Don't Pay Off the Mortgage

[Rowena105]

One of the things that people think is that when they buy a house they want to get the mortgage paid off fast.

This is not a great idea unless you plan to stay in this house forever. If you are looking to sell and move in the future then you want to keep a first mortgage on the house to make it easier for buyers to get financing.

The buyer could probably take over the first mortgage if their credit is good and then get a 2nd mortgage, maybe for a little higher interest rate, through a mortgage broker.

This way they have a chance of getting the financing needed to buy your home.

Or you could even take back the 2nd mortage and arrange to sell it on your own if you have connections. This also makes things a lot easier to arrange.

[Annie]

I'd agree that paying off your mortgage may not be a smart move to a certain degree that if your interest rate/monthly payment is low, because it'll be good to have the benefit of using that extra money that you have to invest in higher yield mutual funds or stocks, besides enjoying the tax deductions for your mortgage interest.

But to say that having a mortgage on your house will make it easier to sell your house later on may not be true unless your mortgage is assumable. Nowadays there are not many mortgages which are assumable. If there is a due on sale provision in your mortgage, your lender will demand repayment in full if you sells the property that serves as security for the mortgage.

However, before paying off that mortgage, think about how you could possibly use that extra money to invest in something else that will net much better return after offsetting the cost of keeping your mortgage.

[MysticMind]

I'm in agreement with the don't pay off the mortgage statement simply because the market will turn around again and when you renegotiate your mortgage you may want to ask for the proviso of assumability for a qualified buyer.

This can be asked for and then the lender has the right to accept the buyer's qualifications or not and if they do then you can get a sale much faster.

[MiamiHomeowner]

Originally Posted by Annie

I'd agree that paying off your mortgage may not be a smart move to a certain degree that if your interest rate/monthly payment is low, because it'll be good to have the benefit of using that extra money that you have to invest in higher yield mutual funds or stocks, besides enjoying the tax deductions for your mortgage interest.

But to say that having a mortgage on your house will make it easier to sell your house later on may not be true unless your mortgage is assumable. Nowadays there are not many mortgages which are assumable. If there is a due on sale provision in your mortgage, your lender will demand repayment in full if you sells the property that serves as security for the mortgage.

However, before paying off that mortgage, think about how you could possibly use that extra money to invest in something else that will net much better return after offsetting the cost of keeping your mortgage.

That's pretty sound advice. I also should mention that some mortgage plans include, for an extra monthly fee, insurance coverage that's even good for war damages, if that ever happened. Plus the bank pays your local property taxes...until you pay off the mortgage.

[Reluxuryflips]

Originally Posted by Rowena105

One of the things that people think is that when they buy a house they want to get the mortgage paid off fast.

This is not a great idea unless you plan to stay in this house forever. If you are looking to sell and move in the future then you want to keep a first mortgage on the house to make it easier for buyers to get financing.

The buyer could probably take over the first mortgage if their credit is good and then get a 2nd mortgage, maybe for a little higher interest rate, through a mortgage broker.

This way they have a chance of getting the financing needed to buy your home.

Or you could even take back the 2nd mortage and arrange to sell it on your own if you have connections. This also makes things a lot easier to arrange.

Wow, that is quite interesting.