Which one should I throw extra $$ at first?

[Tim Hawkins]

Hello. I'm kind of torn and unsure. I have been putting and extra $750 mo onto my primary residence mortgage for many years now. A little over a year ago I bought my first rental property using a business loan and a HELOC. I have been putting an extra $1500 mo onto the HELOC since inception to get my equity back ASAP. Both loans currently: Primary mortgage: $78,500 at 3.78% and HELOC: $76,000 at 5.75% fixed with an every 5 yr renewal. I'm looking at putting another $200 mo somewhere on top of it all. Should I pull all the primary mortgage extra payments and combine that with the HELOC extra a'la the Dave Ramsey plan? Or should I keep doing what I'm doing and just add the extra $200 onto one or the other loans? Or, some other option I haven't thought of??

Thank you for the advice. I appreciate it.

[Eric Gerakos]

Tim, paying extra to your primary loan that has a 3.78% rate is not putting your money to work for you. Save the extra cash and invest in something that's paying considerably more than 3.78%. For example I did a cash out refi on a rental 2 yrs ago and pulled $200,000 out of the rental at 3.5%. Now that $200,000 is earning 9% in first trust deeds and the rental still cash flows. Don't pay down low interest rate loans. Put that money to work making you more money.

[Bud Gaffney]

EXACTLY what @Eric Gerakos said!