Boy I need help - 10-year mortgage

[Jeremy Houser]

So I have a big dilemma and I need some expert advice. I will try to make a long story short: 

So I purchased a 2br/1 bath that was completely renovated for $99k (no downpayment or PMI, I used Old National Bank Professional Mortgage Program). I had to make a quick decision because the owners had 6 offers within 24 hours. So two weeks after closing, I was informed that the house next door was for sell. This house was a 3 bedroom/2bath (3 bedrooms/bath on first floor and 1 bathroom in basement). I was able to purchase this property as well which I renovated (3br/3bath now) and made my primary residence.

However, the first house 2br/1bath is on a 10 year mortgage (roughly $1200/month including escrow). I’m currently getting $900/month for rent. So definitely negative cash flow. Initially, my plan was not to make it a rental property. The payments are not hurting me but I’ve heard so many negative opinions regarding negative cash flow and not using your own money for investment property (let your tenants pay the mortgage). 

My question is should I refinance, sell property to fiancé (wife in November) with 30-yr mortgage, sell outright or continue to make payments for 10-year mortgage? Due to the renovation on my primary residence now, my credit score is not the greatest. I used credit cards 0% APR for 18 months to fianance renovations. So it impacted my credit utilization significantly.

Maybe there’s another solution I’m missing.....thanks in advance. 

P.S I purchased 2nd home (primary residence for $80k and I’m sure it will appraise for $130-140k. I owe $69k on mortgage. I owe $88k on 1st home and I’m sure value is roughly $110k now. 

[Dante Feria]

Try looking into getting a Heloc on your primary to pay off for the first property , once free and clear refi it to get a longer term 20 or 30 to pay for your Heloc and have a positive cash flow. Or just sell the first property since the numbers are off. 

Why did you buy the first property if you cannot rent it out having a positive cash flow? Also why a 10 year loan?  I think these are the main cause of your pain . 

[Jeremy Houser]

Dante, 

Thanks so much for your reply! Well, I wasn’t planning on renting the first property or buying the second one.  However, the second property seemed to be a good buy and I already closed on the first property.  Again, the 10-year loan payments are not hurting me and I honestly just wanted to pay my primary mortgage off really fast initially when I took our the loan but realized that was a big mistake - should have done a 30-year and just made extra payment. 

Thanks again!
 

[Andrew B.]

I think you are making this too complicated. There is no reason to sell it to your fiancé to go from 10 year to 30 year. Just call a mortgage broker and tell them you want to refinance your property. He or she will help you get a decent rate and help you refinance. No need to play games changing the name on the title.

[Michael Lewis Lee]

Hello Jeremy!  The market is in your favor now, most likely.  Just sell it and then you can use out of your pocket money to pay additional principle each month to pay off that mortgage early on your residence.  Another thing you could do is see if the current tenant would take your financing on a Lease Option if the will pay rent that covers your debt payment or more and use any spread to pay off your mortgage early.  

Good luck to you!