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Paying Multiple Mortgages

by Ryan
(Akron Oh)

your books and on line advice has been very helpful! I do have a question I have not seen an answer to on your site.

I have 4 mortgages 2 are 15 year loans that I have 7 and 9 yrs left on both are rentals, then the other 2 are 30 yr loans that I have 24 and 23 years left on. one of these being a rental and one my own home.

My question is would I be better off dividing by 12 each payment and adding that amount to each loan to have that extra payment a year on each or taking that lump sum of all 4 and putting it on one or both of the 30 yr loans.

I'd love your opinion


'Thank you,

Ryan

Comments for
Paying Multiple Mortgages

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Feb 03, 2010
 prepaying mortgages
by: Gerri

Ryan,

I agree with Marc. Due to the tax implications, I would also suggest you talk with an accountant first. I'll also add that you may want to keep in mind that if something does happen, the equity in your home may be better protected from creditors than that in your rental property. Most states provide at least some homestead protection, but the equity in your rental property may not be as safe.

In addition, if something happens in one of your properties and your tenant or someone else sues you, it may not be to your advantage to have a lot of equity. (This is out of my area of expertise, but something for you to look into.) That's not to say you shouldn't pay down your mortgages, just that there are other issues to take into consideration here.

Feb 03, 2010
 strategy for prepaying mortgages
by: Marc

Hi Ryan!

Thanks for your nice words about our work. There are a few unknowns embedded in your question. As author of The Bankers Secret, the book that introduced mortgage prepayment to America, I'm responding to your specific question as to whether you would be better off adding your prepayments to each loan, or combining them to add to one or both of the 30 year loans.

The tax ramifications of paying down the rental loans would best be answered by an accountant or tax preparer. As to the general question of prepaying mortgages, all other things being equal, you'll get the greatest financial return by "investing" your prepayments in the loan that's charging the highest interest. That said, there may be a psychological benefit to quickly paying off one of the loans, even if it doesn't charge the most, or finally owning your own home free and clear. And there may be a tax benefit associated with either paying off, or not paying off one or more of the rental loans.

Marc

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