Sell rental, lower primery mortgage balance

[Kenny Moghoule]

Hi every one, 

I have learned a lot from reading through other people posts but it couldn’t apply those recommendation to my own situation. Long story short, we are a family of two ( mid 40th) with the cash flow of about 185K no car/ school/ credit debt. We live in Houston Texas, just finished construction of our future house and ready to move door to door and as the title shows, we can’t make our mind over should we sell our current residential house and pay off the mortgage or turn it to an investment rental property? 

Current home:

built at 2016

Value 400K

mortgage rate 2.25%

balance 190K

13 years left

possible rent of 3K

Future home:

built at 2016

Value 980K

mortgage rate 5.75% - after 5 years up to 6.5%

balance 715K

30 years left 

About 35K emergency saving 

The current house rent will definitely can covers the mortgage/ tax/insurance/HOA and I am not worried about them specially because of the low interest we have on that mortgage. With doing that we definitely cannot save because the future house mortgage/ tax/ insurance/ HOA would be (about 6.2K) eat up all our paychecks but as we are not big spenders, I know we can survive until rental starts to bring us some cash.

On the other hand If we sell the house, our mortgage balance will be lowered to about 515K (I don’t have plan to retrofit) and that would saving me of paying 550K of interest to the lender. This is like what my balance goanna look like by 2039 If I do regular payments and don’t add anything to my monthly payments . I really like to have rental property and that was a part of my future plans but I don’t see that much of appreciation in the value ofthe rental over the course of 15 years to cover 550K.

I will appreciate any feedback as few adviser have recommended me to keep the rental.