ccccc rrrrrr
First Time Poster
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| Pay down mortgages |
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Hello,
This is my first time posting.
I have two mortgages and one free and clear home. We are 10 years from retirement age.
#1 home tax value $230,000. Loan $209,000 at 5.34%, 8 years of payments with many pay-downs leaves a balance of $134,000. Currently my principal is $414, interest $610. This is a 30 year note. Yearly property tax $5000- homestead exemption. Rented at 5% below PITI. Excellent growth potential positive area of town (when the market turns around). Investment potential HIGH, emotional weight MEDIUM. Cost to maintain-medium high.
#2 home tax value $180,000. Loan $100,000 at 6.375%, 2 years of payments with many pay-downs at beginning of loan leaves a balance of $66,000. Currently my principal is $509, interest $355. This is a 15 year note. Yearly property tax $2900. Rented at 10% below PITI. Nice area on a creek always able to find a tenant. I work in the detached studio. Investment potential MEDIUM-MEDIUM LOW, emotional weight MEDIUM HIGH. Cost to maintain- low.
#3 home tax value $185,000. Loan $0. Yearly property tax $4500 (different city tax rate). View of a nice lake. Investment potential MEDIUM HIGH, emotional weight MEDIUM HIGH. Cost to maintain- medium.
My questions are,
Which would you pay down fastest?
Which would you sell first?
Why?
Thank you in advance. All input is very much appreciated. I realize this may be an easy thing to figure out, I just can not at this time . Thank you again.
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Wed Feb 18, 2009 3:47 pm |
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littleroc02us
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Sounds like a great investment plan you have. Based on the principles that I follow, I would payoff the $66,000 mortgage first. The reason being is that it is a smaller loan amount than a balance of $134,000 and can be paid off quicker. The larger loan is at a very good interest rate of 5.34%. Once you have paid off the smaller loan than you can apply the payments you were making to the $66,000 loan and multiply the payments on the larger loan amount. You could be debt free on all three properties in a very short time. Wow!
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Wed Feb 18, 2009 7:30 pm |
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oldguy
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quote:
My questions are,
Which would you pay down fastest?
Which would you sell first?
Why?
I would not prepay any of them - actually, I do the opposite, I refi my rentals periodically when rates are favorable, and I get full 30 years loans - no ARMs, no 15 year loans.
They sound like 'keepers' - rather than sell them, just refinance them and get your equity out and use it for other investments. This doesn't creat a taxable event.
The two appreciating assets are real estate and stocks, the two make a good diversified portfolio. I would be careful not to get too one-sided. You can balance the two by removing money from your houses and adding it to your stocks.
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Fri Feb 20, 2009 9:02 am |
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Greg Orlando
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Paying the mortgages is a big question as how you wanna pay it? Many ways are there to pay the mortgages but all of them are not proven to be good for you. So what you can do now? Many companies are there waiting to help you in recovering your mortgage payment, like www.editmyloan.com
They are doing this kind of job. You can visit the site see whether it is good for you.
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Thu Jun 04, 2009 6:11 am |
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No-Brainer
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Location: Oregon USA
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I am almost 10 years past retirement age and I have no desire to pay my home off, let the kids do it from the equity. In the meantime I get the tax benefit. As far as other property, I sold it when I retired and didn't have any mortgage on it.
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Thu Jun 18, 2009 9:57 pm |
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littleroc02us
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| Re: Pay down mortgages |
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quote:
Originally posted by ccccc rrrrrr
#1 home tax value $230,000. Loan $209,000 at 5.34%, 8 years of payments with many pay-downs leaves a balance of $134,000. Currently my principal is $414, interest $610. This is a 30 year note. Yearly property tax $5000- homestead exemption. Rented at 5% below PITI. Excellent growth potential positive area of town (when the market turns around). Investment potential HIGH, emotional weight MEDIUM. Cost to maintain-medium high.
You should never keep a house simply to get a tax break. Let's do the math:
You state that on your remaining loan of $209,000 at 5.34% your paying as you stated $610 a month in interest which comes out to $7320 a year to the bank. At the end of the year lets just say your salary for example is $120,000 and your in the 35% tax bracket according to the IRS. That means you will only pay taxes on $112680. On that $7320 you paid in interest you will get back only $2562. So my question would be, why would you pay the bank $7320 to get back only $2562 from the IRS. Doesn't make logical sense to me. Pay off the houses.
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Mon Jun 22, 2009 2:24 pm |
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oldguy
Senior Member
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Location: arizona
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quote:
#1 home tax value $230,000. Loan $209,000 at 5.34%
If you followed the 30 yr schedule, the full payout would be $419,680 - ie, $209,000 in principal and $211,000 in interest. And that is exactly what I would do - I would not prepay. If you have an extra $500/m don't use it to prepay, invest it at 10% to 12% for the 30 yrs - it will compound to about $1,600,000. That is well worth paying $211,000 in interest for the use of that capital. (I do this with my rentals.)
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Wed Jun 24, 2009 11:10 pm |
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Terry Wills
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Let me tell you story about a friend. He was doing ok, until the recession hit us. So, he lost his job and left unwanted. Then he tried affiliate marketing. And now he is living on his own.
But my point is I know he can survive but at the mean time he faced a lot of problem with mortgage. He took the refinancing option and saved his house. If he couldn't do it then, he would've been left without a house.
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Thu Jun 25, 2009 3:03 pm |
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namratasnv
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quote:
Originally posted by Terry Wills
Let me tell you story about a friend. He was doing ok, until the recession hit us. So, he lost his job and left unwanted. Then he tried affiliate marketing. And now he is living on his own.
But my point is I know he can survive but at the mean time he faced a lot of problem with mortgage. He took the refinancing option and saved his house. If he couldn't do it then, he would've been left without a house.
I too believe in refinancing, as If you Refinance to lower interest rate, you may save your substancial amount on your monthly mortgage payment, reducing your other expenses which is the main reason people consider refinancing their mortgages. 
http://www.connecticutwebuyhouses.com/
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Sat Aug 01, 2009 12:21 pm |
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GovAuctionGuy39
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I would do the first one, its more money but easier to pay back due to its interest and loan difference compared to the second one.
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Sun Aug 02, 2009 8:35 pm |
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namratasnv
Preferred Member
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There are several benefits of Refinancing, that are It keeps your paymants stable with a fixed rate loan, lower your interest rate and consolidate debt.
You can also check when you need to go for refinance, by the use of refinance calculator by this you can also get teh currunt status of loan options and interest rates.
http://www.connecticutwebuyhouses.com/
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Sat Aug 08, 2009 8:37 am |
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jacktom
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quote:
Originally posted by michealparker
hi,
I am totally agreed with Mr. Greg Orlando.
he put a nice information for us and for post.
his information is really very useful to us.
Thanks Mr. Greg Orlando.
yes micheal i also agreed with him
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Fri Sep 18, 2009 10:34 pm |
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