[cod_fragger]

...payment resets? Situation:-Purchased new home built less than 2yrs. ago in Pittsburg,Ca.-loan amount for 400k after 20%down payment.-loan program is a 5/1 option arm,interest rate fixed for 5yrs. @8.25%.-i'm only paying minimum payment from the 3 payment options.The minimum payment is a negative amortization.-start rate is 2%...so the monthly payment is very low but the interest is compounding at 8.25% to the balance of the loan.-FICO score is 729-renters has given 30 day notice.-loan balance is now 430k and same home is selling for less due type of loan and recession.I know it's gonna take some time before home values start to incline on the graphs.I just want to be prepared during the housing market healing process. Based on this information can someone give me any helpful advice.It's my first rental property and i want to do this right,Economy sucks right now and i'm not gonna be a victim from it.I worked very hard to get this far and being a single parent w/ two daughters makes it more challenging.Thanks to those who respond.

[Skeeter]

I would refinance. Call a few banks from Bankrate.com. Rates are very low. It will be hard to get a loan but try. Get a fixed one too. Should be able to get one under 5%. Good Luck.

[jekessans]

Yes refi if you possibly can. You put 20% down and have worked for this and if you allow foreclosure and have that credit score you will be messed over for long after the mortgage crisis shakes out and getting another loan after foreclosure will be next to impossible in the new economy.

[JohnLG]

If you are going to do it, do it immediately because the housing values are dropping monthly. check out your current value on cyberhomes. If it goes upsidedown, get a loan mod. Your loan is one of the worst that you can have and one of the easiest to get approved for a loan mod.