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If your chief Concern is not making up that extra $300 a month maybe you should consider renting out a room in your home for a while til you are back above water.
Personally I would rent it and take the "loss". If the house goes up in value you can sell it if not. Eventually you'll get below the LTV and you will get cash low out of it. Long term you'll gain. Your advantage is that right now if you rent it your house payment will drop to 2-400 a month compared to whatever it is now. Yeah you're upside down but that won't be forever. Add your normal payment that you are making on top of the rent payment ( keeping a bit aside for repairs) and you'll get that mortgage down. You would have to make the payment anyway. You just dropped the payment by getting a renter and you can add as you please to principal.
How much is your mortgage payment? $190k at 5.25% is, what, about $1200 per month? If you can get, say, $900 per month for renting the underwater place, it'll cost you about $3600 per year to maintain the house. If instead you take $30k out on your other house, at the same interest rate it's costing you about $350-400 per month, or $4,200 - $4,800 per year.
The real difference is that renting the house is a contingency--if you lose renters or have trouble renting it, you're paying the full mortgage cost. The refi, on the other hand, is constant, even though it costs more.
Unfortunately, I don't think it's reasonable to expect that the $30k underwater is going to change significantly over the course of a few years. If the house is worth $160k as you imply, that would require a nearly 20% increase in home value.
If you are within a few hundred , at least your money is going towards principal.
1) you need to see if your balance is going down every month
2) evaluate any chance of appreciation
3) is it a low maintenance good property or is it a headache, have you rented it for a couple of years?
4) is your paid off property your residence?
5) do you want to be a landlord still
6) have you talked to an accountant to see what will happen if you sold , took the loss , how much you'd get back in taxes?
Pay off one house with the other house and save a few hundred. With tax savings you should be over water in a few years. If your income supports it get a shorter term loan to get a lower interest rate. Otherwise get a fixed 30 then refinance it to an arm in the future.
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