For $500 per month, just for the HOA it must be a super high-end property with a golf course, swimming pools, tennis courts, club house, etc., but I had HOA's in Las Vegas for $35 per month that had all those amenities including the gold course and beautiful club house.Do the math!

This is particularly true in California where regulation is reminiscent of the Soviet Union, people are nutty, and courts often err on the side of injustice.I also recommend "Every Landlord's Legal Guide - California Edition" by NOLO.

If so, does it appear at a Debt on your credit ?

In 21 years you can have a court award you title https://codes.ohio.gov/ohio-re... or https://www.nolo.com/legal-enc...

With the way you have presented the options, it almost appears you are trying to "sell yourself" on opt1 since your "out of pocket" is so much lower and you feel you can refi out of the arm later. 

So maybe slightly high and it would appear you are doing the rejecting VS the other way around.  

Home got very nasty and we called the city health and safety office and they sent in an inspector and he testified in court the home was uninhabitable and they tenants had to leave. 

The square footage of the 2nd home on the property appears on the parcel info as an "extra feature" but it does not appear as part of the "heated area."

It appears this Is sure shot way of staking up on properties!

Your expense ratio appears to be too good (25%) --- but hell -- maybe that's what it is.