My CA story...

[Joel Fraser]

Hello, I have been lurking for a few months and I've finally decided to take the brave step and start working on our housing situation. We live in the Inland Empire in California, in a city where housing prices have dropped another 30% in the last year. Our story: Dh is a teacher, we moved from CO to here because here he could go to work and I could be a SAHM. In CO, teachers don't get paid enough for us to have that option. We bought our first house in 2003, a very low fixed rate. We sold in 2006 when my son was entering kindergarten because our old neighborhood and school were getting worse every day. We moved to a great school district and a nicer neighborhood. We bought the house in Aug 2006 for $420K, the seller gave us $5K for closing costs. We put down 20% down from our old house sale ($80K) so we wouldn't have to pay PMI insurance. We have a pick a payment loan. Our plan from the day we signed the papers was to refinance the day the prepayment penalty left on month 12. But, the market had already dropped at that point. We were denied refinancing everywhere we went. Our loan amount was for $330K. DH has had 3 raises since we bought the house. The interest rate is based on the treasury loan. The rate keeps going down, our income has gone up. But it doesn't matter. Since we can only afford the teaser rate ($1550), our loan keeps going up. It is currently at $365K. Our loan is with AMHS. We have not started at all trying to negotiate something with them. I have read enough stories on here that say this co doesn't want to negotiate until you are late. We don't want to be late, we can still afford the teaser rate. But the teaser rate is just like us paying rent. Honestly, we'd just like to sell this house in a short sale, if we could negotiate that with AMHS. Our next door neighbor abandoned his home. It was the next model up from mine and it is selling for $209K. My model down the street is $150K. That means we are upside down $215K !!! Our ARM is suppose to balloon in 2010 to 12%. We want to deal with this before that point. And, I read somewhere that until 2009, the IRS forgives your loan debt and doesn't consider it taxable income. That means we need to leave next year. We would refinance, if the loan company would refinance for the loan value. I think we qualify for the goverment refi program in Oct, but I think we'd rather take our chances in buying in 2 years if we could short sale this place. The program doesn't sound that great for people horribly horribly upside down. well, that's our story. It's kept me awake countless nights and kept me sick with anxiety for months. I hate living in this place. We feel we can't do any major repairs to anything because it would be like throwing money down a drain. It makes us sick to our stomach that we lost that $80K that we could have saved for our child's college funds.... My SN says trying to stay...but honestly, I'd do whatever I need to do to protect my family. Hopefully protect my good credit, too, but family is definately first.