15 year mtg or cash for next place?

Question

Hi I am looking for advise, I am having a hard time weighing out these two options and making a decision.

Option 1 - 15 yr loanrefi my current 230K 4.375% 30 yr loan by putting in 70K and getting a 160K 15yr loan at 2.8 apr. This lowers my monthly by $100 and pays my mortgage off 25 years faster (im 5 yrs into my current) and I would save 100K on interest payments

Option 2 - get rental #2 refi at 230K at 3.5 apr and have 70K cash (and growing) ready to buy another rental or two when prices fall. This keeps my mortgage the same, just lowers my monthly payment by $200. It seems like a bubble right now and in a few years It would be a good time to get a second rental

My objective here is too make the smartest/most logical move and build wealth, not to proudly say I have (only) 1 rental that is paid off, which my family is advising to do.

Although I like the idea of a 15 year, id hate to miss out on a future fall in prices/implosion because I didn't have free'd up cash, which I think is coming in possibly a few years.

Patrick Liska · Answer

I personally wouldn't put more money into the investment property, your greatest return is when you put the least amount of money into the investment property. you want to leverage what you have to create more wealth. have your tenants pay for your investment through their rent, which should be all calculated for when you purchased the property. here is a blog i wrote recently that you may want to read. It explains if its a good idea to pay off ( or down a mortgage in your case) or keep the loan, I would go with your option #2

Charles M. · Answer

Thanks for the advice and blog post. I agree. I feel like focusing on one property and paying it down/off is more of a middle class get out of debt/all debt is evil move that my family is advising instead of multiplying and building more wealth. It cash flows very nicely now as is.

15 year mtg or cash for next place?

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