Author Topic: Question for a loan officer/mustachian?  (Read 931 times)

jimmyd

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Question for a loan officer/mustachian?
« on: November 02, 2017, 02:38:44 PM »
I currently have 3 mortgages.  I have been aggressively paying off my primary residence and have balance of $143,000.  At my current pace of repayment I should eliminate this debt by December of 2018.  Ambitious but possible.                    
This is the amortization schedule for the remaining payments.  15 year loan, 3.375% interest and a monthly payment of $2,409.78.                    
                  
1   $157,000.00    $14,000.00    $441.56    $14,000.00    $441.56    $143,000.00
2   $143,000.00    $2,007.59    $402.19    $16,007.59    $843.75    $140,992.41
3   $140,992.41    $2,013.24    $396.54    $18,020.83    $1,240.29    $138,979.17
4   $138,979.17    $2,018.90    $390.88    $20,039.73    $1,631.17    $136,960.27
5   $136,960.27    $2,024.58    $385.20    $22,064.31    $2,016.37    $134,935.69
6   $134,935.69    $2,030.27    $379.51    $24,094.58    $2,395.88    $132,905.42
7   $132,905.42    $2,035.98    $373.80    $26,130.57    $2,769.67    $130,869.43
8   $130,869.43    $2,041.71    $368.07    $28,172.28    $3,137.74    $128,827.72
9   $128,827.72    $2,047.45    $362.33    $30,219.73    $3,500.07    $126,780.27
10   $126,780.27    $2,053.21    $356.57    $32,272.94    $3,856.64    $124,727.06
11   $124,727.06    $2,058.99    $350.79    $34,331.92    $4,207.44    $122,668.08
12   $122,668.08    $2,064.78    $345.00    $36,396.70    $4,552.44    $120,603.30
13   $120,603.30    $2,070.58    $339.20    $38,467.28    $4,891.64    $118,532.72
14   $118,532.72    $2,076.41    $333.37    $40,543.69    $5,225.01    $116,456.31
15   $116,456.31    $2,082.25    $327.53    $42,625.94    $5,552.54    $114,374.06
16   $114,374.06    $2,088.10    $321.68    $44,714.04    $5,874.22    $112,285.96
17   $112,285.96    $2,093.98    $315.80    $46,808.01    $6,190.03    $110,191.99
18   $110,191.99    $2,099.87    $309.91    $48,907.88    $6,499.94    $108,092.12
19   $108,092.12    $2,105.77    $304.01    $51,013.65    $6,803.95    $105,986.35
20   $105,986.35    $2,111.69    $298.09    $53,125.34    $7,102.04    $103,874.66
21   $103,874.66    $2,117.63    $292.15    $55,242.98    $7,394.18    $101,757.02
22   $101,757.02    $2,123.59    $286.19    $57,366.56    $7,680.38    $99,633.44
23   $99,633.44    $2,129.56    $280.22    $59,496.13    $7,960.59    $97,503.87
24   $97,503.87    $2,135.55    $274.23    $61,631.68    $8,234.82    $95,368.32
25   $95,368.32    $2,141.56    $268.22    $63,773.23    $8,503.05    $93,226.77
26   $93,226.77    $2,147.58    $262.20    $65,920.81    $8,765.25    $91,079.19
27   $91,079.19    $2,153.62    $256.16    $68,074.43    $9,021.41    $88,925.57
28   $88,925.57    $2,159.68    $250.10    $70,234.11    $9,271.51    $86,765.89
29   $86,765.89    $2,165.75    $244.03    $72,399.86    $9,515.54    $84,600.14
30   $84,600.14    $2,171.84    $237.94    $74,571.70    $9,753.48    $82,428.30
31   $82,428.30    $2,177.95    $231.83    $76,749.65    $9,985.31    $80,250.35
32   $80,250.35    $2,184.08    $225.70    $78,933.73    $10,211.01    $78,066.27
33   $78,066.27    $2,190.22    $219.56    $81,123.95    $10,430.57    $75,876.05
34   $75,876.05    $2,196.38    $213.40    $83,320.33    $10,643.97    $73,679.67
35   $73,679.67    $2,202.56    $207.22    $85,522.88    $10,851.20    $71,477.12
36   $71,477.12    $2,208.75    $201.03    $87,731.63    $11,052.23    $69,268.37
37   $69,268.37    $2,214.96    $194.82    $89,946.59    $11,247.05    $67,053.41
38   $67,053.41    $2,221.19    $188.59    $92,167.79    $11,435.63    $64,832.21
39   $64,832.21    $2,227.44    $182.34    $94,395.23    $11,617.97    $62,604.77
40   $62,604.77    $2,233.70    $176.08    $96,628.93    $11,794.05    $60,371.07
41   $60,371.07    $2,239.99    $169.79    $98,868.92    $11,963.84    $58,131.08
42   $58,131.08    $2,246.29    $163.49    $101,115.20    $12,127.34    $55,884.80
43   $55,884.80    $2,252.60    $157.18    $103,367.81    $12,284.51    $53,632.19
44   $53,632.19    $2,258.94    $150.84    $105,626.75    $12,435.35    $51,373.25
45   $51,373.25    $2,265.29    $144.49    $107,892.04    $12,579.84    $49,107.96
46   $49,107.96    $2,271.66    $138.12    $110,163.70    $12,717.96    $46,836.30
47   $46,836.30    $2,278.05    $131.73    $112,441.76    $12,849.68    $44,558.24
48   $44,558.24    $2,284.46    $125.32    $114,726.22    $12,975.00    $42,273.78
49   $42,273.78    $2,290.88    $118.90    $117,017.10    $13,093.90    $39,982.90
50   $39,982.90    $2,297.33    $112.45    $119,314.43    $13,206.35    $37,685.57
51   $37,685.57    $2,303.79    $105.99    $121,618.22    $13,312.34    $35,381.78
52   $35,381.78    $2,310.27    $99.51    $123,928.49    $13,411.85    $33,071.51
53   $33,071.51    $2,316.77    $93.01    $126,245.25    $13,504.87    $30,754.75
54   $30,754.75    $2,323.28    $86.50    $128,568.54    $13,591.36    $28,431.46
55   $28,431.46    $2,329.82    $79.96    $130,898.35    $13,671.33    $26,101.65
56   $26,101.65    $2,336.37    $73.41    $133,234.72    $13,744.74    $23,765.28
57   $23,765.28    $2,342.94    $66.84    $135,577.66    $13,811.58    $21,422.34
58   $21,422.34    $2,349.53    $60.25    $137,927.19    $13,871.83    $19,072.81
59   $19,072.81    $2,356.14    $53.64    $140,283.33    $13,925.47    $16,716.67
60   $16,716.67    $2,362.76    $47.02    $142,646.09    $13,972.49    $14,353.91
61   $14,353.91    $2,369.41    $40.37    $145,015.50    $14,012.86    $11,984.50
62   $11,984.50    $2,376.07    $33.71    $147,391.58    $14,046.56    $9,608.42
63   $9,608.42    $2,382.76    $27.02    $149,774.33    $14,073.59    $7,225.67
64   $7,225.67    $2,389.46    $20.32    $152,163.79    $14,093.91    $4,836.21
65   $4,836.21    $2,396.18    $13.60    $154,559.97    $14,107.51    $2,440.03
66   $2,440.03    $2,402.92    $6.86    $156,962.89    $14,114.37    $37.11
67   $37.11    $2,409.68    $0.10    $159,372.56    $14,114.48    ($2,372.56)
                  
