Upturned, wrong-side-up, inverted, reversed, underwater, overturned. Whatever you want to call it, being upside down on your mortgage is a very unpleasant point of view.
Most people will tell you that if you are upside-down on your mortgage, you cannot refinance. Well surprisingly, there are some refinancing options that might be available if you find yourself in this unfortunate position.
First things first; do you want to refinance to lower your monthly payment because: A) you are having a hard time making your monthly payments, or B) you simply would like to take advantage of a lower interest rate?
If you are just looking to save money over the life of the loan by getting a lower interest rate, you should investigate these two programs.
A loan program called "Home Affordable Refinance Program" or HARP for short. This program is backed by Fannie Mae or Freddie Mac and can be offered for approximately 125 percent of the value of your property -- although lenders do seem to be reluctant to extend to that additional 25 percent above the estimated value of your home.
FHA-insured mortgages have a streamline refinance program. Under this program, you can refinance your FHA-insured mortgage without an appraisal. This means you can refinance an underwater home. To qualify, you must have an on-time payment history and an FHA-insured mortgage.
If you have missed several payments, you could talk to your lender about a loan modification. A loan modification is a change in one or more of the terms of your loan. The purpose here is so you can afford the payments.
So, as unpleasant as it is, being upside down does not necessarily mean you are out of options! Think of it as an opportunity for new point of view.