I Am Underwater in My House and I Am Not Walking Away!

Home ownership is a major part of the American dream. My wife and I purchased our first home ten years ago. At the time our credit was not the best. We realized that because of being slightly credit challenged that we would not get a good interest rate. After months of intense searching we were finally offered an ARM also known as an adjustable-rate mortgage, which we were not worried about because we could refinance in 2 years. Now in terms of an Arm initially your payments can be low but depending on the market the interest rate can increase as high as 12 percent.

When it was time for us to refinance unfortunately as a result of increased mortgage fraud new laws prohibited us from doing so. The new laws regarding mortgages now stated that you could not refinance your mortgage loan through the same finance company that initially gave you the loan. This was both devastating and highly unexpected. We were now faced with a serious dilemma. Not only was there the possibility of being stuck with an ARM but also we had a second mortgage on our house. Once again we were desperately searching for another company that would refinance our mortgage loan because if we did not the Arm could possibly lead to us losing our home. Fortunately, we did refinance our mortgage loan with a fixed interest rate that enabled us to completely pay off our second mortgage. After taking care of all or that we thought that our worries were over until the housing market took a turn for the worst. Home foreclosures were at an all time high. We were seriously affected by the failing housing market because there were several foreclosures in the neighborhood were we lived. Although we had consistently made our mortgage payments on time, yet our property value had dropped tremendously because of the increase in foreclosures in our area. This caused us to be underwater in our mortgage which basically meant that we were now paying more on our home that it was actually worth. My wife and I entertained the thought of walking away from our home. This has commonly become knows as a "strategic default." There are several factors that kept us from walking away. First, being a homeowner is a major responsibility that we take very seriously. Secondly, our current debt ratio could possibly prevent us from obtaining another mortgage loan in the near future. Lastly, my wife and I both agree that sometimes when situations become difficult the best thing to do is to hang in there instead of running away from the problem.