These days a lot of people find that they owe more on their mortgage than their property is worth. When this happens it creates serious financial problems. In many cases these problems could be alleviated if you were able to refinance your mortgage. This raises the question of whether or not it is possible to refinance if you owe more than the house is worth.
In most cases if you owe more than the value of your property you will still be able to refinance your mortgage. The government have recently introduced a program that is designed to help people who are in this situation to avoid losing their homes. The program provides financial incentives to banks who are willing to refinance mortgages that are up to twenty five percent over the value of the property. Not all banks participate in the program so you may have to do some searching to find somebody who is and willing to refinance your mortgage.
The reason that the government set up this program is to help people who are struggling to pay their bills but who can't sell their house since it is worth less than they owe. Therefore the program requires that when you refinance that you get lower monthly payments than you had before. This may happen because you get a lower interest rater or because you are able to extend the length of the loan. Really the only reason that you would want to refinance if you owe more than the property is worth is so that you can get lower payments.
The other requirement if you want to refinance a property that is worth less than what is owed is that you must be current on your payments. The government program does not cover people who are behind on their mortgage payments and no bank will refinance your mortgage if you are in that position. If you are behind on your payments you are going to have to look into other options. The best thing to do is to talk to your lender about a loan modification.
If you owe more than your house is worth and you are behind on your payments your lender is probably not going to be all that keen on refinancing your mortgage. At the same time they are not going to want to foreclose either since they would never be able to recoup their money. Therefore they are often up to a loan modification. This is not the same as a refinance, in this case the terms of your existing mortgage will be changed. In general you don't want to modify your mortgage unless you are behind on your payments since it will hurt your credit. However it may be the best option to keep you from losing your house if you are unable to make the payments.