I would cut off my own arm to get rid of this ARM!

With so much going on in the news with the upcoming election and recent pass of the "bailout", I have seen more and more posts on blogs about politics and personal opinions and less about infertility. I am all about the freedom of speech and considering we are battling mostly unexplained infertility of our own right now, it certainly distracts me, if nothing more.

Shall I tell you about our current situation and my own personal beliefs? Since all the cool kids are talking about it these days, might as well join in. Well, as I briefly mentioned here, we are one of the millions affected by the mortgage crisis that seems to be almost widespread right now. Being that my husband and I aren't total idiots, it certainly makes us feel that way when we look at the total f-ed up situation we have put ourselves into. And I am the first to say, "This is TOTALLY our fault." However, we all make decisions based on personal experience. We bought a brand new home before I got pregnant with Ainsley and lived there happily for a few years. However, the area declined and more and more renters moved in and we began exploring other options, both which included moving to a more family-friendly, safe part of town and into a home that had more room for the growing mounds of baby stuff that had begun accumulating in every corner of our house. We sold at just the right moment, made a pretty penny off of our home, and bought a resale in a nice neighborhood. To put it in perspective . . . we bought our first home for around $150,000. After we sold it, we paid realtors, taxes, paid off some old student loans (unfortunately not all of them), put $9,000 down on a new car, and put $25,000 down on our new home. The home was originally on the market for $417,000, where it also appraised for. We got it down to $375,000 and put $25,000 down, so we financed $350,000. We had good credit, but ended up doing an interest-only, adjustable rate mortgage. The ARM wouldn't come due for two years and from our personal experience, we thought we could refinance, especially being we bought for under the appraised value and because we put a good chunk of money down, and get into a 30-year, fixed loan before the ARM came due. That would give us two years to see our income go up, too. We just knew we could do it.

We were wrong. And here we are. The ARM came due on October 1st. I have been dilligently attempting to work with our mortgage company to see what our options were since July. We expect our new appraised value on our home is probably $300,000. So, we are approximately $50,000 upside-down on our mortgage. This, of course, doesn't include all of the money we have lost redoing bathrooms, carpet, landscaping, and the money we put down. Our mortgage company made up some promises they didn't keep and told me on the phone on Tuesday that since we have always paid on time, they won't work with us because they "assume" we can make the payments, even though they have gone up.

Our payments have gone up almost $700 a month and they are due to go up again in March of 2009. We could probably survive until then, but after this Spring, we would definitely not be able to make the payments. What does all of this mean? This means no more potential baby #2, depleted savings, no family vacations, nothing extra. And sitting down every night this week has left us with a lot of unanswered questions, especially considering that all of Bush's proposed answers for people like us from the bailout are still UN answered. I have called HUD, FHA, Hope for Homeowners, along with countless other banking institutions, lenders, and federal loan modification consultants, and basically everyone says the same thing. "We can't help you." If we do a short sale on our house, that would mean our lender would have to be willing to write off the $50,000 our home has lost AND we would, of course, have to have a buyer. Our options currently are:

1. hope for a short-sale where we don't come out of pocket any money, other than being taxed up our ass by the IRS for the money our lender could potentially write off

2. be broke, pay the new ARM payments for as long as we can, stop trying for another potential child just to be safe, and hope the government's big plan comes through (ha)

3. walk away from the home and start over again, renting the same size home in our area for $1,500 less than our current mortgage. Deal with destroyed credit, but save every penny for another home somewhere in our hopefully not-too-distant future, and potentially have another child that we both want.

We have no idea where to go with this, but in asking my husband last night what he wants to do, he says he is at peace with any decision that doesn't take away the chance of us not having another child, which leaves us with #1 and #3.

In the end, I don't know what will happen, but I know I want the best life for my child as I can give her. This does not include material possessions or a perfect home, but a safe, clean place to live, where she has a yard or nearby parks to play with us. This home isn't our dream home, but we were hoping to be here a long time. Now? We are very unsure of the direction we are headed. My parents have been conferencing with us every evening about our upcoming decisions. There has been a lot of tears and worrying all around. Thankfully, no one has said, "Shame on you, Sara!" We feel bad enough. I just hope I can look up one day and think, "Well, that was a stressful, crappy time in our lives, but we weathered the storm." I don't want Ainsley to sense things aren't going well in our lives.

