Better to keep property or sell and pay off existing mortgage?

Question

I own a home with a mortgage and own a piece of rental property that currently has a tenant. I net appx. 800 a month from the tenant. I could sell the rental property and pay off my first home's mortgage with the proceeds and live in my house for practically nothing. Is it better to have the rental income and the tax deduction from the interest on the mortgage I currently pay or is it better to have the piece of mind that my mortgage is paid off and I will be able to save additional $$ towards retirement, etc.

Thanks for all the advice.
I'm a 47 y/o divorced mother of 3. No mortgage on the rental prop, good health and savings/investments are in good shape as well.

Answer 1

Personally, I would rather have my house paid for. You'd be saving a ton in interest.

Answer 2

Paying off your mortgage is one of the biggest mistakes people make for the most part. It is a valuable financial tool if done properly.

That is such an individualized question though and you don't indicate, your age, how close to retirement you are, health matters, etc. Those are all factors to consider. You also don't indicate whether the rental property has a mortgage.

Assuming that you aren't 90 and you're health is good and you still need tax advantages, here are some reasons not to pay off your mortgage:

1. A mortgage is the cheapest money you will be able to borrow and offers one of the only tax deductions available.

2. Paying off a mortgage is like putting money under a mattress! It's great to have but it is not working for you.

3. A Mortgage doesn't lower your home's value


Your goal should be to make the smallest payment with the biggest tax break possible which means to choose the best mortgage available not necessarily the one with the lowest rate.

Options to consider.

1. If you do sell the property, take the proceeds and find an investment that provides monthly dividends and keep your mortgage and tax benefits on your property intack.

2. Refinance the house and pay off the rental property and continue the business deductions (depreciation, etc.) and collect your rent.

3. Refinance the house, invest the proceeds and keep the rental property with the income and deductions intack.

Answer 3

That is really a personal decision. I would sell the rental and pay the mortgage. If your rental property sells for more than the remainder of your mortgage, you could put the profit into your retirement. Ya know, retirement incomes are very minimal these days, so you definately should protect your future. I want to know I will be able to live comfortably when I reach retirement age. And if you get to a point financially where you are comfortable enough doing it, you could purchase another property later on to rent out. The income from that could then further expand your retirement savings.

Answer 4

Hi MonkeyMomma,

I get this question quite a bit, and I would say in your situation: sell.

The passive income you receive is nice yeah? $800.00 month is nothing to sneeze at; however, I think you answered your own question, maybe?

Once you say piece of mind, I have the feeling that your done with the stress of having a rental and would like to sell and pay off your Primary and relax for awhile.

Good Luck,
~Trey
Fidelity Lending Northwest

Answer 5

A own loan is a manner of borrowing money very affordably as a results of fact it somewhat is secured on the linked fee of your place. Assumunig you have a reimbursement own loan then it will be paid off ultimately besides. different issues being equivalent it somewhat is clever to maintain your individual loan and make investments the capital. Theoretically you're able to be able to take a place the capital sum you have and earn greater effective than the interest fee you're paying on your individual loan so which you benefit financially. needless to say the recent turmoil interior the economic markets has made this look a relativly much less appealing proposition yet over the long term you're able to benefit significantly from making an investment in equities. My advice could be to take a place in great properly run business enterprise's like Tesco which could gain earnings growth of over 10 % pa. With a divided yield of three % and earnings growth of 10% pa you're able to realize a finished return of 13% pa over the long term against 6 or 7 % you're paying on your individual loan. maximum investment advice could be to take a place in a balanced controlled fund or a tracker fund and you're able to in all probability refer to an investment consultant. interior the united kingdom the two tax efficient investment methods are ISA and pensions. There are annual limits on what you are able to placed money into the two. yet you are able to placed money right into a typical fund that's no longer tax sheltered and then feed the optimal volume allowed into pensions and ISA's each and every three hundred and sixty 5 days. With a typical investment fund and ISA's you greater often than not get you cash out and so which you would be able to constantly pay off your individual loan at it sluggish interior the destiny. no count in case you place money right into a pension which will tie up maximum of you cash till retirement age relies upon on what your pension preparations are in any different case. pay attention for fund administration and different expenditures and determine you be conscious of what you're paying. think of roughly considerable expenditures you will have interior the destiny like your childrens education. desire this helps besides the undeniable fact that it somewhat relies upon on your specific economic situations and your long term targets.

Answer 6

BRAVO, Sam B! I am with you!

However, you should definitely talk to a financial advisor who can evaluate your personal situation before making any decisions based on Yahoo! Answers!

Answer 7

I would schedule an apt. before doing anything with your financial advisor and tax preparer. They can show you how both scenarios will affect your future savings.