Q:My wife and I bought our house at the top of the market in 2004. With the plan to stay in Florida for three years, a 5/1 adjustable-rate mortgage, (80/20) with a home equity line of credit was the perfect choice, since we weren't planning on staying long, and didn't have the down payment.

The housing bust derailed our plans, and our home has plummeted in value. With an ARM set to adjust in November 2009, should we try to refinance now, or hope that the rate our line is tied to (LIBOR) doesn't rise enough to get us in trouble before the housing market returns to normal?

Todd Denning

Sebastian, Fla.

A: I say step up to your lender now, if you can, and see what options you may have that won't expose you to greater risk down the road. Speak with them about what they foresee. With the Fed just lowering rates, there's sure to be relief.

I am hopeful that a new administration will implement tools to help the homeowner, as long as that homeowner can afford to maintain his or her home (Even as I write this, the president is signing new legislation meant to help out people in your circumstance and sadly there are a lot of you.) You might have to wait a bit for some clarity. In the meantime, keep up your payments and make sure your credit is excellent. Dig into the community too, because it looks like you'll be there for a while.

For the future, although I'm sure you won't have to be reminded, one should always view real estate as a long-term investment. Cycles come and go in any market. Since real estate can be quite illiquid, as we're seeing now, renting can be a lot cheaper and easier if you have a short time horizon.

Also, the ''no payment down, anyone can have any home they want'' days are over, and shame on the aggressive lenders. You need to have skin in the game and be able to afford to stay even under daunting circumstances.

Responsible lending rules should once again put homeowners on the right path. Sorry you got caught this time.

Meg Green is a certified financial planner. Mail questions to her c/o Sunday Business, The Miami Herald, 1 Herald Plaza, Miami, FL 33132 or send an e-mail to

askmeg@MiamiHerald.com. Include your full name and city of residence.

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