In order to determine if you should accelerate your payoff date, there are four key areas you should consider. There is no one-size fits-all when it comes to finances, so you’ll need to survey the options, and how they will work for your individual situation.
- Do you have other investment opportunities? It’s fine to pay down your mortgage if you don’t have any opportunities available to you at the time. But if a great deal comes across your desk, you may want to take the cash flow from your tenant to purchase an additional rental property.
- What is your tolerance for debt? If you’re in a Dave Ramsey mindset, you’ll probably be focused on paying off your debt as quickly as possible. On the other hand, if you’re interested in using leverage to grow your portfolio, paying off the loan can wait.
- What is your time horizon? Your investment strategy will likely be different when you’re 30 versus when you’re 60 years old. However, it’s not all about age, it’s more so about mindset. It all depends on how quickly you want your properties to cash flow.
- What is your required monthly income? If you’re at a time in your life where you’re using your rental income just to make ends meet, you should probably keep your cash flow. If your rental income is just icing on the cake, you might be more inclined to put it toward paying off debt.