Re: Payoff Mortgages Early? - Landlord Forum thread 359147

Re: Payoff Mortgages Early? by Garry on March 21, 2019 @15:14

Your retirement goal of 55 is VERY aggressive. You should change it to at least 62, so you can figure on getting Social Security also when you retire, even though even that amount will only be 70% of what you would get at age 67 or 68.

Right now, you have the LOWEST interest rates any investor could possibly have anywhere in the country. Here's my suggestions : I like paying "round" amounts on all my mortgages. If you have an extra $100-$150 each month to go towards principals, on prop A, pay exactly $700 each month ($55 extra), prop B-$750 or $775 ($22-$47 extra ), Prop C- $750 ($42 extra)/mo.

If you can do that, you will be paying down the principal on all 3 props each month, without hurting your own personal income very much. You have TIME on your side, which is why I'm suggesting doing it this way. Also, on prop C, the mortgage comp. will not automatically take off the PMI at any certain point in time or amount. You will have to ask them to do an updated appraisal (at your expense, say 5 years from now), and if your mort. amount at that time, is 78% or less of that appraisal amount, then you can ask them to take off the PMI. (remember, your principal will have to go down, as your properties are appreciating in value, to hit that magic 78% amount.)

Keep saving as much as you can/want, once you make your enlarged mort. payments each month. Re-assess all your numbers once a year. Good Luck

[ Reply ] [ Return to forum ]

Re: Payoff Mortgages Early? by Jason on March 21, 2019 @20:25	[ Reply ]

Garry, Thank you. I greatly appreciate your advice. Do you think it's worth it to focus on paying down Property C to the 78% mark to get rid of the PMI or just "round up" like you suggested? Thanks, Jason

Re: Payoff Mortgages Early? by Garry on March 21, 2019 @22:01	[ Reply ]

Yes, you could if you wanted to. You could round up props A and B to the next $5 or $10 amount, and devote $100 to $150 per month towards your goal of getting rid of the PMI on prop C. However, I noticed you have 30 year amortization schedules on all 3 props. That means very little principal is being paid down for the first 15 years on each mortgage. Assuming you only paid 10% down, and assuming prop values increase at 2-4% each year in your area, it will still take you 5 years before you should even try to get another appraisal, even if you could afford to pay $200 per month ($2400 per year). What I have been doing for the past 25 years, is when I buy a property, I get a 15 year, fixed rate mortgage, instead of the 30 year. BUT, it must be able to positive cash flow from day 1, or I don't buy it. I am 67 yo, currently have 20 SFH rentals, and 8 are totally paid for. My own home is also totally paid for. My recommendation is for you to only get 15 year ams on all future props, unless you have a LOT of extra cash to devote towards 30 year ams, to make them into 15 year ams. Whatever you do, NEVER refi those super-low-interest props, as you will NEVER see those low rates in your lifetime again. When I was buying props in the mid eighties, the interest rates were 12-15%.

Re: Payoff Mortgages Early? by Jason on March 22, 2019 @04:52	[ Reply ]

Thank you for responding. I went with the 30-year mortgages because I figured that I could always pay extra towards the principal, but that I might be spreading myself too thin for a 15-year mortgage, you know what I mean? Property A: Put down 3.5% (purchased Jan 2013) I have approximately $11k until the PMI can be removed. Property B: Put down 20% (purchased Nov 2016) Property C: Put down 20% (purchased Dec 2017) According to my calculations, if I pay an additional $200/mo towards the principal ($200/mo total for 3 props), they will all be paid off when I'm right around 54-years-old. Any advice for when I start looking for another property? Do you think obtaining a HELOC would be a good idea to use as a down payment since it'll have to be a Conventional loan.

Re: Payoff Mortgages Early? by Jason on March 22, 2019 @05:26	[ Reply ]

And don't worry - I will NEVER refinance Property C that has a fixed rate of 2.70%. Most brokers try to convince me to refinance to a Conventional loan so that I can purchase another property using FHA until they hear my interest rate - then they say to never refinance. I'll never see that rate again. Ever.