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I have a house that is upside down and would like to pay off $100,000 of my mortgage to make it eligible for the current mortgage rate of 2.875% for 15 years. By doing this, I will save $430,000 in the interest when the mortgage is paid off. Should I pay $100,000 to make my house eligible for the current market rate or should I use that $100,000 to purchase another house for $300,0000 and rent it out for $1800 per month and after 15 years that is paid off.
ANSWER
Expert Mark Anderson's Answer:
It really depends upon your goals. Have you tried getting the bank to write down the mortgage. Also, do you really want to be a landlord. There are risks of having a rental. What if you are unable to rent the property or your renters do not pay. If you get some bad renters, then having a rental can be a hastle. It really depends if you want to reduce your debt. Given the state of the economy I would be more concerned about getting out of debt. However, it really depends upon your goals. I would make a list of pros and cons of each and the cost and expenses of each. It may help you make a decision. I hope this answers your question. Thank you.
