This is just a thought but if you already have a low credit rating and are not planing on moving any time soon. Get a month or two behind in your current mortgage, then your current lender will be more likely to help you. This is a crazy world we live in. I called my credit card company many years ago asking for a lower rate but because I wasn't behind they wouldn't do anything to help me. I did get caught up without their "help". It seems like it might be a bit dishonest but its the in thing now. The only way to get help is not to pay your bills. Just save your mortgage money and catch up when they lock in your rates.
Best wishes and all my hope,
Sonya

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I know you don't want to hear this, but there is ONLY one way to get off the treadmill. Call three local realtors and ask them what you can sell your house for.

Sign up with the lowest estimate. Sell your house and rent a virtually identical one for the longest period you can sign up for. Use the money you are saving (mortgage-rent, taxes, insurance, maintenance) to pay off every other bill you have.

Once this is accomplished, open an online brokerage account with Wells Fargo and start buying BTU, CCJ, RIO, BHP, SBS, HCBK every month.

You will be delighted with how much better off you'll be in two-three years.

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Abelicio - If you are going to have a hard time making the payments and you won't be able to build any equity, you might be better off selling and renting something smaller for a couple of years. You can accomplish a couple of things: you can save some money with a lower monthly cost and you can work on improving your credit score. You will be in a better position to buy a house then.

But if you can't/won't do that... you won't lose your house just because your ARM is resetting. You will end up with a higher rate, yes. But you will still have a mortgage and can keep you house if you keep up with the payments. The downside is that less of your monthly payment will be going toward principal. But again, if it makes sense to stay in the house, you can spend the next year or two improving your credit score and then refinance.

All is not lost!!!

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AP:
If I read you correctly, you are living paycheck to paycheck. That to me is a treadmill. I would infer that you have no buffer for the "bad luck" event...illness, job loss, divorce...all the classics.

And it's all because of mixing two very different things together...a nice, warm, comfortable and attractive shelter for you and your family and a highly leveraged speculation on real estate values in the years ahead.

Let's say you have a 20% equity. You are making a four times leveraged bet that home prices will rise. Down by 20% and your equity is GONE.

I have a white paper detailing my results of 60 homeowning years covering 43 calendar years that shows an average price appreciation of 5.66% annually.

Had I rented/leased over that period and invested the cash savings, I'd be ahead by nearly a factor of four compared to what I've earned from home(s) appreciation. That's over 43 years through all business and home cycles, up and down.

Renting is like a 3% mortgage, with no taxes, insurance or maintenance. Owning a home and paying these costs in today's world is financial insanity compared to renting.

If you want a copy of the analysis, I need your email address.

CHG

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It's not a step backwards. It would simply be a rational, intelligent financial analysis that provides the attractive shelter you want and permits you to clean your debts and grow wealth over the years.

Home price appreciation is a very poor way to grow wealth and provide for a comfortable retirement, given the heavy (and growing) carrying costs of interest, taxes, insurance and maintenance.

I've got 43 years of experience to justify what I'm saying.

CHG

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You've already done the hardest part and that's admitting to yourself that you weren't controlling your money properly and inturn caused your credit score to decline. Most people don't realize that you need wonderful credit to refinance at 100% and not have to put any money down. Now you need to fix that, you need to start cleaning up your credit report today. This is a timely prosses and the longer you wait the longer you'll continue to struggle. You can do it yourself if you know how, you must be diligent and don't let the bureaus take advantage of you. My company specializes in credit restoration. We are a Legal company (many others are not so do your home work first). We provide a software program, audio series and workbook to help educate yourself so you don't make the same mistakes again. We then offer you a complimentary 12 month restoration process. We have a 90 day money back guarantee and a credit for life program. If you would like to know more or just get some advice you may contact me at 877-708-0088 or email me at rosie@imperiallegal.com. My companies web address is http://www.creditoutofcontrol.com and we are a division of Imperial Legal Financial. We have been in this business for 8.5 years and are about life change and a better future. You may also find me on http://www.wannanetwork.com/rosiefolks. We are also members of the Elmhurst Chamber of Commerce in Elmhurst IL. Thank you for your time and good luck to you. Remember you are not alone and there is help.

Rosie Folks
http://www.creditoutofcontrol.com
877-708-0088
rosie@imperiallegal.com

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