Cheesehead
Recycles dryer sheets
I don't have a Wise Uncle so I am posting here to confirm my fear that if I pay off the mortgage I think I will be "locking in the loss" (?)
There have been many threads regarding whether to pay off one’s mortgage but my situation is a little unique. They say when your stock goes down you don’t have a loss unless you sell. We bought our house at the height of the bubble for $500K and we’d get $400-$410K now, so I think that would lock in the loss if we sell. We plan to retire in two years.
We are carrying a $330K mortgage at 4.8% and if we paid it off that would use up 1/3rd of our nest egg. The reason we have a high mortgage is we banked our profit from the sale of the last house rather then put more into the purchase of the new house. Perhaps that is an inadvertent good thing?
This is probably not our “forever home”, in fact we’d like to move somewhere warmer with lower taxes and HOA fees in two years. We live here because my wife’s commute is three minutes and we have family in the area.
If we did pay off the mortgage using nest egg funds in two years then we would be inclined to stay and consider it a “lock & leave”, go somewhere warm from Jan-April but we would still have housing costs of $2K a month in taxes, insurance, HOA and utilities and those housing costs would represent about 25% of our annual retirement income which is too high.
So, am I correct in thinking that we should not pay off the mortgage because we would be locking in the loss? I'd like advice regardless of the other factors such as high taxes, etc. Am I really locking in the "loss"?
Thanks
There have been many threads regarding whether to pay off one’s mortgage but my situation is a little unique. They say when your stock goes down you don’t have a loss unless you sell. We bought our house at the height of the bubble for $500K and we’d get $400-$410K now, so I think that would lock in the loss if we sell. We plan to retire in two years.
We are carrying a $330K mortgage at 4.8% and if we paid it off that would use up 1/3rd of our nest egg. The reason we have a high mortgage is we banked our profit from the sale of the last house rather then put more into the purchase of the new house. Perhaps that is an inadvertent good thing?
This is probably not our “forever home”, in fact we’d like to move somewhere warmer with lower taxes and HOA fees in two years. We live here because my wife’s commute is three minutes and we have family in the area.
If we did pay off the mortgage using nest egg funds in two years then we would be inclined to stay and consider it a “lock & leave”, go somewhere warm from Jan-April but we would still have housing costs of $2K a month in taxes, insurance, HOA and utilities and those housing costs would represent about 25% of our annual retirement income which is too high.
So, am I correct in thinking that we should not pay off the mortgage because we would be locking in the loss? I'd like advice regardless of the other factors such as high taxes, etc. Am I really locking in the "loss"?
Thanks