Pay off home mortgage or pay off investment property?

[Anonymous]

Anonymous wrote:And not paying off either and investing is CRAZY risky. No way would I do that ever.

If OP had a fixed rate mortgage, I'd invest instead of paying off. At 3-4% (what mortgages were recently), it's a pretty darn cheap loan. You can make way more than that investing it, even investing conservatively. The fact that they are ARMs though, scares me. I don't touch those, so I'd want to get rid of one I think.

[Anonymous]

Anonymous wrote:Do you have any other debt? What other emergency savings do you have?

From the $350k, I would set aside 6-12 months expenses (normally I'd say 3-6 months, but with the investment property, I would want a higher emergency fund). Then take the remainder and pay down your residence mortgage. Next, I'd refinance the balance of your home mortgage to a fixed rate 15 yr mortgage - will be a much lower principle and payment which you should be able to manage on the lower income.

You also might look into refinancing your investment mortgage to a fixed rate loan now before your income goes down.

I'm the OP.

To answer you questions, no, I don't have any other debt other than my mortgages and the $350k represents my entire life savings outside of any retirement funds. So I'd have to build my emergency savings back if I spent all of the $350k. I'm a risk averse person so the thought of investing (without paying anything down) makes me nervous but I like the thought of refinancing and keeping some of the funds readily available. I may look into that next week.

[Anonymous]

If you don't have difficulties paying the two mortgages, I would not be too quick to pay either or both of them off.

The advice to invest the money makes sense especially if your mortgage rates are in the 3% range. But the stock market is high right now and jumping in now would make me very nervous.

A financial planner would probably advise you to divvy up your 350k among savings, investments, and paying down debt.

Also, Even if you pay off the rental prop mortgage & rent it out, you may not have to pay income tax if your expenses & depreciation are high enough.

But in general I would stay as liquid as possible. Once you pay off those mortgages, you wipe out 350k and getting money back out from the properties is a huge PITA. And expensive.