I got into an ajustable rate mortgage 2 years ago. The rate was 7.3%, which, at the time was the best I could get with my bad credit. Now, the rate has jumped to 10.3% and I'm being told it will jump to 13.3% in another 6 months. I already could barely afford the payments before the first jump in cost. Also, my wife had an accident at work and is on disability leave due to back surgery. We get workman comp pay, but it is about $300 less per month than her normal pay. At this point, I'd just as soon get out of the house and rent something for about $500 less per month. Unfortunately, because of the re-finance 2 years ago, we actually owe more than we could get for the house if we could sell it. There are a large number of houses in our neighborhood that are for sale, and nothing is moving, so, selling it is not going to be a quick and easy fix, even if we could get the bank to let us short-sell. I can't see how to avoid a foreclosure on this. Advice?

Have you tried another refinance to lower the mortgage. If you can't do that then your options are very limited. The only possibility is borrowing from relatives and use that money to increase the equity in your home to help with a refinance. Hopefully you can then hold out until you can sell for a good price or until your income increases.

Yes a refinance now if you have been payig on time.

The same company that has it on an adjustable, should be glad to refinace once they know you are going to.

But sadly you have no idea of the number of people who get forclosed on every day because of adjustable rate mortages. They are not designed to be keep over 2 years and then always a refinance. Or at least one with caps over several years.

Contact a mortgage broker and see if they can help you. Because they represent 15 or more lenders, they should be able to get you into a more affordable mortgage.

Plus, appraisals on refinances tend to come in for a bit higher than on purchases.

As far as short sale goes - you would have to find a buyer. That alone would be tricky since you're not in a "hot" market. If all the other houses aren't selling, they'll see it's not a good investment. Then you have to hope the mortgage company will go for it.

Since you're trying to rebuild your credit, you really don't want a foreclosure on your credit so try to avoid it if you can.

And avoid all those "We buy houses" ads. Do a search online for them and you'll see what a nightmare they are and why they're called "cement lifejackets."

Good luck!

Diane