Some of you I read are die-hard Republicans, some are faithful Democrats. I have a hardcore Libertarian father and friends, too. I tend to always lean to the democrats in the end, thanks to our stupid two-party system. Remember, just my belief system  . . . . but I think McCain is entirely too conservative about numerous issues for me to head that way. It certainly doesn't mean I agree with Obama on everything, because I don't. My Dad gets infuriated and tells me I am just picking the lesser of two evils, but I honestly don't think either one of them is EVIL. And even though I know where I am going to end up voting, this video, especially concerning our current situation, just makes me . . . angry. It doesn't make me angry enough to want to go out and vote for McCain because I can't do it. But it just pisses me off that we fell into the trap of this housing crisis. It makes me feel brainless and uneducated and I am far from it.

Comments

[VHMPrincess]

Two of our friends are doing #3. They are just walking away - the bank let them live in the house for a while until they get to them, so they essentially get to live there rent-free until their number comes up - which allowed them to save almost 12K in pmts.

Either way you put it, there is no good answer it seems, but lots of people are going thru it, I hope, at least, all our money bails out families like you instead of already-rich CEO's.

[Abby]

I don't even know what to say. That is so horrible, I totally understand why you are beyond stressed. Please let me know if I can do ANYTHING!

[Jenn]

I think it puts everything in a whole new perspective to see how this all really effects someone and how it came to be.

[Dooneybug]

I'm sorry you guys are facing this and the stress that it brings. Certainly isn't what you planned and that in itself is a hard pill to swallow. I wish the best outcome for you!!

[Irish Girl]

Sadly, this is the scenario for way too many responsible, intelligent, capable Americans at the moment. I hope the bailout helps ... my years of work in the financial industry tell me it *should* but it's going to take time. I'm very sorry you're dealing with these tough choices. And I wish you and your family the very best outcome!

[Erin]

You could always move to Upstate NY, homes are much less expensive here!
I'm so sorry you're going through this. I am happy to hear that you and your husband are on the same page about baby #2.
I just hope an answer will come, no matter who our next Pres will be.

[Natalee]

My brother had to do #3, so my sympathies are with you. This whole mess has also put off our plans to buy, because I need a little more stability in the economy before I make such a large invenstment.

As far as the video goes, might I also ask you to view a video on this site: http://www.keatingeconomics.com/
just to have a more balanced viewpoint? You know I'm I'm a liberal, and I make no apologies for it, so take with that what you will.

[Melissa]

I am so so sorry you guys are having to go through all of this. I just think of how close we were to getting into an ARM mortgage last year and it makes me shudder. I also understand what you mean with the politics. I consider myself a conservative (usually puts me in with Republicans, but I don't vote based on party). I don't agree with 90% of what Obama says, but I also don't like McCain. I hate that we only have 2 real options. If you vote for the independant, it's kind of a waste of vote because you know there is no way possible they would win. There hasn't been an election yet where I have been happy with our choice of President.

[Heather]

I feel for you. We're not in the best of mortgage situations either, and I don't think we were that smart about our current mortgage choice too. We're also hurting from the alternate minimum tax for the past few years too. I wish the government would do something about that considering that I don't think we are rich, which is what that tax is supposed to affect. We just happen to be a two income family that maybe pushes us to upper middle class, but definately not rich!

[Jane]

I just wanted to say that while we didn't have an ARM, we went through a similar situation -- we ended up short selling after we moved across country to an area with much lower cost of living. It was surprisingly easy to short sale, just do a search for realtors with short sale experience, this guy dealt directly with the mortgage company, and had done so many times, so that he knew the ropes.

And if that doesn't work, like the other commenter said, just stay in the house until they get to you -- we didn't even think of this option, I wish we had, we could've saved a lot of money!

We are currently renting a bigger house for 700 less a month, and yes, someday we would like to own again, but it is kind of nice not have the responsbilities of ownership. And a house would never take the place of another child!

[yep]

Thanks for commenting on my blog. How did you find me, by the way?

Anyway, ironically I am a HUD-certified mortgage counselor. You can probably find someone in your area who does the same thing (for free). Depending on your lender, they may be offering freezes or reductions in your interest rates. You would basically be asking for loan modification to freeze/lower your rates. I have had one lender offer temp reductions down to 3%. Just a thought. You could either call the lender yourself or find a counselor to help you. Just be sure you are not paying anyone to do it. A HUD counselor should be able to do it for free. I can give you more info if you need it.

Also, good to know I am not alone at the pumpkin patch!

[yep]

Oh, and Hope For Homeowners is totally useless. It's entirely voluntary for lender to comply and according to HUD's west coast office, none are so far. We call it Hopeless for Homeowners at our agency.