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south central WI | Either way has benefits. I would determine how much I would need in cash for a bad year and keep that as cash. I would then use the rest to pay the mortgage. Decide how bad you want the other parcels first. Talk to who you will borrow the money from and see which way is more beneficial to getting the next loan. Interest is low but it is still money you are paying. I may be wrong but the taxes may be the same if paid now or over time, just have to pay it all in one year if paid all at once. It may bump you into a higher tax bracket, but at 4% interest you are spending $2400 a year in interest also.
Some are worried about having to mortgage the house for the second farm if you pay it off. Either way there is a mortgage on the house. I guess if you keep it in cash the mortgages won't be connected so if things turned sour you could give up one and keep the other. Make sure if you pay ahead you put the extra money onto savings for the next farm.
My thoughts are that if you don't get the neighbor farm next year or the other one in the future you will have paid interest all that time for no reason.
Also do what is best for your health. Would there be less stress on you and the wife with no payment to make? Less stress knowing you have 80k available for bad times?
If it was me I would pay off any operating or short term debt, keep a little for an emergency and pay the rest towards the mortgage. Then I would have less stress. Of course then the some farm would come up for sale and I would end up buying it and be in the same place. Lol | |
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Should I pay off my farm mortgage?
