Pay off home mortgage or save for down payment for second home
I own a starter townhouse in a good neighborhood with great schools. I like the thoughts of mortgage/rent free living but the love towards SFH seems greater. Question- Do I try paying off primary mortgage ASAP by diverting all stocks/bonuses every year and then start saving for the next or do I just invest and save towards the second home and let primary take it’s course? Plan is to keep the current starter townhouse as a rental once SFH becomes a reality. It’s in a decent neighborhood with great schools so assuming rental is good.
If the interest rate is under 4% don’t pay off, put it in index funds to save for 2nd home down payment.
Second home. No brainer.
If you are keeping old home as a rental it’s better to save for down payment vs paying it off since you will need DP for new home
Are you ready to be a landlord ? You might get be underestimating that amount of work. Also if you’re going to hold rental for more than 3 years, you lose tax benefit on capital gains. How many months of rent (less mortgage and upkeep) is required to break even your tax benefit ? If it’s say 5+ years is it worth it ?
Assuming you’re in a tech dominated city on the west coast Sell, rent, buy 4 homes in 2 years. Market will crash.
Op, buy another house and rent out your current one. That’s what I have been doing. You get potential cash flow plus someone else is paying for your mortgage. Then when you retire, all the houses you own will be paid off. That becomes your retirement income.
Down payment fund if you are definitely going to buy. Rental income should take care of first property over time.
If you like money second house obviously or stock market as both return more than the 3 to 4% ish tax deductible interest. If you dislike money and find leverage stressful then pay off.
If your th will be able to cash flow itself as a rental, just save for the sfh.
Location. Where are you and what is your rental experience? Don’t just do it because it has potential. Landlords take a certain kind of mentality.
I have a starter townhouse in Fremont with great schools, mortgage is about 3k/month.
Fremont is hot. You’ll do fine with rental