Since your home doesn’t have enough equity you are in a tough situation. Like you said, you will not be able to refinance since you don’t have enough equity in the home. Likewise, you will not be able to sell either since their isn’t enough equity. I am assuming you are upside down; meaning you owe more then what your home is worth. If you sold you may owe money to the bank.
Also first time home buyers don’t always get lower rates. Yes there are programs designed for first time home buyers, but they have to qualify for them.
Before you even get concerned about your adjustable rate mortgage loan you should consider the fixed period of the loan. If it is a 2 year ARM, then call your bank and ask if they can modify your loan. It is called a loan modification. A lot of banks are doing that so they can extend the fixed period of your loan and prevent you from defaulting on your mortgage payment.
When you contact your lender they will ask you to contact their loss mitigation department. They are going to ask you to write a letter of explantion and include pay stubs, bank statements, taxes, and insurance declaration page. You must have also not have been late on any mortgage payment. Unfortunately, they are not going to guarantee anything.
If your loan is fixed for 5 years or more, then you shouldn’t worry as much. An ARM that is fixed for 5 years or more provides stability that homeowners are looking for. These stable ARM loans will ride the storm, that we are currently experiencing, and will give you that peace of mind. As soon as the storm is over you can then look at refinancing your home to a 30 year fixed or even selling.
I wish you the best of luck!