I have a second mortgage that was originated in 2006 for roughly $60k at 9.125%. It is a 15 year mortgage amortized as a 30 year mortgage with a baloon payment due in 2021 for the remainder (roughly $47k). I have been unable to get the lender to work with me to lower the rate and I am under water. I'm not in a crisis or anything - I dutifully make my payments and am not struggling.
Right now, if I add an additional $400 per month to the payment, it will be paid in full by the date required. I'm trying to decide if it is worth it to pay it off early or to just save that extra $400 per month either in a savings account or invest it in something.
At 9.125%, the math seems to indicate that my investment would need to be above 9.125% to make it "good". Part of me likes knowing that the balloon payment will be voided if I add the extra payment. The other part of me likes just holding that cash in my savings for extra emergencies. By the due date I will have about $33k in cash, so I would need to come up with about $15k on my own which is doable by just saving some more. I am debt free except for my mortgage and have 6 months of e-fund, save 20% of my income for retirement, and generally am in a good spot I think.
Any advice? I'm struggling with this just from the fact that I know that this house is not my final house and I hope to either sell or rent it out in a few years and move.
Any advice is appreciated.