Mortgage "Underwater"? Loans And Programs That Can Help

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Mortgages that are "underwater" or "upside-down" are mortgages that started out as high-interest mortgages. These mortgages had interest rates that were so high, borrowers were only paying thousands of dollars in interest every month. Many of these borrowers/homeowners are still stuck in this position. If you are such a borrower and your mortgage is "underwater," there are lots of programs that can help get you out of all of that high interest:

HARP 2.0

Borrowers who are in a similar boat with you, and who have made their monthly mortgage payments on time, can refinance under a government program enacted by former President Obama. This program looks at your finances, assets, and debts, and determines if you are a good candidate for the program (most people are). Then your mortgage is refinanced such that the interest rate is competitively lower than that of local banks, killing much of the excess interest you pay every month and allowing you to pay more of the principal. It helps you pay off your mortgage faster, too, since it offers extra perks like a $5,000 bonus knocked off your principal after five continuous years of timely payments while on the program.


These are two more government programs that can help with mortgage expenses. Unfortunately, they can only help you buy a home that has been preapproved by HUD and FHA for the programs. They cannot help you with a mortgage you currently have unless you already have an FHA/HUD loan. If you have an FHA/HUD loan, then you are in luck. They can help you refinance and get lower monthly payments anytime you are unable to make your mortgage payments due to financial hardship.

Mortgage Brokers

Mortgage brokers have access to thousands of lenders that can help you with your current mortgage. You can refinance under many of these programs, thereby switching your mortgage company to get a better interest rate. Depending on the program's terms, your broker may be able to get you some financial relief for a couple of months, or a reduction in interest for a couple of years. Be sure to read the fine print on any mortgage deal the broker offers and do not be afraid to ask questions.

Credit Unions

Credit unions tend to be a little more "lax" in their lending policies. They also frequently have very good refinancing rates for mortgages. If everything else above is a no-go, try a credit union.

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