Another option is to invest in the market instead of paying down a mortgage.

(We had already given them a reduction on the sale price under market.) 

@Adrian Rae, The contract would have to specify that the sale was contingent upon finding a purchase property. 

BUT I have also heard that it could trigger a due on sales clause, bringing the note fully due at any moment.

You’re paying $70k in “non-deductible” interest in exchange for less deductible interest. 

So now we cover utilities for both units and the new tenant pays a higher amount too on the back unit to cover all the utilities with a great profit.  

., Purchase Price: $475,000 ($197.9/sq. ft.).Estimated Market Value: $402,000 ($168/sq. ft.).Financing Terms: 2% interest rate, with a 9-year balloon.Unit B Income: $2,049/month (Section 8 tenant through November 2025).Unit A Income Potential: Similar rent or higher; Section 8 cap for the area is $3,234/month.Monthly Loan Payment (P+I): $1,386.Cash Flow Breakdown (if both units are rented at $2,049/month):Gross Rent: $4,098/month.Vacancy (10%): $410/month.Operating Expenses (37.3%): $1,376/month.Net Cash Flow: $943/month.Key QuestionsWould you be comfortable paying an 18% premium for financing at 2%, especially in a market where current mortgage rates are closer to 7%?

My mortgage increased earlier this year as my home owners insurance went up due to the company closing and my escrow didn’t have enough to make up the difference so I’m kind of pay check to pay check right now.

The tenant was paying rent to the previous owner but hasn't been paying rent for a while since the property was foreclosed and sold to the bank.

When you pay off a mortgage you pay the interest for all the years you didn't own the house?!?