Say it's a 3.5 percent interest rate and the rent is 400 bucks more than the mortgage payment. Would it be better to pay off the mortgage even though 400 is being made per month? If a minimum of an extra 200 of that 400 is applied to the principal of the house, in lieu of the regular mortgage payment, would I still be better paying it off? In my mind, the additional 200 being paid monthly towards the mortgage seems like free capital.
While over the life of a loan, nearly two thirds to double will be paid on the mortgage (if never paying extra), the additional 200 cuts the principal down much quicker. Not to mention, in an economic crisis, rent does not fluctuate and is less effected, unlike mortgages. I understand the pros of having less debt. However, it seems better that one would have more capital to use for future investments had they not paid the mortgage off. I'm fairly new to real estate investing so if anyone has insight they'd like to share, much appreciated.
Read more: Is it better to pay off the mortgage on a rental property?
