Something to think about depending on where you live but when I have paid something off my credit rating takes a hit. I learned this the hard way when my car insurance was increased because of the drop. The insurance was through AAA so not one of those iffy insurance companies.

Any mortgage balance you have will be paid off at closing. While it has been a while since I paid off this house I remember that there were other things that were rolled into the mortgage such as property taxes and insurance so if they are in your mortgage at least for the insurance you would need to make other arrangements to pay.

The purpose of the question was would it make the closing easier if the mortgage payoff was done at the same time? Stax, what tax break?

would it make the closing easier if the mortgage payoff was done at the same time?

Yes. It will insure than all the paperwork is in one place at the right time, and you will not have anything else to do.

Based on my limited experience, Title Companies that handle real estate sales have to deal with all different types of payoff requirements, so it makes very little difference what choice you make. However, since you said you have a low interest rate, I would see no benefit in paying it off early.

Bruce

To Stax's comment, there is less than two years left on the mortgage, so I doubt that assumabiity, even if possible, isn't very useful to a new buyer. Shsuipup's answer is what I was assuming.

Also, if there's only a handful of years left on the mortgage, the tax break on the mortgage interest is negligible because the interest is front-loaded; very little interest is paid at the end of loan, and it doesn't matter anyway if you don't itemize.

It's probably easiest just to have it paid off at closing. They'll handle everything for you, including escrow balances and such.

You should focus on getting that house on the market now and not the nonsense of selling securities to pay off the mortgage first, it doesn't add up to a hill of beans and makes no difference.

Yep, the housing market is at it's top NOW, and if you wait your going to lose 10's thousands on that house. Summer you say, but there are hundreds of thousands set to hit the market in spring for the sole reason to cash in on this bubble. Think I'm wrong? When people are in panic to buy at any price, with emotion over riding rational thinking, this has always been the final signal of a bubble ready to bust. This is called housing bubble 2.0 and not much of an unexpected surprise to many except those watching all year and have decided to sell to cash out in the spring. Summer you say, good luck.

No, it will not make closing any easier at all. Most home transactions have a mortgage payoff and so it is a fairly standard arrangement. You will make the closing attorney's job a tiny bit easier and thus your closing a tiny bit more profitable. There is no benefit to you as the seller at all, now there is the interest rate you are going to pay for the mortgage, but if you only have a few years left that is probably a negligible amount as you owe only a small amount of money.

On the other hand, you will be taxed on the gain of your securities and it is very likely that the taxes will be greater, possibly significantly greater, than the interest savings.

Summer you say, but there are hundreds of thousands set to hit the market in spring for the sole reason to cash in on this bubble.

People generally don't cash in on housing bubbles. Not many homeowners say, I will sell my house because it is at the top of the market and then pay way more than my house payment in rent because my house is worth a lot.

Your house has gone up in value but so have all the suitable alternatives. Housing bubbles grow and burst constantly but unless the underlying mortgages are bad or lots of people have tapped their equity it is largely a non-starter. Most times we just call it a buyer's market and things move on without a care. Covid has created a unique scenario and I don't know what will happen but I don't see anything even approaching a repeat of the subprime mortgage collapse.

I agree about getting the house ready to sell now. What has been happening was panic buying. While not a bubble there were more people looking. Some of that panic has worn off. While in some areas there will always be people bidding against each other with the vaccines apparently working some of the panic should subside. While you want to receive as much as possible for your house the cosmetic things you have posted about before may make the house more attractive but most people want to put "their mark" on a house.

I never mentioned collapse and a simple basic supply and demand scenario, and I see a 20% price drop of the medium house price by fall of 2021 based on a number of indicators.

A house is just another N95 mask in respect to the price people will pay when supply is low and demand is high. The average supply of homes right now on the market is a 1 month supply compared to an average of a 5 to 6 month supply in a normal market. The supply will increase drastically in the spring and asking prices will need to come down to sell, just like N95 masks and any other bubble caused by supply/demand issues.

