What happens if I want to refinance, but I owe more than my home is worth?
If you want to refinance your mortgage but owe more than your home is worth, it's called being "underwater" on your mortgage. This can make refinancing more challenging, but it's not necessarily impossible. Here are some options to consider:
- Government programs: There are government programs available to help homeowners who are underwater on their mortgages, such as the Home Affordable Refinance Program (HARP). HARP is designed to help homeowners who have not been able to refinance due to declining home values.
- Loan modification: If you're having trouble making your mortgage payments, you might be able to modify your loan to lower your monthly payment and get back on track. This could involve extending the term of your loan, reducing the interest rate, or changing other loan terms.
- Short sale: If you can no longer afford to keep your home, a short sale might be an option. With a short sale, your lender agrees to accept less than the full amount you owe on your mortgage to allow you to sell your home.
- Deed in lieu of foreclosure: If a short sale is not possible, you might be able to turn over the deed to your property to the lender in exchange for them forgiving the remaining debt.
- Foreclosure: If you're unable to refinance or find a solution to your underwater mortgage, your lender may start the foreclosure process. This can result in the loss of your home and damage to your credit score.
It's important to consider all of your options and work with a knowledgeable professional who can help you find the best solution for your situation.
