Hello everyone smarter than I.  

Here's the situation; I've one rental SFR at the moment that cash flows fairly well. I'm saving 30% of my income from one job and all my income from a second to have more money to invest, whether it's in another property, tax liens, etc. The rental is our old primary with FHA MIP still on it, though we're about $3,346.07 away from paying down to 78% of the original purchase price when my loan servicing company will have to legally remove $123/mo MIP payment. I've have many discussions about trying to remove at 80%, or 78% of the initial appraised value and they're not having it, though I don't want to refinance as it's at 3.5% over 30 yrs. This MIP is $1,476.00 over the next year (when it falls off naturally in 8/2019) that is only benefiting my note holder. If i'm going to be in a 22% tax bracket, that payment that doesn't benefit me will cost $1,800.72 of pretax income over the next year I'll have to earn, pay that 22% on, then pay MIP with the remaining $1,476.00.

So if I look at the money I'll have to earn, over the amount I'll have to pay ($1,800.72/$3,346.07) I'm basically getting a 53% return by using that saved money to kill the MIP, correct? If I've been saving to re-invest and after paying down the principal still have enough to cover maintenance, vacancy, etc. over the next year, this strategy should allow me keep more money than using that chunk to buy tax-liens at 12% locally, then of course need to pay taxes on my gains. ($3,346.07x.12=401.52, 401.52x.78=313.19)

To dig a little deeper.. here is another question for you. My EA who's been doing a great job on my taxes for years told me MIP is not going to be tax deductible for 2018. Is principle pay-down going to be tax deductible? For example I've already made additional payments of about $2,500 again for $1,400 and now maybe for $3,346. I don't believe so, only the mortgage interest, depreciation, improvements & property taxes will be tax deductible (note generated in 2012), correct? Basically I'm using most of the profit/ cash flow from the property this year to pay down the note & kill MIP.

Any insight to my mis-steps in logic or experience you've had in a similar situation would be greatly appreciated.  We've just had our first son & I want to be sure I'm doing everything I can to bolster our financial situation & ramp up to be sure he's always taken care of.  

Thank you all for any feed back!

-Steve C.