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Started By
Message
Help in regards to paying off a small mortgage loan
Posted on 1/22/14 at 12:59 pm
Posted on 1/22/14 at 12:59 pm
I have an investment property. It's a tiny condo bought as a short sale for good value. With that being said, I owe 37k with about 7 years left to pay off.
I pay roughly 121 bucks a month in interest on the loan, and that number decreases by 1 dollar each month.
I have roughly that exact amount of money to invest. With that being said, I'm 100% clueless about where to maximize the most with my money.
My question is, would it behoove me to pay my loan off in full or hand over 35k to a solid financial advisor and let he or she manage a portfolio for me? My persona opinion that negates any risk is to just pay off my house loan.
Thoughts?
I pay roughly 121 bucks a month in interest on the loan, and that number decreases by 1 dollar each month.
I have roughly that exact amount of money to invest. With that being said, I'm 100% clueless about where to maximize the most with my money.
My question is, would it behoove me to pay my loan off in full or hand over 35k to a solid financial advisor and let he or she manage a portfolio for me? My persona opinion that negates any risk is to just pay off my house loan.
Thoughts?
5
Posted on 1/22/14 at 1:03 pm to JMnola
Most on here will suggest investing it on your own. I will suggest doing with it whatever helps you sleep at night. If paying the note off does it, that's what I would do. I would leave enough cash for emergencies though, assuming you haven't already.
Posted on 1/22/14 at 1:03 pm to JMnola
Some further info is needed:
Are you able to depreciate the property or do you or your family use the property too much to qualify?
Are you able to depreciate the property or do you or your family use the property too much to qualify?
Posted on 1/22/14 at 1:07 pm to JMnola
What's the interest rate?
Posted on 1/22/14 at 1:15 pm to Croacka
quote:
What's the interest rate?
This matters. Not all debt is bad debt.
Posted on 1/22/14 at 1:19 pm to JMnola
With the info you provided, it seems that your interest rate is right around 4%.
I would invest that money in something that will get you greater than 4%. My recommendation is a diversified mix of ETFs and maybe open a lending club account. Put 10K in there in try to get around 8-10% return. I am currently at ~8.50%
I would invest that money in something that will get you greater than 4%. My recommendation is a diversified mix of ETFs and maybe open a lending club account. Put 10K in there in try to get around 8-10% return. I am currently at ~8.50%
Posted on 1/22/14 at 1:40 pm to Croacka
Interest rate is 3.875%
Not sure the answer to your question, Russian. I do not personally use the property at all, it's currently being rented.
Not sure the answer to your question, Russian. I do not personally use the property at all, it's currently being rented.
Posted on 1/22/14 at 2:06 pm to JMnola
quote:
Not sure the answer to your question, Russian.
Some people have condos, like at a beach or other resort, that they use personally some of the year and rent out the rest of the year.
I forget the exact details but the IRS puts a limit on the amount of time an owner or owner's family can personally use the property each year and still be able to depreciate it and take other expenses as deductions from the income they make on the property.
Posted on 1/22/14 at 2:57 pm to JMnola
Refi into a 10yr Fix so you barely pay any interest
Posted on 1/22/14 at 3:19 pm to SDVTiger
quote:
Refi into a 10yr Fix so you barely pay any interest
Might not be the best idea. After taking into account the tax deduction on interest, you want to get the rate down as close to the rate of inflation as possible.
You do *not* want to pay extra to go below that, or to pay extra to reduce the length of the mortgage either.
If your after-tax rate is the rate of inflation (or near enough to it) then your real cost of the note is zero.
Posted on 1/22/14 at 8:03 pm to foshizzle
its 37k. How much can you write off?
OP said he wanted to pay it off faster
10yr is the way to go unless you go simple interest and pay above to principle
Posted on 1/22/14 at 8:11 pm to SDVTiger
quote:
its 37k.
How much can you write off?
If it's a tough decision for him, the difference could matter to him.
Not only that, but he said he only has 7 years left. Purely financially, the smart move might well be to cash out refi for 30 years. Notice that this would maximize the interest deduction.
Posted on 1/22/14 at 8:20 pm to foshizzle
Then he is re-ammortized? Paying more interest on his principle that he cashes out
When America realizes the 30yr Fix is the worst loan it will better off
When America realizes the 30yr Fix is the worst loan it will better off
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