Bad credit, upside down house, thinking of buying another house.....possible?

[signal]

Here is a summary of my situation.

I have a house I paid $429k for (Florida) in 2005, I put down $60k. So I owe maybe 360k, 6% conventional mortgage (30 year), and the house is now worth maybe 200k.

I am a veteren, so I have my VA benefit, I did not use it on this house.

My income is 165k in 2010, 185k in 2011.

My unsecured debt, due to my wifes failed business mostly, is 100k. I debated Ch7, but I think now that is probably not an option as my income keeps climbing.

My credit score is about 680, my wifes is 695 (she doesn't work right now, she is a student).

I am wondering if I possibly could get another mortgage, say for $250k, buy a new house, move there. And try to rent my current home or even short sale it. It just does not make sense to stay in this house. My mortgage is with a small bank, they own the note, its not a Freddie Mac loan, BofA, etc. I am not behind on my mortgage, I have a perfect payment history. Payment history on my two cars is also perfect. My unsecured debts have not been paid since 2009 and I have opened no new accounts.

If I had to, I could borrow from my 401k for a down payment of up to 50k, however I would prefer not to. My only thought is if I buy a 250k house and only borrow 200k, maybe that makes the risk lower for the bank and makes it more likely I would be ok?

I am thinking since I have a decent income of 185k/year, and my current mortgage is only $2500/mo, that I should be able to get a 2nd home, as a primary residence, using my VA benefit, which requires no money down and from what I understand depends little on credit.......more on income.

Thoughts? Do you all think this is possible? I plan to goto a bank to inquire about getting pre-approved for a VA loan. If I can get one for 200-250k, then it would seem this is the best move.

[jacko]

Why not ignore the real estate market and be happy what you have? What you are trying to do can be construed as unethical and could open up a can of worms. Unless you declare BK, the house you want to shed by walking away, your bank will most likely file suit for deficiency if they see you have another residence plus the high income. Learn to live win your means and save.

Here is a summary of my situation.

I have a house I paid $429k for (Florida) in 2005, I put down $60k. So I owe maybe 360k, 6% conventional mortgage (30 year), and the house is now worth maybe 200k.

I am a veteren, so I have my VA benefit, I did not use it on this house.

My income is 165k in 2010, 185k in 2011.

My unsecured debt, due to my wifes failed business mostly, is 100k. I debated Ch7, but I think now that is probably not an option as my income keeps climbing.

My credit score is about 680, my wifes is 695 (she doesn't work right now, she is a student).

I am wondering if I possibly could get another mortgage, say for $250k, buy a new house, move there. And try to rent my current home or even short sale it. It just does not make sense to stay in this house. My mortgage is with a small bank, they own the note, its not a Freddie Mac loan, BofA, etc. I am not behind on my mortgage, I have a perfect payment history. Payment history on my two cars is also perfect. My unsecured debts have not been paid since 2009 and I have opened no new accounts.

If I had to, I could borrow from my 401k for a down payment of up to 50k, however I would prefer not to. My only thought is if I buy a 250k house and only borrow 200k, maybe that makes the risk lower for the bank and makes it more likely I would be ok?

I am thinking since I have a decent income of 185k/year, and my current mortgage is only $2500/mo, that I should be able to get a 2nd home, as a primary residence, using my VA benefit, which requires no money down and from what I understand depends little on credit.......more on income.

Thoughts? Do you all think this is possible? I plan to goto a bank to inquire about getting pre-approved for a VA loan. If I can get one for 200-250k, then it would seem this is the best move.

[SMinGA2]

Assuming your credit score/file and income are sufficient - it is possible to qualify for a mortgage on a house when you still owe on another.

I have friends who:

Moved out of home A around 2003 or so, to buy home B. Tried to sell home A unsuccessfully. Carried both mortgages for a while. Filed ch. 7 in 2005. I do not know if they reaffirmed home B, and don't know when home A foreclosed. Just over a month ago, they purchased home C. They have already lined up a renter for B. (Though as I understand it, rental income will not be considered in mortgage application unless it has a 2+ year history.) My friend has increased his education & income a good bit over the past 5 years or so.