Exploring renting as a possibility

[Jonathan Van Heijzen]

Good morning.  We are considering renting out our current home and moving to another home.  Right now, we are at the information gathering phase.  If it makes sense for us to do something, we'll probably pull the trigger in the next 6-12 months.

A little background.  I moved my family to a small town in Texas a couple of years ago.  Our current mortgage + taxes is about $2,600 per month on a 15 year loan.  During the time that we've lived here, a lot of other people have come and property values have increased significantly.  I work from home and we like living in a rural community, plus taxes have increased significantly as a result of the property value going up and us being incorporated into the city recently and it is putting a strain on our family.  We're trying to consider what would be best for our family.  So far, I have run the numbers for the following scenarios:

1) Refinance our current property into a 30 year loan.  I personally don't like this option, as I would prefer to get out from under a mortgage payment sooner rather than later, but it is a feasible option so I'm listing it.  This would make our total mortgage + taxes about $1,600 a month, but obviously extend the life of our loan for another 15 years.  To me, this isn't enough of a savings for me to be overly excited about this option.

2) Sell our property outright and purchase another one in the boonies.  After closing costs, I'm estimating that we can purchase a home in a rural area and have a mortgage or no more than $50,000.  This option sounds ok to me, but I'm not overly excited about it.

3) Refinance our current mortgage into a 30 year loan, plus purchase a new home with a 30 year loan, then rent out our current home.  Based on my estimations, our monthly payment would be about the same for the two homes as what our current mortgage is for one home (right around $2,600 per month, including taxes).  The difference would be that we could then rent out our current home for, let's say, $2,000 per month, thus leaving us paying $600 per month for two homes effectively.  I like the sound of this option, but I know I don't have all of the information, and I don't know what questions to ask.  What other things do I need to consider to determine if this makes sense for us?  Our credit is great, so I don't think the loan would be a problem, but I obviously need to talk to the bank about it if this is the route that we decide to take.

Thank you in advance,

Jonathan