30-Year Fixed Mortgage

In June 2006 I bought a house with an 80 / 20 loan. The 80 is @ 6.65 % and the 20 is at 8.1 %. Both rates are 30 year fixed. Also I gave K down including closing costs. My insurance and taxes are in escrow and included in my mortgage payment to Wells-Fargo. I live in Miami.

The price of the house was 9,500 but the value according to Zillow.com is 5,000 and sinking!. My initial mortgage payment was 00 / month but has now ballooned to 32 / month!

I purposely avoided an ARM because of the eventual increase but even a fixed rate still increases due to taxes and insurance!

Has anyone experienced this? How did you handle it? I can’t refinance because I owe more than what the house is now worth. Plus it’s not really the banks fault it’s the county and states.

I can probably find an apt. as big as my house for 00 less per month (probably with a view of the ocean).

I am seriously considering walking away. Does a foreclosure only damage your credit? Any advice or thoughts?
Last year the taxes & insurance were about 00.

I can afford the payments, but I did not anticipate a 0 / month increase in less than 3 years. And it’s been going up every year. I have no reason to believe that it’s going to stop. Eventually I won’t be able to afford it.

I’m wondering what’s a common increase for my area and what I should have planned for?
Correction the taxes alone were 55 for 2008.