4 Secrets to Refinancing an Underwater Mortgage

If you are one of the millions of homeowners across the country with a mortgage that is considered “underwater,” you’ve likely discovered the difficulty in getting your home refinanced to take advantage of a better rate.  While government programs like FHA are allowing underwater homes to be refinanced, conventional loan holders are finding less luck.

Here are the 4 secrets to refinancing your home if it has an underwater mortgage:

1. Try again, even if you’ve been denied in the recent past

Newly modified government programs like HARP 2.0 have made it possible for underwater mortgages to be refinanced by lowering the restrictions for loan-to-value requirements. Additional programs that are available are FHA Streamline Refinance, USDA Rural Refinance Pilot (pilot program), and VA Interest Rate Reduction Refinancing Loan (IRRRL aka VA to VA or Streamline).

2. Shop around

Just like colleges and universities have different entrance requirements, different lenders have various requirements for their refinancing offerings.  A “no” from one doesn’t necessarily mean that all of them will turn you down, which is why you shouldn’t stop looking if you’ve been told “no” by one or several lenders.

3. Let them fight for you

If you have been paying your mortgage payments on time, you are a great candidate for a loan from many banks, despite the fact that your home is valued at less than the loan.  For this reason, shopping around to multiple banks and loan companies is your best bet to getting approved.  Let the banks fight for your business.

4. Be patient

In the process of searching for a refinance offer, you’re likely to run into bad service and get frustrated from the ordeal.  This is especially true if the search takes a while and you have to go through several lenders.  When you start to get frustrated and lose patience, remember…most homeowners are finding that it takes several months to find the right offer.