out if you are eligible by following the three steps below.
How Many Lenders Should I Contact about Refinancing my Underwater Mortgage?
Underwater homeowners should contact at least one other lender aside from their current bank and/or servicer. There may be large differences in rates and fees offered by current servicers and other lenders so it pays to shop around.