[USER]

Hi all. I have 2 mortgages.
1. 360k at 3% paying $905 in interest per month

2. $91k at 3.5% paying $268 interest per month.

The question is I have $50,000 in cash that I would like to pay towards the mortgage. Should I pay it towards mortgage 1 for $360k or 2 for $91k. Thanks.

Not looking to invest. I already have investments set up.

Thanks.

[Robert]

Do you have rental income on either of these properties?

[Ashutosh]

If you are not looking to invest, use this tool to understand the impact.

The time left on the loans can cause significant changes with pre pay.

All loans are front loaded on interest.

[Michael]

If you are decided on paying the mortgage it only makes sense to pay it on #2. The monthly interest of each is irrelevant.

The 2 has higher interest rate and a lower amount.

Personally I would choose to stay liquid until I could pay it off in full.

Currently you can lock in a rate higher than 3.5 percent which allow you to essentially have the same rate of return after tax and give you the opportunity to use the cash if necessary.

[Cindy]

I would put it on #2 and bring that down to 41k – then you can aggressively pay that one off in the next year or two.

[Gary]

Don’t pay either at that low of a return.
The rate of inflation is in real life more than 5%, so it’s a negative rate of return.

If you are looking for a better long run rate of return invest in a REIT or real estate fund or something proving much higher dividend.

[Josh]

Ugh, I would be in the neither camp. But to answer the question #2 the highest interest one is the better choice.

[Heather]

Monthly interest isn’t relevant. Neither are great options at that interest rate (you could do a HYSA for 5% and then swap to paying off mortgage once rates drop lower).

[Jessica]

Better to put in high yield savings account. Be rational.

[Steve]

I would split between the two. Reducing the principal on both will reduce your overall interest over tine, but also gives you the option to recast your payments on both loans if needed in an emergency.

[Lita]

Pay down enough on one of them to qualify for cash out refi. Purchase a quad or duplex 3 to 5% down and live in one of the units.

Rent out the other units.

[Lee]

None is the correct answer, invest the money until you can off the entire balance at once.

[Robert]

I realize you said you are not looking to invest; but part of my job here is tough love. Accordingly ———-> You have two mortgages one at 3 % and the other at 3.5%. In this day and age, that is the closest thing there is to “Free money”.

Take that 50K, and if you can’t put it into any kind of tax-deferred vehicle, then dump it (all) into a taxable brokerage account, dump it all into a fund that mimics the S&P 500, and forget about it for the next 30-35-40 years.

You’ll thank me at that time.

[Author]

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