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Help with next move

Looking for advice on what direction we should go next financially/housing-wise. I feel like we’re in a decent position overall, but I’m struggling to determine the smartest long-term move.

Current situation:
Me and partner with 3 kids ages 7,8,9

Household income: ~$215k salary (not including rental income)
About $250k in retirement currently
Contributing 15% to a Roth 401k
Around $80k in cash savings (hysa)

Primary home:
Estimated value (super conservative): ~$500k
Owe: ~$350k
Interest rate: 3.75%
We’ve outgrown it with 3 kids and only 3 bedrooms plus unfinished basement. (No office space for WFH)

Rental property:
Estimated value: ~$430k
Owe: ~$249k
Interest rate: 2.75%
Mortgage is about $1,580/month
Rent is $2,500/month
Cash flows roughly $800/month after expenses

The dilemma:
We need more space, but I’m torn between a few options:
Stay put and remodel/finish basement, stack cash, enjoy the low mortgage.

Sell current home and buy bigger (found a house with everything we want/need for 699k (worried about interest rates)

Keep both homes, rent them both out, buy another primary residence with low down payment

Sell the rental (2.75% mortgage, cash cow, good long term renter) and use the equity to upgrade aggressively

Something else I’m not considering?

Part of what makes this difficult is that both mortgages have great rates that I hate giving up. The rental especially feels like a long-term asset I probably shouldn’t touch.

At the same time, homes in the size range we’d realistically want are expensive enough now that I’m not sure what’s financially responsible versus overextending.

A few questions:
What would you do in this situation?
Would you protect those low interest rates at almost all costs?
Is keeping the rental the obvious move here?
Roughly what home price range do you think is realistic/safe with this setup? (No debt aside from partners student loans)
Would you prioritize liquidity, equity growth, or monthly cash flow right now?
Looking for honest opinions from people who are either smarter and more strategic than me, or who’ve been through similar decisions

submitted by /u/whale_sauce
[link] [comments]

source https://www.reddit.com/r/RealEstate/comments/1ti72nq/help_with_next_move/
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