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If I want to have the ability to relocate, is it better for me to keep a mortgage?
Old 02-12-2012, 02:42 PM   #1
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If I want to have the ability to relocate, is it better for me to keep a mortgage?

Sorry if this question sounds simplistic.

If I want to make it easier for me to relocate if or when I want to, is it better for me to maintain a mortgage on my residence or is it better for me to pay the mortgage off now if I have the ability to do so. Or, does it not make a difference? Assume that I have an adequate emergency savings fund.

Thank you for your advice.
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Old 02-12-2012, 02:57 PM   #2
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If I was hiring you, I would be happiest if you didn't own a home at all. If you are positive you are changing jobs, put the house on the market. I see no benefit to owning the house outright if you intend to sell it anyway. You may need the cash at the next stop. What would you do if you had a problem selling the house, not such a far fetched thing at the moment, and you found yourself in a new job far away with all your cash tied up in your old home?
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Old 02-12-2012, 03:18 PM   #3
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Originally Posted by midnighter777 View Post
...easier for me to relocate if or when I want to, is it better for me to maintain a mortgage on my residence or is it better for me to pay the mortgage off now...
I'm assuming you're not "upside down" on your house here or you would have said it. So either having or not having a mortgage, you still need to sell or otherwise redisposition the house (i.e. you could make it a rental or something). But let's say you sell. I don't see much difference in how 'hard' it would be to sell your house with or without a mortgage. In one case, you'd get a big check, and in the other case, you'd get a smaller check and the bank would get it's payoff amount.

The other consideration is the financial side, I'd ask what interest rate you have? If it's more than 4.5%, you might pay it off or consider a refinance. Where's the payoff money now? If it's in equities for the long haul (i.e. you're still young enough to be invested in equities), you may be able to do better by just staying in the market. If it's earning near zero in a bank, you might as well pay it off. But if you itemize deductions and subtract the mortgage interest as a deduction, you would loose that little tax benefit. But of course that has nothing to do with how easy it would be to relocate, except if you have a litte more money to relocate with, hehe.

That's a long way to say "it depends"
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Old 02-12-2012, 04:07 PM   #4
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If you keep the mortgage but also continue to have the funds to pay it off when needed, there is no need to do so now. The advantage to future relocation is simply not being held back when the opportunity arises.
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Old 02-12-2012, 04:28 PM   #5
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Originally Posted by midnighter777 View Post
If I want to make it easier for me to relocate if or when I want to, is it better for me to maintain a mortgage on my residence or is it better for me to pay the mortgage off now if I have the ability to do so. Or, does it not make a difference? Assume that I have an adequate emergency savings fund.
If you're not upside-down, it makes no difference. At closing, the lender gets a slice of the selling price instead of it all coming to you. That's it.

If you're upside-down, as long as you have cash handy to prop up the shortage, then it makes no difference either.

When you sell the house, there is going to be a closing. Having a mortgage effects the distribution of funds at the closing. That's it as far as I know. Having to sell the house is the pita. Paying off the mortgage is quick and easy. If being able to relocate on short notice is what you're looking for, start investigating selling the house to make sure you understand what that's going to involve.
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Old 02-12-2012, 04:31 PM   #6
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If you keep the mortgage but also continue to have the funds to pay it off when needed, there is no need to do so now. The advantage to future relocation is simply not being held back when the opportunity arises.
Even if OP doesn't have funds handy to pay it off, won't those funds appear from the buyer at closing? Assuming OP is not upside-down.
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Old 02-12-2012, 04:54 PM   #7
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Shouldn't make a difference. Assuming that the funds that you are using to pay it off now are not subject to decline, then you could always pay it off later if you wanted or needed to.
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Old 02-12-2012, 05:20 PM   #8
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Even if OP doesn't have funds handy to pay it off, won't those funds appear from the buyer at closing? Assuming OP is not upside-down.
I was just thinking negative equity or poor housing market might make it difficult to sell. Being able to buy without a contingency might be an advantage.
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