House refinance question?

Caroline
Like many others our house has plummeted in value. We owe $640, 000 on it and it is worth about $348, 000. We have a 5 year interest only fixed that is due in one year. My questions is, will we be able to refinance even though it is worth so little? We have never been late on a payment and my credit (I am alone on mortgage) is a 770, but our debt has crept up because I had 4 months of unexpected bedrest. Many comparable houses in our neighborhood have sold as foreclosures or short sales from $300, 000-$350, 000. We would love to do a modification, but do not qualify because we own a rental (also only in my name). Thank you for your KIND answers.

Abram
Not that you already haven't done so, but give serious consideration to selling the rental property, or placing more of your total mortgage burdens onto that property instead of your primary home.The fact that you've kept current, have good credit, and are on top of the situation a full year out all show that you are responsible...go talk with the lender as soon as possible.I think it's counter-intuitive on the bank's part NOT to refi your loan...sure anyone can understand why they wouldn't originate a new loan under such circumstances, but the fact is that they're already involved in this situation (and many more like it). With the high volume of foreclosure activity, they should feel lucky when someone is willing to stay on board and stick things out rather than simply handing over the keys.It's sad to say, but people in similar situations are finding it easier to obtain a work-around rather than a refinance...that is to say, there's currently "help" out there for people who've missed payments, but not so much for those who've kept up (logical, isn't it?). Who knows though, in the current economic & political environment a year is a relatively long time...it's not entirely impossible that a homeowner bailout comes to be the next program.

Abel
My arm just adjusted and because of all of the interest rate cuts my rate went down one whole point (from 6.75 to 5.75) it was not the end of the world. Just wait it out beause that is the only thing that you can do. It will turn around eventually. Stay positive as long as you dont have to move then just get comfy.