Loan #2 Balance of $271,443.33         30 years   4.63%   $1,542.42    
Loan #3 Balance of $247,042.57         30 years   4.13%   $1,332.79    
                  
The primary goal is to create cash flow from my rentals that will make me finanaciall independent.                    
Eliminating the mortgage payment of $2400 a month would do just that as I would have $60k in recurring income with no mortgage.                   
My concern is that paying off my current mortgage would bring my interest deduction down to around $3k in 2018 and I will be paying more in taxes.      

So my though/question is whether I should refinance my home loan (primary residence), apply a certain amount toward Loan #2 and then
continue to work toward paying off Loan #2 until it is repaid. 

What is my best strategy?  I want the lowest rate but also the best cash flow scenario?  Does having a lower LTV make a difference?  Someone told me that rates are better with a 65% LTV but I haven't had this confirmed. 
            

Cwadda

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Re: Question for a loan officer/mustachian?
« Reply #1 on: November 02, 2017, 02:50:05 PM »
What is the rest of your financial picture?  Do you have any investments, anything in the stock market, any tax-advantaged accounts? 

If so, paying off a mortgage early may be actually slower in achieving FIRE.

jimmyd

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Re: Question for a loan officer/mustachian?
« Reply #2 on: November 02, 2017, 03:07:38 PM »
I'm looking for specific advice based on my current strategy, dept repayment.  I want to eliminate Loan #1 or loan #2 and I'm pretty much there. 

I want to know how much I should put toward loan #2 based on a cash our refi but don't know the specific rules options from a loan perspective that would get me the best terms. 

Proud Foot

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Re: Question for a loan officer/mustachian?
« Reply #3 on: November 03, 2017, 10:24:43 AM »
Cwadda does ask good questions. For your question I ask these:
How much equity would you pull out in a cash out refi on #1?
Would you refi for a 30 year term?
If you want to increase cash flow on the rentals why are you aggressively paying on your primary and not one of the rentals?
What is the current cash flow on each of your rentals?
What opportunities are there to increase rental income and cash flow by cashing out your equity and adding another rental?

I really do not understand what you mean by this line.

The primary goal is to create cash flow from my rentals that will make me finanaciall independent.                    
Eliminating the mortgage payment of $2400 a month would do just that as I would have $60k in recurring income with no mortgage.                   
Could you explain more?
Does this mean you have $60k in income from your two rentals?
Is this revenues, net income, or cash flow?