Ever heard of mortgage forbearance? 600K mortgages are in forbearance and technical default and escrows for taxes and insurance are also not being paid. A percentage of these will be put up for sale as the forbearance time limit is reached, in spring/summer 2021.

Housing starts are way up with builders targeting spring to sell.

Investors/flippers have stretched the their own budget finding stock to sell in the spring and will be the first to drop prices because holding a house not selling effects their cash flow.

Present homeowners are also holding off right now to sell in the spring, witch is normal.

Interest rates have slightly risen from it's historic low and are forecast to break above 3% by June 2021, but I pay closer attention to the 10 year treasury rates, and the rate of increase. I'm forecasting mortgage interest rates to be closer to 4% by June 2021 and at least a 20% drop in housing prices by fall of 2021.

10.1% increase in the month of December home prices? Yep, and people are in panic and willing to over pay, they're chasing an asset and a pullback will happen without a doubt. After fall may consider a potential collapse, but right now just a good old fashioned pull back for.

I signed on a closing Wednesday, 22% over asking but what bugged me was a higher offer which I refused and was 25% over asking. He was looking at FHA financing with 3% down and wanted me to pay the 3%. Don't tell me this guy wouldn't walk away from an upside down mortgage in the future. So how many overpriced homes where bought like this over the last year? Scary thought, Collapse 2.0?

Don't bother to pay off. It's not worth your effort if you are planning on selling in the next two years. Continue to prepare to sell the house.

Regarding a bubble in the housing market. There may be some frothiness. It's really a supply and demand issue that has it's basis in the 2008 mortgage crises. The number of houses and population growth needed to satisfy future demand did not change because the mortgage crisis back in 2008. It did drive skilled tradesmen and builders out of the business resulting in a loss of production capacity. This lack of new production has been getting worse year by year.

Yes, there are people who are not able to make their payments due to COVID job losses. Foreclosures do not yet reflect this fact. But, there still isn't enough excess housing stock to oversupply the market. Interest rates will increase due to inflationary pressures.

You might consider getting your home ready to market this Spring if your circumstances will allow. It's a good time to sell.

Since you have a low interest rate on your mortgage and would have to sell securities to pay it off early, the additional interest is not going to be relatively much. If your securities have gained in value since you purchased them, you could have to pay capital gains tax on the gain. That could be more than the interest you save on the early payoff.

Get your house ready to sell, and then get it on the market!

I never mentioned collapse and a simple basic supply and demand scenario, and I see a 20% price drop of the medium house price by fall of 2021 based on a number of indicators.

A house is just another N95 mask in respect to the price people will pay when supply is low and demand is high. The average supply of homes right now on the market is a 1 month supply compared to an average of a 5 to 6 month supply in a normal market. The supply will increase drastically in the spring and asking prices will need to come down to sell, just like N95 masks and any other bubble caused by supply/demand issues.

That is not a bubble. What you are describing is just a downturn in the housing market. A bubble exists when the prices of houses become disconnected from the supply and demand curve. More housing stock becoming available and/or demand simply decreasing is not a bubble.

The problem with your 20% downturn is that you are looking at the driving force in the market being our unprecedented low supply of homes. You are ignoring the fact that average household savings are also through the roof right now. The US savings rate varies between 6.5% and 9%, in 2020 it hit 34% for a while. So there is more money saved up to buy houses in America currently than there has been since soldiers returned from World War 2 and the demand is there.

I believed for a long time that the housing market would suffer because of the number of people who lost their job, but there is so much pent up demand and cash savings that I now believe the market will continue on fine.

Thank you all for your advice and suggestions; this was just a thought, and we have decided to follow your advice and not pay off the mortgage. A couple of details - the house is currently rented, and when we decided to sell, we asked our renters if they could vacate by the end of April. They agreed and quickly found another place and are moving in early March, so we will have extra time to prepare for the sale. This will be a slow process because we live about 6 hours away, so the extra time will be appreciated.