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.