Help me figure out some house mathematics

[93LXHORSE]

My home in Arlington is currently occupied by a tenant. 3 years ago I almost lost it. The mortgage company escrowed all my back money owed and formulated a new payment amount.

The original payment amount was 734.00 monthly and I paid taxes at the end of the year separately.

I got behind on everything and the mortgage company absorbed taxes, back payment force insurance policy, and the new payment to them is 1130.00 a month which I've been paying for almost 2 years.

My loan was an 80 / 10 /10 loan. The 80 % first loan is at 5.25 % interest and the 10% second loan is at 9% interest.

I pay 104 per month on the second loan, bringing my monthly payment to 1234 all told.

My tenant pays 1250 per month.

I could pay off the 9% loan, and I could pay off all the amount that's escrowed, and bring my payment down to 600 or so a month, getting my own homeowners insurance and combining it with my car.. however the escrowed amount has no interest penalty from what I understand.

I don't want to burn cash unnecessarily but I'd like to clean stuff up real good to get my credit top notch.

What do ya think?

[Cooter]

I think this is a far better use of money than a new mustang!

[93LXHORSE]

I think this is a far better use of money than a new mustang!

Well thank much sir. I plan to do all this first, then maybe the Mustang later. Maybe so much later that I won't be paying the sticker from a dealer.

All kinds of time to daydream whilst I ride this boat around in the Gulf. LOL. I just disputed every single item I didn't like the looks of on credit reports as well... "This item has been charged off and should no longer show on my report". Fairly honest, I would say...

[Gasser64]

What were your total costs originally, before you got behind? You said $734 for the payment, but what about insurance and how much were the taxes?

[93LXHORSE]

Ah, good point. Taxes were 2900 a year I think.... and insurance 1100 per year. I'd have to go back and look for sure.

I can't now cuz I'm in the middle of the Gulf still.

[Gasser64]

Plus unforeseen stuff and having to fix things. How much would you say you actually got to pocket for yourself every month?

[93LXHORSE]

Well right now I am putting 16 bucks in my pocket. If I paid off the escrow and my 2nd loan I'd my monthly payment would go down considerably. I owe 10 grand on my 2nd loan portion... and about 5 grand on the escrow... so I'd be paying out 15 grand to start putting an extra 500 or so in my pocket each month. Repair wise, i put a brand new heat pump in last year, new oven, and I'm about to have a new roof, fence, and paint job paid for by insurance... so the house will be in damn good shape maintenance wise.

I may sell it at the beginning of 2017. That's my target plan for being buying / building a new home.

[slow99]

Haven't read in detail, but if it's $15k to save $500 a month that's a 2.5 year payback (at zero percent cost of capital) and you hope to sell in 1.5 years. Haven't met your payback threshold.

[8mpg]

If you need the money, Id keep it in your pocket. With any investment properrty, the key is positive cashflow. Raise rent a little bit and call it a day.

[Big A]

I don't think that $15k into a mortgage will have much impact on your debt to income ratio either, certainly not like the same amount being used to pay off credit card debt, best you can do for your credit score is keep making them monthly payments.

[bard]

I would get rid of the escrow and the 9% loan, then increase the monthly payment. Maybe not the full 1200, but at least by as much as what you are paying towards the princ.

[93LXHORSE]

I don't think that $15k into a mortgage will have much impact on your debt to income ratio either, certainly not like the same amount being used to pay off credit card debt, best you can do for your credit score is keep making them monthly payments.

Right on then. I like that idea.