Rose Marie and Lee Iskowitz
Rose Marie and Lee Iskowitz

Rose Marie Iskowitz and her husband Lee purchased a home in Branchburg, N.J. for $520,000 near the height of the market in late 2004. And, like so many other homeowners, their home is now worth considerably less than what they paid: $450,000 or so. And less than what they owe: $461,000.

Even worse: the couple financed the house with an option ARM, which boasts a very low rate now -- 3.5% -- but will adjust higher, eventually raising their mortgage payments to levels they don't think they'll be able to afford.

"My aim is definitely to get a fixed rate loan," said Iskowitz. "We're barely affording the payment now."

She wants to refinance now -- while rates are near historic lows -- and get a fixed rate loan at, 4.5% or so (the recent average according to Freddie Mac). That would not only limit their risk of a ballooning payment, but their monthly tab would only be about $2,330 a month, up from their current payment of $2,100, but a lot more affordable than if rates rise to 6% or more.

"I have attempted to reach out to my servicer, Bank of America, on multiple occasions through their various programs," she said. Yet, Iskowitz was told that the only way they'd be able to work with her is if she started missing payments.

The couple made only minimum payments for awhile so they could put money into a business venture. Rose said, though, they always made those minimum payments. And she said their credit score has always been strong (although she doesn't currently know her score).

Now, she said, her bank will only refinance the loan if she brings $40,000 to the closing, which she doesn't have.

After CNNMoney called her bank a spokeswoman said it is looking at what options are available to help out the couple.

Iskowitz hopes for a quick fix, before rates rise. "If our rate goes up substantially, we could be in trouble," she said.


Last updated August 03 2011: 6:07 AM ET
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