Homeowners have watched anxiously as the values of their homes have decreased dramatically. Historically, when home values have dropped, we have seen the housing market bottom out and gradually begin to rise again. However, in our current economy there is no indication that homeowners are going to be able to recover from the enormous discrepancy between what they paid for their home and its current actual value. Approximately 25% of Americans are carrying mortgages that are underwater. And, many Americans are beginning to ask themselves whether they should stay in a home with an underwater mortgage or if they should just walk away.There are several factors preventing people from taking advantage of the lowest mortgage rates we have seen in a long time. The most prevalent reason is that the mortgage is underwater. The decreases in home values have left many people with little or no equity in their homes. Typically, if you do not have any equity in your home, you cannot refinance your mortgage. Additionally, qualifications for refinancing have become much stricter. The days of obtaining a “no documentation/no verification” loan are long gone. Lenders have also raised the bar on credit requirements. As more and more people struggle to survive in the current economy, credit ratings are falling. This increases the difficulty of qualifying for a refinance, even for people who are current with their mortgage payments.There are, however, some limited options for underwater homeowners. The Federal Housing Authority (FHA) and the Home Affordable Refinance Program (HARP) may offer opportunities to refinance. In order to qualify for these options, homeowners must be current on their mortgages. People who are delinquent with their payments need to try one of the loan modification programs first. The FHA and HARP programs are designed to help lower monthly mortgage payments. The biggest drawback to these programs is that the bank who holds the current loan must agree to write off a percentage of the mortgage principal. Many banks have been unwilling to do this, frustrating homeowners that are continuing to make payments on a home with negative equity.Another program requirement that is frustrating homeowners is the three-month probationary period. Once a homeowner has qualified for a refinance under the FHA program, the new mortgage payment is required to be made on time and in full. If the homeowner fails to meet this requirement, the new payment arrangement is revoked. However, if the payments were made on time, the homeowner is supposed to be granted this arrangement permanently. However, lenders have stretched this probationary period to six or even ten months. The unwillingness of lenders to uphold the three-month program requirement has left homeowners so aggravated that they walk away from the program even after they have qualified.Underwater mortgages can be refinanced if you are willing to put in the hard work. It takes a lot of patience on the part of the homeowner and willingness from your current lender to help you stay in your home.