Should we take a HUD loan to rescue our foreclosure?

My husband bought our home before we were married back in 2005 when everyone was telling us to ‘hurry up and buy!” Over the years our payments went up, the first time was because when we refinanced with Countrywide they made a ‘mistake’ on our escrow payment and the other two were interest rate increases. Our payments got too high so we entered a forbearance program. The program was for a limited time and after it ended we continued to struggle. Counrtywide had NO options for us so we just paid what we could, usually about half of our mortgage. Most people would have stopped paying and saved their money but we were trying to show effort (dumb). We started getting foreclosure notices and prepared for the inevitable. We talked to a number of professionals and it seemed we had no options. After receiving a slew of foreclosure notices we lined up a rental, made or security deposits and signed a lease. This week, we packed up our entire home, we even let our friend come dig up the plants and trees we had put in over the years. Yesterday, Countrywide calls us, due to the bail out they can offer us help now…..ARGH! I should be excited but what am I supposed to do now? They want to see if we qualify for a HUD loan.

Is a HUD loan worth it?
What if after 5 years we go to sell and there is a small to no profit?
What if after giving them the 50% we are not left with enough to buy again?
Would it be better to rent for substantially less and save during those five years?

I feel like we have continued to do the right thing but kept getting screwed. Now I am scared to follow up on this option and I feel helpless. We put a lot of money into this fixer upper and it breaks my heart to let it go but is it worth it to keep holding on? At this point what am I holding onto? The house is worth less now all fixed up then what we paid for it in an unlivable state.

What would you do?

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