Hi,
I’ve been working on my budget and my debt since December 2014 (heavily edited version: spouse wasn’t making payments, and I wasn’t checking).
I have two houses (primary and rental), and two mortgages. The second mortgage is a rental (this ended up a rental because we “needed” to buy a bigger house farther from work - but we were underwater). I’m losing money monthly on the rental, because we financed it 3 years ago as a 15 year note:
$135k ~ at 3.5% for 15 years= $1100/month (payment plus taxes, insurance)
Monthly rent is $995 (when we try to raise the rent price, it sits empty)
It’s rented through 9/2016. Due to the 15 year note, we finally have equity and can afford to sell the house- and actually make money on the sale too.
Financially and logically, I think we should sell the rental, use the money to pay off the other credit card, and part of the only car payment we have. Emotionally, I see the $100k balance on the rental, and I’m thinking: if I kept this house and moved back into it, my retirement horizon is moved WAY UP. It has its faults though: 945 square feet, no garage, no basement, really crappy school district. Realistically, I don’t think we could ever be happy living there again.
I’m just starting to make $2000 monthly payments on the credit card (prior, was only doing minimum payments while paying other credit card). I won’t have the second credit card debt forever; only for the next 10 months.
Right now, my credit score is poor, so refinancing is not an option. However, it may be possible next summer (I don’t know, but I imagine my score has to improve with on-time payments for almost two years and drastically reduced credit card). Should I sell the rental in September 2016, or refinance it whenever my credit score approaches 660 (option would be to refinance back to a 30 year mortgage, estimating new mortgage payment would be $480)?