First home of 8 years, considering refinance or selling

[Marc Belisle]

Greetings, 

I have just joined this forum and hope to learn a lot from all of you. I live in New England in a home which has lost value from the original sale price in 2008. My wife and I have been underwater for years due to the housing depression. We have almost paid off the loan to approximately the current market value for the home. We are considering re-financing in order to lower our mortgage payment considerably. 

My wife recently threw a wrench in this process by suggesting that perhaps we look into buying another larger house instead. I don't want to sell this house for a $40,000 loss. 

Long-term I would like to own several properties and have them for retirement income when they are paid off. So, ideally, I would not like to sell this home, which is turnkey. Does it make sense to sell this house for a significant loss or to rent it and buy a larger home at a cost higher than the original price of our current house?

Thoughts?