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Member |
I am now in a position to pay off my current mortgage, however we plan to move (and pay cash for our next house) in the next 2-3 months. Given the tendency for bureaucracy to move like molasses, will paying my current mortgage off prior to this move unnecessarily complicate things? I know it's been sold a couple of times if that matters at all. | ||
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| Member |
Best advise is to speak to an attorney in your state. In Florida I would not advise someone to payoff an mortgage if you are actively selling a home and may actually have a contract to sell and close within 60 days. Why 60? In FL that is the time the mortgage holder has to record a satisfaction of mortgage. So you could pay it off but then have the issue of it not showing up in the Title Search done by the Buyers. But as stated, speak to a real estate attorney in your state for how it works there. | |||
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Nosce te ipsum |
You're asking how quickly the bank will clear your deed? A friend in a recent position says it took 10 weeks from satisfying the mortgage to the release being filed with the courthouse. Even after they thought the mortgage was "satisfied", a few weeks later a bill for residual interest of a buck and change appeared. So their idea of satisfaction date and the bank's idea of the date would have been different. | |||
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| Member |
It depends on the bank, but I recently paid off a mortgage on a condo I own, I had the lien satisfaction letter in 2 weeks, and it took 3 weeks before it was recorded at the courthouse. The other option and might be easiest, is to just pay 95% of your current mortgage, leaving a 6 months/1 years worth of payments on it and then sell the house in a month or two and have the buyer/realtor/escrow company deal with paying the mortgage off from part of the proceeds and all the BS paperwork that goes with it...….and then you have no issues as far as timeline and are paying minimal interest on the mortgage. | |||
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| Member |
I wouldn't do it. It can take 3-4 months for all of the title/deed recording to be undone and unrecorded. Plus it usually causes a drop in your credit score when you pay it off so it could affect qualifying if you do need to end up with a small mortgage on the new place. | |||
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Don't Panic |
There's little point to taking the step of paying off a mortgage 2-3 months before it will be paid off anyway in escrow when you sell. Plus, it risks complicating the sales process since delivery of a clear title is part of the deal. If the title is passing through the ether of bureaucracy 1 (your bank) working through bureaucracy 2 (county records) the odds of it sailing through smoothly on a tight schedule are, essentially, zero. I'd strongly advise patting yourself on the back for being ready to pay it off, but letting nature (and the sales process) take care of this on autopilot in the usual course of selling the house this Spring. | |||
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Member |
This is a very logical and practical thing to consider. Now, for your reasoning for paying cash on the second house, WHY? Any gain (up to $250K/$500k ( Link )) on the sale of your principal residence is tax free. This is one of the few times you will get to have tax free money. Why not invent it and let the investment income pay most or even all of a very low loan rate - mortgage rates are very near bottom amount? ========================================== Just my 2¢ ____________________________ Clowns to the left of me, Jokers to the right ♫♫♫ | |||
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| Member |
Thanks. That's what I was thinking. | |||
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| Member |
Because I am retired and my wife is soon to be retired. When one of us croaks, there will be one less worry about having somewhere to live, and I don't see why, at this stage of life I need to pay unnecessary interest. The house will probably earn more 'interest' than any investment I'm likely to make. | |||
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| Banned |
I really don't know, but I'd be inclined to pay it down, but let the title company do their job at closing of the purchase/sale transaction. They know better than me what needs to happen, and how. | |||
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| Member |
So stupid question.... If you had a paid off $750,000 house. Would you take out a mortgage just to take that $$$$ and invest it in the stock market?? Hell no. Because of Risk. But that is essentially what you are advocating. Andrew Duty is the sublimest word in the English Language - Gen Robert E Lee. | |||
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Nullus Anxietas |
Depends. Right now? Oh yes. 30-year fixed mortgage rates are currently hovering in the vicinity of a little less than 4%. Our investments realized a 17% gain in 2019. That's pretty easy math 
No risk, no gain. Besides: Risk can be managed. Our investment portfolio, for example, is so moderate and so diversified we'd be unlikely to take a major hit almost regardless of what happens. We only paid off the mortgage this year because we felt it was time to take some of our earnings while we were up, there was so little left on the mortgage, and it was nice to finally own our home for real. "America is at that awkward stage. It's too late to work within the system,,,, but too early to shoot the bastards." -- Claire Wolfe "If we let things terrify us, life will not be worth living." -- Seneca the Younger, Roman Stoic philosopher | |||
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