Best Way to Qualify

[Administrator]

We have a monthly net income of about $7500 that is guaranteed (in writing) to increase to $7900 in Jan 2009 and to $9000 in May 2009. Our current monthly CC and car payments add up to about $1100 per month. Our credit scores are 640 and 590 and we have never been late on or defaulted on our mortgage payment or any other loan. We currently own a home in AZ and are trying to build a home in IA. We own land in IA that is currently financed on contract and will owe a $40k ballooon payment in 2010. The house we are trying to build will cost about $198K to construct and is estimated to appraise once completed at about $280-$300K. Thus, if we were to roll in the remaining land payment into the loan we would be looking at a total loan amount of about $240K. Our original plan was to sell the house in AZ and use the funds towards the downpayment on a construction loan in IA. However, with the current housing market this has become, for obvious reasons, problematic. If we were to sell the house in AZ now we would either barely break even or possibly be even a little bit short - which leaves us little if anything for the downpayment. And to further complicate the situation we began this process before the market turned and now have one of us in each state and are, therefore, having to absorb the cost of running two separate households and renting property in IA while maintaining our home in AZ. So, now we are wondering what we should do next. Our only options (as we see them) are: 1) Try to keep the house in AZ as an investment property and rent it out to offset the expense of 2 mortgages - we could probably get about $900 in rent and the mortgage/2nd mortgage is about $1800 2) Continue living in dual states and wait until the market turns around so we can try to sell the house in AZ then (obviously our last choice!) 3) Sell the house in AZ as soon as possible and take a loss 4) Try to purchase a less expensive pre-exisitng home in IA and either turn it into rental property later, flip it when/if the market improves or refinance it in 2010 and use the equity for the downpayment on the construction loan So, basically, our questions are these. First off, what would it take to enable us to build the home in IA? Pay off the debts? Save for a downpayment? Wait until we can sell the AZ house? Secondly, with those credit scores and that debt load do we even have a prayer of qualifying for a loan that would allow us to keep the house in AZ and build in IA simultaneously at all? Lastly, are there any options we have overlooked? We are just completely unsure of what our options are (if any) and what is the best way to make this happen now that we are in this complicated situation. Is there any hope?


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(Source: mortgagefit.com)