If I sell my rental I can pay off my primary mortgage and be debt-free. Is that a good idea in this housing market?

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Dear Marketwatch,

I have a rental property that is worth $175,000, and I owe $53,000. My primary home is worth $265,000 and has $108,000 left on mortgage.

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My question is this: should I sell my rent to make my primary payment and be mortgage free? Or should I refinance my rental – and take out cash to pay off my primary mortgage?

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Signed,

worried about the market

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,big move‘ is a MarketWatch column looking at the ins and outs of real estate, from navigating a new home search to applying for a mortgage.

Do you have questions about buying or selling a home? Do you want to know where your next move should be? Email Aarti Swaminathan at [email protected]

dear worried,

Refinancing may not be your best move.

Mortgage rate is very high at 7.3% as per mortgage news daily, for 30 years. If you have a 15-year mortgage, or an adjustable-rate mortgage, you may be able to get a lower rate (but not as low as what you could get a year ago). So I doubt if it makes sense to you.

If you’re sick of renting, selling may be your best bet.

If you sell your rent, you will get, as you Say, $175,000. You’ll be able to pay off the $53,000 mortgage on the rental, and the $108,000 you still owe for your primary residence, and be completely mortgage-free.

Being debt free is so psychologically liberating. Plus, after fees or other miscellaneous expenses, you’ll still have over $10,000 left.

But a small caveat: Adjust your expectations. There is a slight decline in the housing market. Sellers are making more concessions to unload their homes. redfin
rdfn,
-6.29%
says that a record number of homes for sale each week are seeing a price drop, up by 7.9% (up from 3.7% a year ago).

,Being a landlord is a lot of work, but the prospect of becoming debt free brings with it such financial freedom. So go for it – sell that rental, if you think you’ll get a good price.,

This includes cutting prices, or offering to help buyers get their mortgage rate down. If you think your home is going to sell at the 2020 or 2021 level, and you’re going to get multiple offers, you may need to talk to a Realtor for a reassessment. But I’m not 100% sure if your $175,000 valuation reflects that.

It’s hard to rent, right now. rents are going down, according to apartment list, and the market is expected to cool further in winter. As my colleague Levi Sumagese reported in October, even short-term rentals are struggling right now. Airbnb hosts are saying bookings have dropped, and they’re now moving to longer-term rentals.

So if you find that your monthly costs are rising, and you are not able to increase the rent to cover your expenses, your profits will drop – sell. Being a landlord can be a lot of work. Also, being debt free gives one such financial freedom. So go for it – sell that rental, if you think you’ll get a good price.

Just make sure you are 100% sure. Once you sell, there’s no turning back.

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