Time to start worrying?

[Joel Fraser]

Hi everyone, Hope this is the right place to post, right site, I just stumbled on it and figured what the heck.My wife and I bought in Orange County CA, in '04. House was 650k, way out of our range, but with rates low, shifty people working deals, etc, you know the story. Only way we could afford it, interest only for 5 years. I think we put 85k down and did an 80/10/10. First mort at 5.5%, second at 7% I believe. This loan expires in June of 09, and I'm starting to worry. Value of the home is probably in the 550 range, if we're lucky. A home similar to ours sold for 510k, but it was in need of some work, and we've put in new windows, new floors, etc, so I'm hoping 550 isn't a stretch. Our credit is good, but we're in heavy debt. I started a biz with a buddy a few years ago, it didn't pan out, but needless to say we have credit card debt galore. Our credit scores are in the 650-680 range. Never miss payments, but heavy in debt. For the last couple years, I've been told it didn't make sense to refi, as our 5.5 rate was better than anything we'd have gotten. Rates seem to be in the same range as they've been, but probably going nowhere but up, even with Fed interest cuts. We could probably afford another $200 or so a month house payment if it goes up, but not much more than that. I'm unsure if we let the loan play out how it works, I'll have to find out. Maybe no more than a percentage point a year? I'm not sure. Should we be able to get a loan? Together, my wife and I make about 140k a year, so we afford life, but again, a lot of it is house and debt. (and kids) I just keep hearing stories of doom and gloom with people trying to get loans, but I'm thinking WAMU should be able to help us. We've never been late on a payment, have been ideal clients for sure. And when we did have equity, we never touched it, so we have no equity loans against the house. (Thank God.) Sorry, I know that was a lot of info and rambling, but again, thought I'd start somewhere and see what some of the experts had to say.Thanks for your time!