I’m not sure this is much of a win – they aren’t getting thrown own, but that might be what’s best for them.
Now their payments are going up, they are locked right back into another IO loan they (already) can’t afford at a slightly higher rate. They have no savings, 2 kids, and are relying on a single job. And even if their condo does happen to be worth what they originally paid for it 5 years from now, they haven’t paid down the mortgage.
I’m not familiar with Poway rents, but presumably you could rent something that *would work* for $1,600/mo if not less. The monthly savings alone could pay off some debt. Swap out the car payment for a cheap car. Have the wife at least get a part time job. They could salvage their situation, and be alright if they had the discipline and were willing to sacrifice.
