Mortgage Forum

Mike

I am coming up on my 24mo ARM in Jan 09. I purchased my home at 294k. The seller paid all closing cost, but I still financed 100% at 7.75% 2yr ARM Interest only and I pay my own taxes/insurance. I also have a 2yr penalty on the loan. My mortgage is just under $1900/mo. And we put about 400 aside each month for taxes/insurance. My broker at the time told us, get in the house. We'll do a 24mo ARM to establish mortgage history and with the home equity, you can refinance at a much lower fixed rate and set up your escrow. Let's just say at the time, this seem like the most obvious thing to do. I was quite shock though to find out that it was interest only. So my payments have been for not. While we aren't missing payments, there's no way we can make it if our payments increase. I bought the home and got the loan with the intention of earning some equity so I could refinance it in Jan 09 to a lower fix 30 yr loan. We'll we all know that the market that was promised when we were doing the loan, is the market it is today. Needless to say, my home would probably appraise at about 280k. I would need 28k to refinance at 90% plus come up w another 14k to pay off the difference of my current loan. My wife was laid off Dec 07 and has been working freelance work, she is making about the same as before but now 1099 income. I am worried about proof of income and time on 1099 employment since this employment has only been since Dec 07. My question is this, what would be the chances, I could call my current lender and asked them to work w/ me to refinance the loan without any money down. Would they kill me on the 30yr interest rate? I've never missed a beat with them. I don't know what to do. I can afford to probably pay for about 6mos after the ARM goes up, but I do not see a point in paying on a higher ARM/Pmt towards something I would I know I'm going to end up losing. I would be prolonging the inevitable. No one is going to finance me w/ the negative equity and I do not have that kind of money available to put down. I would be grateful for any advice anyone can give me. Thank you.