The major change that will be only reflected on my interest is from allocation to the property at hand. Since prepayments and lower rates would definitely go to my personal mortgage and not a rental property. The rental property balance will now owe the largest rate I pay and my personal home will relish in the more affordable rates I have negotiated. So, what will this mean to you?
Nothing. The only thing you might notice is a more aggressive pay-off. For now and until we lose tenants or something, I intend to continue making the same total payments as before this alteration. Meaning I will be escalating our principal payments. The 2 smaller loans that we have restructured with the in-laws will be paid as agreed - per their request. Remember, this is as much for them to have income streams as for us to eliminate high interest payments and debt. Which means all the money being saved in interest and payment adjustments will be applied to the next mortgage down the line - Mortgage #3. The equity line will follow a basic pay-off to be eliminated in 3 years; pre-payment is not desired because the rate is lower than Mortgage #3.
This means:
- Equity line paid off in 3years
- Mortgage #1 & Mortgage #2 paid off in 5 years
- Mortgage #3 (if payments maintain) will be paid off in 11 years
3 comments:
This is getting exciting. I see progress ahead. I can't wait to see the new amounts of interest paid per day!
Makes sense! And works to your tax benefit too, since rental and investment interest are even better tax deductions than mortgage interest. Glad this all worked out with the in-laws...wondering if the banker is scratching his head? Or more likely, hasn't even noticed. *roll eyes*
444- yes, interest will drop and I am excited about this too. Although I wish it would fall more. Guess that will come with greater interest payments!
In Debt - absolutely on the allocation of taxes, this was a great move for our personal home and are costs are going down on the rental too - because all rates are lower than the initial rate!
As far as the banker - one would think he has his eye on the loan that needs to re-up. Especially because it brings more funds to the bank in fees. However, I seriously doubt he has even noticed yet. I fully intend on playing dumb if the call ever comes. Then I will tell him "I thought the bank didn't want my business". Hopefully this will motivate action for our other business.
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