A Story of Sub Prime Loan Sharks and Being Caught in the Middle

This story is from my own experience and I know of many locals that are in the same situation and did the same as I had to. The story starts five years back when my area, here in Lake Worth, Florida, was hit by a major hurricane, and I had got major damages to my house. My insurance covered about 60% of the repairs that I needed, so after my deductible and the local shortage of good contractors help. The rise in repair prices, left my savings at nothing and I did most of the work myself!

Things were good for the next 2 years since housing in my area sky-rocketed in value and my house increased over $100,000. I thought it would be a good time to add even more value, so I refinanced and combined my first and second mortgage with a new sub-prime loan and got an extra 50k out of my houses value for some things like a pool and new deck in the back and new floors through out my house. The house value increased and my payments were below the normal of what it should be paying since my sub prime loan allowed this. My loan is called pick a payment and I can choose to pay the payment with 4,5,6 or 7% interest on to the payment. I choose the 4% since on a teachers salary I can only afford that one now and I thought that as the payment goes up, so would my pay.

I am doing okay for now and my payment is about the same as it was before I refinanced. The interest rates go up once a year over the next five years until the fifth year my payment will be three times what it was at the start of the loan. I just figured the interest rates would go down and I would be able to refinance again. I now wonder what I will do now that the you-know-what hit the fan with these loans and the housing market my payments are rising faster than my pay and within 2 years my payment will triple if things stay the same. My house and the houses in the area are not selling and, so far as I see it, the value is going backward and is down $100,000 from when I got this loan 3 years ago -- and still falling.

I already have 2 neighbors that have foreclosed or just walked away from there loans and house, since the value is below what they paid for it and there loan is higher than its value. If the trend continues, I will be in the same boat as them since my value is getting close to the loan value. I wonder if there will be a way to refinance to a lower interest rate that is fixed since the Fed's have not lowered the rate to help us home owners that live in our houses.

I will have to think of doing something soon. I hope I do not loose my house and all the work I put into it after 3 hurricanes over the last 5 years and more on the the horizon. The school budget is cut again and we have to tighten our programs to help. My utilities have increased 20% and my food costs have doubled the last 2 years, gas has doubled and the future does not look that good, at least for the near term. Let me see.... If I foreclosed on my house I will have to rent... OH thats right, rent in the ares has doubled and is about the same as a mortgage payment. I do not have to have insurance or pay taxes with an apartment... Don't know if the taxes are going up or down on my house, We may be getting some relief except insurance is going up to be tripple of what it was 3 years ago. Where is this going to end?

I should not have to cut out food to have a house and a family... OH I forgot to tell you, I have a family that depends on me for a roof over them and food in their bellies. I think my family is first and the house can go to the bank that swindled me into a loan that they knew was more that we could handle. I think the government needs to have them set the interest to 0% on these loans and tell the banks to never do this again!

I will keep you informed what I will have to do in the future to fix the jam I am in and maybe the system will fix the problem of sub prime loans.