Are you further away from owning your home than ever in spite of making payments on time? Are you among the many homeowners who don’t actually own any portion of their homes at all?

Do you owe more on your home than it’s worth? Has your home value declined considerably due to factors outside of your control?

If you’re “underwater” on your mortgage payments, you may be able to get help through a government sponsored program offered by the Department of Housing and Urban Development (HUD).

Prior to September 7, 2010 there wasn’t as much help available for people in your situation, but since then things have changed.

If you tried to get help from HUD before and didn’t qualify, you may want to consider trying again since in September of 2010, the Federal Housing Administration (FHA) started offering short refinance opportunities to borrowers with negative equity who are current on their payments. This program is presently known as the Home Affordable Refinance Program (HARP).

You may be able to qualify for the short refinance option if you are completely up to date on your payments. Even being current on your payments you can suffer from a lack of security since you have negative equity in your home and are in a losing investment.

The program was created mainly to help people in this predicament, not those who are actually behind on their payments. For people who are behind in their payments, the Home Affordable Modification Program (HAMP) is the appropriate option. This is also offered by FHA. Both HAMP and HARP are part of the Making Home Affordable (MHA) program.

Participation in this program isn’t required for your lender, which could make it harder for you to qualify, since your lender can unfortunately turn you down. There are incentives provided by FHA to lenders to participate though, which will hopefully improve your odds with time.

To be eligible for refinancing you have to be underwater, and you need to have a credit score which is 500 or higher. You need to qualify for a new loan under standard FHA underwriting requirements.

The home you want to refinance has to be your primary place of residence. Your first lender must agree to write off 10% or more of your unpaid principal in order to create a loan-to-value ratio of no more than 115%. Your present loan cannot be insured by the FHA, and the refinanced FHA-insured loan cannot have a loan-to-value ratio which is greater than 97.75%.

Remember that if you are behind on payments or will be soon, you should try to qualify for HAMP, not the short refinance option. If you fail to get into either program, you will probably have to choose to short sell your home, get a deed-in-lieu, or go into foreclosure.

A program called HAFA (Home Affordable Foreclosure Alternatives) exists to try and make the short sale and deed-in-lieu procedures easier and more accessible to homeowners who have failed to qualify for HARP or HAMP. Good luck refinancing your underwater home.