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Good morning,
we have multiple houses at this time and we are trying to decide which would be best to pay off quicker. We have been paying $100+ (to the next nearest hundred, e.g. mortgage is $1150, we would pay $1300) on all the houses but now we're wondering if we should be paying one off quicker than the others to save more money.
Would we pay off the one with the highest interest rate first? 6.7%, or the one with the highest value that only has a 4.0 interest rate?
We've been playing around with mortgage calculators but it's really been complicated because we haven't always been paying $100+ on all the properties, and we've had them for anywhere from 1 year up to 10 years.
Sort of confusing trying to figure this stuff out.
I just wondered if there was a rule of thumb to go by for which to pay off first, going by higher interest rate or higher loan amount owed?
Good morning,
we have multiple houses at this time and we are trying to decide which would be best to pay off quicker. We have been paying $100+ (to the next nearest hundred, e.g. mortgage is $1150, we would pay $1300) on all the houses but now we're wondering if we should be paying one off quicker than the others to save more money.
Would we pay off the one with the highest interest rate first? 6.7%, or the one with the highest value that only has a 4.0 interest rate?
We've been playing around with mortgage calculators but it's really been complicated because we haven't always been paying $100+ on all the properties, and we've had them for anywhere from 1 year up to 10 years.
Sort of confusing trying to figure this stuff out.
I just wondered if there was a rule of thumb to go by for which to pay off first, going by higher interest rate or higher loan amount owed?
Any thoughts?
Are you paying PMI on any of them?If so how long have you been paying and how much do you need to go to get to 78 percent?
If you aren't paying PMI, highest interest rate without a doubt. If you are paying PMI it depends how long you have to go to get rid of it. You'd have to the run the numbers and get more details. Even so with that big of a difference most likely paying the 6.7 off sooner will still win the day.
Why don't you refinance the 6.7% rate?
I would generally pay off the newest mortgage first. It's likely that you are paying the most interest per month on that one currently. With the 10 year old mortgage you are likely paying down more of the principal with each regular payment. This will depend on the terms and interest rate of each.
There are amortization calculators out there that will let you plug in your numbers to give you a clearer picture.
Why would you want to pay 2026 expense with 2016 money? Also this money will be trapped in the property and could cost you and arm and a leg to free it if needed.
Why would you want to pay 2026 expense with 2016 money? Also this money will be trapped in the property and could cost you and arm and a leg to free it if needed.
6.7 percent intrest is not cheap money and qualifies as an arm and a leg. Since that is pretty close to what you are going to get in equities it is a sound decision to eliminate that debt as soon as possible.
But as is written above it makes sense to refinance and with a rate of 3.75 percent(or whatever the rate will be) and then I might agree with only if they are willing to stomach the level of risk needed to achieve over 4 percent returns
6.7% is cheap money to someone that has been investing for 40 years. No it seems looking closer that the mortgages have 20-29 years left if they were 30 year. So that is paying off 2045 expenses, not debt because I assume some of these mortgages are on rentals where the tenants will be paying in future increasing dollars.
I do agree that the mortgage should be refinanced to new 30 year lower rate mortgages.
Why would you want to pay 2026 expense with 2016 money? Also this money will be trapped in the property and could cost you and arm and a leg to free it if needed.
Part of the spend 10 to save 4 crowd. Owning a home free and clear is more than a strict financial decision. Rental properties are a different issue altogether.
6.7% is cheap money to someone that has been investing for 40 years. No it seems looking closer that the mortgages have 20-29 years left if they were 30 year. So that is paying off 2045 expenses, not debt because I assume some of these mortgages are on rentals where the tenants will be paying in future increasing dollars.
I do agree that the mortgage should be refinanced to new 30 year lower rate mortgages.
6.7% isn't "cheap" as an after tax return that's been pretty hard to beat the last 15-20 years
Real estate has been blowing the doors off 6.7% for decades.
Highly dependent on the location and economic conditions.
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