To sell or rent: Analysis paralysis

[Jason Kim]

My home is approximately at $390k-400k. My 30 year mortgage is at a balance of 240k and loan started in 2017. Bought the place for 270k via an FHA 5% down. I have made no extra payments since the mortgage.

Now, I am considering refiancing into a conventional and move to another home via an FHA. My goal would be to decrease my monthly payments so that at worst I break even. At best I cashflow. I really want to keep this house as a long term investment because it's a newer highly desirable family home close to many schools and jobs. And I am emotionally invested into this house because I feel like I got into it for a good price with such low money down. And I see this neighborhood growing in an already great location!

Would anybody suggest paying a good chunk of money into the loan towards principal prior to refiancing? By a chunk I mean 40k. I have enough to put that down and cover closing cost of a new mortgage. Or would this money be better used elsewhere? I want to move out to a new single family home via an FHA and put only 5 percent down again. So I'm not worried about forking out cash for that either. I'm thinking the money would be better placed in the house intended for a rental. Now I understand the cash on cash may not be that great since I have been paying mortgage interest and principal for 5 years and would be putting more money towards principal. But I am not too concerned with that as I am investing this house for the long term. I feel like if I'm patient enough, the investment will pay for itself. Should I invest this money into the house? What would you do with it in my situation?

Sorry if it seems like I am all over the place. Im a rookie trying to figure all of this out. Suggestions? Thoughts?