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Author: aj485 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 311070  
Subject: Re: Ideas on getting out of debt Date: 7/4/2007 10:48 AM
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My question is after I pay off that 18,500, would it make sense to write a convience check to the mortgage company every year from my credit card to take advantage of a low interest or 0% interest loan to pay down the principle balance? Once a house is paid off, I would use the rental income to continue snowballing until all homes were paid off. With increasing rent, this would give me an income of around $7,000+ a month that I would have free and clear. Any thoughts?

If you are able to manage the cash flow with the fixed rate payment and the credit card, it sounds reasonable. The deductibility of the interest payment on the credit card would be based on if the debt was traceable to your rental real estate, so you would need to show clearly that the debt was solely incurred to pay down the mortgage and be sure not to use the credit card for anything else.

If you use this strategy for your primary residence mortgage, you would lose the deductibility of the interest altogether, but by dropping the interest rate significantly, you will still come out ahead, assuming that the BT costs are reasonable.

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