Upside down in mortgage/want to move - options?

[Anonymous]

So like many people I am upside down on my condo.  Our area has been hit hard with several foreclosures.  I have found an area that I really want to move to but of course I can't sell my house.  We currently owe about $98k and the other condos in our complex are selling for about $60k.  I have about $30k in savings and would like to use most of this to put as a downpayment on the new house that I'm looking at (new subdivision - price is approx. $255k).  I really would like to get out of my condo.  It is in an isolated, rural area and I would like to move to a better area.  I am trying to think outside of the box and wanted to hear from others in this same situation and what you plan to do or have done that seems to work.   Anyone?

[ShanetheMortgageMan]

You could rent out your condo and at least be able to offset some of it's monthly housing payment - but yeah owning an asset that is worth less than what you owe on it, and wanting to get rid of it, is a problem a lot of people are facing today and the options aren't pretty... rent it out, short sell it, or bring in the difference on a sale to avoid a short sale.

As far as qualifying for the new mortgage, if the home is in the same commuting area as your current home, then your income will have to qualify for both the new mortgage payment + existing mortgage payment.  If it's not in the same commuting area/you are relocating to a new commuting area, then in order to not have both entire payments in your debt ratio you can use an FHA loan to purchase the new home with + you'd have to have a rental agreement for the 1st year of the mortgage & evidence of 1st months rent/security deposit has been paid and then you can use that rental income to offset your current condo's housing payment.

[Anonymous]

Thanks.

Based on other rentals in my complex I am fairly certain that I would be able to get enough in rent to cover the mortgage, taxes, Insurance, HOA, and property management fee.  But nothing extra.  I have spoken to several mortgage loan officers in my area and they have all said that I would have to qualify for both mortages (and based on the DTI calculations I would) or I would only have to count 25% of the rental payment as debt.  (About 60/40 on those responses.)   I really don't want to screw up my credit by doing a short sell since I don't absolutely HAVE to move.