Ask Terry Questions Rental Property Mortgage

Rental Property Mortgage

By Terry Savage on July 20, 2019 | Housing / Real Estate

Hello Terry, I am a 65 year old woman with a duplex in an east coast beach community where I rent out one unit and live in the other .The property is worth about $1.2 M and I have a $125,000 mortgage remaining on the rental unit. I have more than enough funds to pay off that mortgage and still leave me with a nice emergency fund. The interest rate is 4.25% and there are 18 years left on the mortgage. The rent is $2000 per month and the mortgage payment is $700. I would use the freed up cash flow to continue interior renovations and build up an emergency fund specifically for that property . Thank You! Joan

Terry Says

OK, this becomes more of a tax question than a financial planning one, since this is a rental property.  So ask your tax advisor what the impact of not having a mortgage deduction would be on your situation.  And be sure to keep track of any improvements you make on your rental property as this will impact you if you ever sell it.

On the financial side, you really need to think about how you will manage your finances for the next 30 years.  Yes 30 years! Because having lived this long, you are likely to live well into your 90s.  That means looking at issues like budgeting for medical costs and the possibility of needing long term custodial care — hopefully in your home.  So if you do spend money on your property , don’t spend it all in one place!  And be sure you have appropriate insurance.

You might need a FIDUCIARY, fee-only financial planner (one who puts in writing that he/she will fully disclose all fees and costs and commissions, and always put your interests ahead of their own.)  The first meeting should be free.  Search at

Sorry I can’t give you an easy answer – -but this issue has lots of ramifications.



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