did interest only loan, now market is falling - now what?

My husband and I purchased our home almost 3 years ago with the intent to hold onto it for a year then sell it to move to a different city after 2 years. Since we weren't going to keep it for an extended period of time, our loan officer suggested keeping our down payment money since it was less that 10% (we bought the house for $232,500 and had $10,000 that we were planning to put down) that we just hold onto the money and finance 100% since it wouldn't change our payment more than a few dollars/month. He also suggested that we do a 1st & 2nd and do an interest only on both (again, since we weren't going to keep it for an extended period of time) WELL, now the market has obviously taken a nose dive - last check, our market value is at $220,500 ($12,000 LESS than what we bought it for) and we are now getting extremely nervous. We've checked into refinancing trying to turn our loan into a conventional loan, but haven't had much luck. The house is in my name since we weren't married at the time and my credit score was better. (my husband hasn't had a house in his name at all, so I don't know if the whole first time homebuyer thing would help us at all) Should we just sit tight and ride it out, or what?? (oh, and just a side note, our loan officer has since gotten out of the business so he's no help)

6 months ago - 2 answers