?What would you do???

[Giavonn R.]

I have 2 properties in California both under a trust:

1. 1.  A 3bd/2ba rental home with a 10-year interest only loan about to adjust to LIBOR in 2016.  Renter has been with us for over 18 years.
2. 2.  A free and clear 40 acre ranch with a 3 bd/2ba house and a barn

Here are the numbers on the rental:

Value = $180,000

Loan = $183,000 @ 5.8%

(ITI) mortgage payment = $1082 a month

Rental =$1050 a month + $152 monthly HOA

Here are the numbers on the 40 acre ranch:

Value = $350000

Loan = $0

Interest only payment = $0

Gross Income = $16000 a year

Net Income = $5,000 a year (agricultural income)

I would like to get out of the interest only loan on the rental because it will adjust to LIBOR rates. Even though LIBOR rates are low it will adjust every year for the next 20 years. Ideally I would like to get a low fixed rate loan, but not exceed the rental payment amount to much. I have excellent credit and can back the loan, but I would like to loan to be issued to the trust.

What would you do?