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[quote=Anonymous]12 years ago I bought my first home, a tiny SFH in Arlington.  My PITI is $2,000 a month and I've rented it out -- I do not earn much on it at all after yearly expenses -- it's pretty much a neutral investment.  If I were to sell the property today, I would net $300k after taxes.

I held on to the house and my DH and I bought another SFH in Fairfax that was larger 5 years ago.  We put no money down and used a VA loan; we have a 3.5% interest rate with a PITI of $4500.  Our current HHI is $320.  We only have about $50k equity in the new house.

Things have been working out great, and we have been happy to have the smaller "fall back" home in Arlington.  But now it looks like I will need to move to another job.  Our new HHI will be $200.  I'm thinking the payment on our primary home will not be easy to make on that income.  So I'm mulling over my options.  I need advice from smarter people:

FWIW We don't really want to move back into the fallback home.  We have 2 small kids, plus my parents who live with us.

(1)  Sell our primary home and the fallback home.  Buy something that's around $600-700 with a down payment of $300-350k.  The interest rate will be higher and we will pay lots of transaction costs but oh well
 
(2)  Suck it up and try to make it work in our current situation.  No more lawn mower or cleaning service.  No more going out to eat.  Reduce retirement savings just to the match.

(3)  Sell fallback home only and refinance our main home.  We can't do a recast because that is not allowed with a VA loan.  We will pay a higher interest rate than 3.5%, obviously.

(4)  Sell fallback home and put the $ in some sort of safe savings vehicle.  Pull money from it as needed to help pay for main home so we don't lose our low interest rate.

Am I missing any options?  Any recommendations?[/quote]

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