Bear in mind that selling a house yourself still comes with cost - ie longer time on market may have an impact on your holding costs or personal situation, and the longer your house sits, the more likely you'll take a price reduction on the sale.  

Was laid off after two years amidst a large staff reduction. 

Total rent cost scenario = rent due every monthTotal own cost scenario = PITI due every month, + utilities, - interest tax deduction, - principal reduction, - avg YoY appreciation/12, - forced appreciation (if you fix it up.)For example, a completely made-up scenario where the numbers are made-up but demonstrate a very real principal:Total rent cost scenario = ($1500) Rent = $1500 true internal monthly costTotal own cost scenario = ($2300) PITI + ($250) utilities - $150 interest deduction - $450 principal reduction - $300 [2% YoY/12months] - $150 [Assuming $9,000 of value added from improvements divided over five years living in home] = $1500 true internal monthly costOnce you've calculated your total liability for each scenario, then you should weigh out the non-tangible benefits of each:Renting - increased mobility, limited responsibility for repairs and things, lower up-front out-of-pocket cost.Owning - Net worth of owners across the US has been shown to be much greater than renters. 

But it's nowhere near the 50% reduction you're assuming.All that said, once again, that's just me.

Had two great set of tenants during the 5 years, and they contributed hugely to my mortgage principal reduction.

The question would only be how burdensome this one would be.If imposed it would likely cause a substantial reduction in market activity (buying anyway) if not an immediate increase in properties for sale and commensurate drop in rental property values.  

Or you could use it to accelerate debt reduction, use it for a down payment on another property, use it to upgrade a property so it hopefully brings more rent, etc.  

sounds like a no brainer to me. even if you could refi, spending $6k up front with a $200 monthly reduction in mortgage it would take you nearly 2 1/2 years to break even on the refi and on top of that you would still be negative cash flow once you consider repairs capex, ect.all that being said it sounds like you are still in a good position considering you could sell and have a nice pay day to reinvest.don't think twice, sell.and when it comes looking for another air bnb just remember you could be going through this all over again in a couple years when the new city you buy in shuts down air bnb as well. make sure the next place you buy will cash flow as a long term rental as well as a short term rental that way you won't find yourself in this bind again.

Ignoring any tax benefit or debt reduction, say the mortgage payment on said house was $1200 per month. 

I was looking for an 80% reduction in rates....I wound up getting a 40% reduction.