Pay Down Current Mortgage or Save Money To BRRRR?

[Josh Hanson]

Hello everyone! My name is Josh I am 28 years old and live in the Cleveland, Ohio area and currently have been working hard towards saving to finance my first BRRRR deal. My goal has been to save up 100k cash in order to be well positioned on the first deal and currently have 40k saved up however, upon researching I came across and interesting strategy utilizing a HELOC to quickly pay off your mortgage. Which bring me to my question. Should I focus on building equity on my current home mortgage or continue to save cash to be ready for my first deal? With more equity I could access a HELOC to finance BRRRR deals in theory and also drastically shorten my loan length + interest paid on my personal home which sounds appealing.

My thought is currently my primary residence is a liability so the quicker I can pay it off the better. I have a 20 year mortgage with a 3.125% interest rate and still owe $200k. My home very recently appraised at $250k as I just refinanced. Currently over the course of my 20 year loan I will pay ~$70k in interest however if I where to inject 40k into my mortgage principle today I would shorten my loan from a 20 year loan to a 15 year loan and also decrease my interest owed from $70k to $40k (assuming I did not inject any additional money into my principle over the rest of the loan) This move alone would create 90k in equity and make me eligible for a reasonably sized HELOC to finance BRRRR deals and of course I would continue to inject additional income into my principle to continue to build equity in my home.

What are your thoughts? Do I keep saving up cash like I have been doing to grow my 40k into 100k over the next 2 to 3 years or build equity on my current home and slash away interest which would quickly make me eligible for a reasonably size HELOC?