My mortgage is underwater can i refinance

Use the lookup tool to find out if Fannie Mae has your loan. Freddie Mac also offers relief for loans that exceed the ideal loan-to-value ratio. The Enhanced Relief Refinance program requires that Freddie Mac owns your loan, and you must also switch to a better loan that has a lower rate or other borrower-friendly features.

Discuss the logistics with your lender to make sure the process goes smoothly. You may be able to submit a request for forbearance online. Otherwise, be prepared for long hold times if you call. See our guide for complete details on mortgage relief during the global health crisis. New programs for rescue options may be available, and existing programs may have additional benefits not listed here. Also, reach out to a HUD-approved mortgage counselor who can help you explore options and avoid scams.

They may be able to work with you in a variety of ways. For some homeowners, it may make sense to just wait before trying to refinance. Over time, your property value could increase, making your loan-to-value ratio more attractive to lenders.

Plus, as negative items age or fall off your credit report and you make on-time payments on current debts , your credit scores should improve.

With a higher property value and strong credit, you may be able to qualify for attractive rates in the future. But you may have several options available with a negative equity mortgage, including relief from federal lawmakers and programs through your lender. Reach out to your lender to discuss options and learn more about how to take advantage of any programs available.

Accessed Feb. Consumer Financial Protection Bureau. The White House. Actively scan device characteristics for identification. Use precise geolocation data. Select personalised content. In a short sale, your mortgage lender agrees to let you sell your home for less than what you owe. In such a sale, you can price your home more aggressively to move it quicker. Your lender would take the loss. Short sales can be challenging, though. Your lender must approve any offer you receive, even if you think the offer is good.

If your lender rejects an offer, your sale will fall through. A short sale will also cause your credit score to fall. They stop making their monthly mortgage payments even if they can afford them. This is known as strategic default. Some argue that this is unethical. Underwater mortgages are less common today because of tighter underwriting standards and record price increases since the pandemic.

Situations that might push you into negative equity include a decrease in local property values. A low appraisal is also a good indicator that you might be underwater on your mortgage. You can find out how much you owe by checking your mortgage statement. That figure will include interest and fees that have accrued since the lender prepared your statement.

You can compare prequalified rates on home loans from all of our partner lenders in just a few minutes. Find Rates Now. The only way to get an accurate opinion of value is to have your home appraised by a licensed home appraiser. Otherwise, you can get a ballpark figure for free from a real estate portal site like Redfin or Realtor.

Lenders protect themselves against default by limiting how much of your equity you can refinance. But if you have negative equity, you have nothing to draw against. Most mortgage loans have a due-on-sale clause that makes the loan due in full when the owner sells.

The simplest option is to remain in your home and continue making your regular mortgage payments. Consider making extra principal payments to pay down your loan balance faster. You can also try to increase the value of your home. Home remodeling projects rarely generate a positive return on investment unless you can do the work yourself, but simple jobs that improve curb appeal can give your home value a boost for little cost beyond elbow grease.

This can right your mortgage naturally as values appreciate. Refinance Refinancing an underwater mortgage is tricky because you typically need equity to do it. However, you might be in luck if your loan is backed by Freddie Mac. This option could make your loan more affordable by lowering your mortgage rate and monthly payment or allow you to increase your equity faster with a shorter repayment period.