Mortgage Forum

Joel Fraser

Hi all. I just found this forum from google and find it to be fantastic. Thanks in advance for any advice given. Here's my situation: Location: South FloridaPurchased home in 10/2005 for $360,000 with an 80-15-5.My 80% ARM is up in 10/2010 with a rate of 5.25% (Citimortgage)The 15% is a fixed 15-yr mortgage with a rate of 6.5% (Thrivent Financial) Currently similar houses on my street are selling for about $250,000 and as is everywhere the market in South Florida is terrible right now. I have a great credit score (800) and a great monthly income to afford payments on the house. Since the start of the year I can afford and have been putting an additional $1000 down on the fixed loan every month to help pay down prinicipal on the fixed portion of the loan. I was planning on doing this for the next 2.5 years hoping to pay off most of the fixed mortgage by the time my ARM was to reset. However, right now I'm not sure if this is the best way to go. In 2.5 years when the ARM is expired it is very likely that I will still owe $300k on a house worth $250k (or worse). I am afraid that not only will the bank not refinance me because I'm so upside down, but they will also foreclose forcing me to lose all of the money ($30k) I was putting in for 2.5 years. I've searched these forums and have not found anyone so far that's posted a situation identical to mine. Should I:1) Try to negotiate with my lender (Citimortgage) now even though it is highely unlikely they will renegotiate given I've been making payments on time every time?2) Not pay down any more principal and instead save the money until I have to foreclose?3) Save the money I've been paying to put a down payment down on another house while my credit is still great and walk-out of this one?4) Continue doing what I have been doing and hope that a) either house prices rise dramatically or b) hope that citimortgage will show leniancy when the ARM is up and refinance even though I'm upside down. I'm trying to do the right thing here so far by not re-negging on my mortgage agreement, but I don't want to be scr#ewed over when the ARM runs out however either. I also realize I'm not in a dire situation right now as I still have time, but I also want to plan ahead for a time when I might be.