Help with mortgages

audioslave

Here's the situation I am in, and I am not sure what to do. I just know I need my money to start working for me.

I have one home which I owe $350,000 on. I have a rental which I owe $140,000 on and another rental I owe $35,000 on. I have $40,000 to put toward an investment. My problem is I am self-employed and banks won't allow me to refinance, and on my two bigger mortgages, I have above-average rates right now. What I am wondering is if it makes more sense to...

1. Pay off the house I am able to in order to get a rental income of $1,500 a month seen as profit, as well as one less loan liability on me, which would help me refinance.

or

2. Pay down the big mortgage and keep just letting the rentals pay themselves off.

Thoughts? Advice?

Also, right now I am writing off my mortgage on the home I owe $35k on because it is a rental. I rent it for what I owe on it, so (I think) it washes itself out come tax time. If I pay it off and collect that $1,500 as income, am I right in that I will have to essentially pay 25% of it then as taxes? In that case, it sounds like it wouldn't make sense to pay it off because after paying the tax man, my profit is only around $1100. Is that right?

Thanks all!

John1993_2

This is a UK site, for UK based buyers. I think that you'd be better off asking for advice in the US (if, as it appears, this is where you are based).

Our tax system is completely different to yours, so expertise here is not much use to you.