Having negative cash flow to pay off mortgage faster

[Steven Coppola]

Hey BP! I always here of having a negative cash flow is bad. But I have an example for you. What if you buy a single family home when the market crashes for $120,000. You put 20% down. Your mortgage interest is 5% and your term is 5years. So this would be a $2000 mortgage payment a month. Say you rent out the house for $1000 a month and pay the other half yourself to pay off the house in 5years. Is this a good or bad idea?

[Nik Moushon]

Theres is plenty of pros and cons to paying off a mortgage faster. They way you are describing is a bad idea. If you are willing to shell out an extra $1k/month to pay it off in 5 years just save the money and put a larger down payment down to lower the payment. Or just save and buy cash. A 5 year mortgage is not worth it. 10-15 year minimum. IMO.

I will say I am one that sides with paying off a mortgage eventually and not keep refi over and over again at a max amount possible. Refi for maybe 30-50% is ok IMO