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Would you payoff mortgage if moving in 2 years?

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    Would you payoff mortgage if moving in 2 years?

    The extra money should start flowing in soon and I have been running myriad scenarios on whether to pay off the mortgage. Emotionally, it would really bring us joy (well, me anyway) if we had no debt at all. From where we came in 2012 to have $1M in the bank and no debt would just seal the deal.

    We would still have $1M in savings and $400k of that would be in a taxable account.

    I want to ask for help to think rationally about this, but then again I want it gone.

    You may have to read 9 or 10 more threads like this as the big decision approaches. Apologize in advance.

    #2
    What is your next move in 2 years - buying a house or renting?

    what if your current house doesn’t sell right away and you need money for the next home purchase?

    given the limited details I would save the cash and consider the mortgage payment to be a 2-year rental.

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      #3
      I definitely would not pay off the mortgage if I were moving in 2 years

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        #4
        yep what are you doing in 2 years? Are you selling? Moving? Nice problem to have!
        LivingAlmostLarge Blog

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          #5
          Yes, I would pay off the mortgage. At this point in my life, debt avoidance is more about the "hassle factor" than anything. No more mortgage red tape to deal with, would be worth it to me.

          Practically speaking, I am not overly gung ho on paying down our mortgage right now, we plan to move in about 5 years. But this is from a standpoint of much more limited means. In the end, it's more important for us to have a substantial down payment for our next home. So it doesn't make any sense to tie that all that money up in a mortgage I know we won't be able to pay off (in a very short time). BUT, if we could pay off our home and have at least 20% down for our next home (to keep things flexible and allow us to buy before we sell our current home), then that is all that really matters to me. That keeps things very flexible. From your prior postings, it sounds like you could have a paid-for home and just save up the cash for your next home too (especially if you no longer have a mortgage payment).

          If you were in a position where this would tie up all your liquid assets, my answer would be different.

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            #6
            I'd pay off the mortgage the first chance you get. It's not like you're losing the money -- you're just storing it as equity. Could you earn more from having it invested? Sure. But as you said, emotionally, it feels AWESOME to have a paid for house. 120% worth the opportunity-cost, in my book.
            "Praestantia per minutus" ... "Acta non verba"

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              #7
              I'd likely pay it off and partly because it sounds like you would still have cash assets you could access if needed. Peace of mind is a big factor and that is different for each person.
              My other blog is Your Organized Friend.

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                #8
                Originally posted by corn18 View Post
                I want to ask for help to think rationally about this, but then again I want it gone.
                I know that feeling. In fact, I'm experiencing it myself currently with our mortgage. We are on track to pay it off by November of this year and the more I look at it, the more I just want to write one big check and pay it off. I know the interest savings will be minimal at this point but it sort of seems silly to drag it out.
                Steve

                * Despite the high cost of living, it remains very popular.
                * Why should I pay for my daughter's education when she already knows everything?
                * There are no shortcuts to anywhere worth going.

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                  #9
                  I think it would feel better to pay cash for your next home - assuming that is more long term.

                  Surprised by the responses given you would only be there for two years.

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                    #10
                    Originally posted by Jluke View Post
                    I think it would feel better to pay cash for your next home - assuming that is more long term.
                    What would you have said had corn posted prior to this purchase and asked if he should pay cash or take out a loan knowing he was going to sell in 2 years?
                    Steve

                    * Despite the high cost of living, it remains very popular.
                    * Why should I pay for my daughter's education when she already knows everything?
                    * There are no shortcuts to anywhere worth going.

                    Comment


                      #11
                      Originally posted by disneysteve View Post

                      What would you have said had corn posted prior to this purchase and asked if he should pay cash or take out a loan knowing he was going to sell in 2 years?
                      20% down.

                      Consider an ARM

                      Granted corn is on a whole other level financially with his income, bonus and corporate perks to cover his real estate expenses

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                        #12
                        Originally posted by Jluke View Post

                        20% down.

                        Consider an ARM

                        Granted corn is on a whole other level financially with his income, bonus and corporate perks to cover his real estate expenses
                        That's what we did! 20% down, 5 year ARM.

                        The plan as of this moment is to do nothing while we let things settle down at work. I may not have a job in 6 months. I should be scared, but my package would be huge and believe it or not, I would be in nearly the same financial situation @ 55 as if I kept working (big severance, PTO payout, more RSUs vest).

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                          #13
                          Don't you still own your former home? Why not use the proceeds from the sale of that home (once it has sold) to pay down part of the mortgage on the current home as a first step, and then take it from there?

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                            #14
                            Originally posted by scfr View Post
                            Don't you still own your former home? Why not use the proceeds from the sale of that home (once it has sold) to pay down part of the mortgage on the current home as a first step, and then take it from there?
                            Good advice. I think we will start there and then decide whether to pay down some more, keep it as is or pay it off. At this moment, we are going to do nothing and think more about it.

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                              #15
                              Re-read the bogleheads wiki for managing a windfall

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