Good News for Homeowners Drowning in Mortgage Debt

August 5, 2016 | by Katie Claflin

Categories: Home Buyer Education, Homeownership

Owning a home is one of the primary ways that many families ensure their housing stability while also building wealth for the future. In the words of HUD Secretary and former San Antonio Mayor Julian Castro:

“Responsible homeownership is about more than contracts, and closings… It’s the stability that comes with putting down roots and having a place to build a life in. It’s the security of knowing that every mortgage payment put in the mail is an investment in the future — a chance to build savings, put a child through college, start a business, or retire comfortably.”

But for homeowners saddled with too much mortgage debt, the American dream of homeownership can become a nightmare that threatens their credit and financial future. A 2015 report by the Center for American Progress found that, nearly 10 years after the housing crisis, more than 7 million Americans are still underwater on their mortgage loans (defined as owing more than their home is worth). 

If you or someone you know is drowning in mortgage debt, you're not alone. WalletHub, a website that provides free credit and financial advice, analyzed and ranked 2,521 U.S. cities to determine which cities have the greatest number of homeowners who are overleveraged (defined as having too much debt) on their homes. Comparing average mortgage balances against median incomes and home values, they determined that homeowners in 26 Texas cities, including Dallas, Houston and Austin, are in the top 10th percentile of mortgage debt.

The good news is, homeowners who don't meet the requirements of traditional refinance programs may still be able to lower their payments by refinancing their mortgage loan. The Home Affordable Refinance Program (known as HARP) created by the Federal Housing Finance Agency can help homeowners who are current on their mortgage payments refinance their home loan, even if they have little to no home equity or owe more than their home is worth. 

Refinancing through HARP can help homeowners lower their interest rate or obtain other favorable mortgage terms, reducing their monthly payment and saving them thousands of dollars over the life of their loan. There’s no minimum credit score to participate in the program, so homeowners can qualify even if their credit needs some work.

To date, more than 3.4 million homeowners have refinanced their home loan through HARP. The HARP program expires on December 31, 2016 so if you meet the qualifications, contact a lender to start the application process. You can also reach out to a HUD-approved housing counseling agency who can talk to you about your options to reduce your mortgage debt. To find a housing counselor in your area, visit

On the House blog posts are meant to provide general information on various housing-related issues, research and programs. We are not liable for any errors or inaccuracies in the information provided by blog sources. Furthermore, this blog is not legal advice and should not be used as a substitute for legal advice from a licensed professional attorney.

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