My parents have both died and I have inheritied their townhome in a HCOL area. While I think it financially would be best to sell, I don't think I can bring myself to do it in the next year despite the hot market in the DC area. So I'm trying to figure out if I should refinance or not. Also, I'm trying to figure out if I should possibly rent it out to a pastor at my church for a reduced price of 1600 or try to find a renter at full price, which I estimate at $1950.
Market Value: $350,000
Original Purchase price: not sure, according to the deed it was purchased in 1974
Original Mortgage Amount: $125,000
Interest Rate: 4.75
Mortgage Term: 30 year
Term remaining: matures 01-2040
Amount remaining on mortgage: 102,478
Gross Rents: $1950 ($1600 if rent to pastor)
Principal and Interest (the P&I of your PITI - should match with the above info): $646
Taxes and Insurance (the T&I of your PITI): $322
HOA costs:$240/quarter (community has a pool)
Deferred maintenance notes: needs new dishwasher, plumbing in bathroom seems clogged, some ceiling tiles need replacing in basement. Need to landscape the tiny front yard. Otherwise in good shape.
Anything else special or unique in regards to the numbers of the property (not the property itself; things such as city assessments, back taxes, special costs due to unique features of the property, etc. etc.):
The interest rate of 4.25 is really high given current rates, but I'm not sure if I should refi, and if I do, if I should refi into a 10, 15, 20 or 30? Numbers aren't my strong suit so I'm not sure how to figure it out. Also, given my situation would this be a second home or an investment? I imagine it's going to sit empty until fall because I can't go though everything in it with summer coming and the kids out of school, but it will eventually be a rental. Our credit is excellent and I'll probably get a closing cost discount if I go with our current mortage company. I could also just pay off the mortgage.
Finally, should I rent to someone I think is good for less money or try my luck with a renter at full price? From watching another rental in the county, I know that laws are really tilted in the favor of renters. And I've been left enough cash that I don't need to worry about maximizing return, although I would of course like to do so.