Hello All,

I recently closed on my first home, and have a question about if it makes sense in my particular situation to pay more each month towards the balance of my home or not. I've heard it can be beneficial to do so to reduce the long term interest, but the specifics are beyond me.

My situation: Just closed on my first home and the balance on my 30 year loan is 440k with a 5.85% interest rate. I put 150k down and the property undervalued b/c it was super outdated / poorly maintained. I'll be doing a full reno which should bump the value at least 150k over what I paid for it. If I'm getting this right, I think that means I'll ultimately have 300k~ in equity more or less right off the bat? Please correct me if I'm getting this all wrong.

It is a duplex, I will be living in one unit, and renting out the other. The rent on the other should cover approx. 1/3 of the mortgage payments and I will cover the other 2/3s - in this situation I would be able to pay a bit more each month towards the mortgage if it made sense. (For what it's worth, I can afford the whole mortgage on my own, just then I wouldn't have extra to pay towards balance). Long term - I plan to live here at least for the next 5 - probably more but who knows what life throws at you. I would like to keep the property and not sell it (although it may make sense to sell it down the line if I need to move for whatever reason). Eventually, once (if?) rates ever get back down to the low 4s / high 3s range I would want to refinance.

So! My question: Does it make sense in this situation to pay more towards the balance each month? Or at a 5.85% interest rate does it make more sense to take that extra money and invest it? Wait to do this until after I refinance? Or once I have a clearer idea if I will be hanging onto the property long term vs. selling within the next 10 years?