The Rise of the Underwater Mortgages

Blog Bonus Submission: The Rise of the Underwater Mortgages

By: Nikole Nail

Rather than reading the textbook or an article on how the mortgage crisis can affect real people, I would like to give you a real world experience that hopefully none of you will have to personally experience.

In 2006, I bought my first house with my fiance and we were expecting our first child. We lived in a very nice one bedroom apartment on Bryant Irvin. We thought, "why move to a two bedroom apartment when we could buy a house and have the same payment." So, we started looking at decided to build our first house in Burleson, Texas. We loved the house and everything it offered.

We waited about five months to close and were extremely excited. At closing, we paid about $800 and that was it. We got the loan to finance the whole purchase price since we weren't required to put any money down. Big mistake. Also, we found out it was going to be an interest only loan. I didn't think anything about it, after all, surely I can refinance before the rates adjust. Little did I know all of this going to happen to the economy. Now, we're in a house that is worth $20,000 less than what we owe. At lease I don't feel so bad, according to the article so do about 12 million other people. We had to get two mortgages to cover the other portion of what we didn't put down. Last July I tried to refinance only to be told (after paying for the $400 appraisal) that the house wasn't worth anything close to what we owed! So much for refinancing.

It is frustrating in the fact that I can't get any help because I've never had a late payment. All I wanted to do was refinance into a loan that was at a fixed rate. I would think that the banks would like to do this as it would benefit both parties; I would get a normal mortgage and they would avoid a possible foreclosure. I was basically told that until I defaulted on my mortgage and facing foreclosure, there was nothing they could do to help me. I refuse to do this since there is no reason I can't afford my mortgage payment. I just don't want it to adjust and am tired of wasting money!

My only hope is that I can sell the house before the rates adjust next July. I hope that from this, others than learn to never get a loan that isn't adjustable and ask advice from others so you aren't faced with this avoidable situation. I bought my first house when I was 19 and hopefully I will be able to get out of this house without having to pay a small fortune. Only time will tell. All I can do is to keep making my mortgage payments on time and ride the wave of the mortgage crisis and hope to get off without drowning.

The government has stepped in to help the banks in this mortgage crisis but they need to help the homeowners. If something doesn't happen fast, the surplus of houses isn't going to help the economy and people will continue to loose value on their house. This is especially important since this is where most people have their equity in case something should happen.

Wish me luck!

Sources:http://www.homescape.com/content/Blog:The_Rise_of_Underwater_Mortgages