Mortgage Payoff – We Pulled the Trigger
If you have been reading Mr. ToughMoneyLove for a while (thank-you BTW), you know that we have been planning on paying off one of our mortgages. (We own two homes, one of which we use now as a vacation home and later, as a full or part-time retirement residence.) My original target date for mortgage payoff was December 2008 but that date slipped a bit once we learned of the outcome of the election, plans for the economy were in flux, and things got busy around here. We had been earnestly accumulating cash over the last 24 months to get this done.
Yesterday morning, I called our bank relationship manager. First, he had one of his assistants move all of the payoff funds into a single local account. He then put me in contact with the bank wire department. I gave them the mortgage account information and wire destination details. I had to answer several secret questions to confirm my identity. The wire person also called our banker to confirm that the instructions were from me. Then someone pushed a button at a computer terminal and off went a big pile of our cash.
A few hours later I checked online to see what the mortgage balance was. It had not changed. Concerned, I called the mortgage servicing office. The nice person told me that the funds had been received but that the computer records would not be updated until midnight. When I got up this morning, the first thing I did was log-in to our online banking account and voila’, that mortgage had disappeared. Gone from the list of accounts. Forever. Sweetness.
So now we own a home, free and clear. (Well technically not free and clear until the satisfaction of mortgage is recorded at the County Register of Deed’s Office, which will happen in a couple of weeks.) It feels good, real good. We may have a mortgage document burning party at some point. I’m not sure about that yet. We may wait until we kill the other mortgage, the one on our mostly full time residence. That plan is also in the works. Hopefully, the college graduation of our third son will be jointly celebrated in two years with another mortgage murder.
So why did we choose to kill the vacation home mortgage first? Several reasons. First, that mortgage had a slightly higher interest rate. Second, the mortgage was only six years old, meaning that a much larger percentage of our payment was interest compared to principal. Third, that mortgage balance was larger. Fourth, we had determined that if and when we downsize, it would be from our full time residence, which is twice the size of our vacation home. Twice as much room as we need, actually. In other words, our current thoughts are that our vacation home will be part of our lifestyle for a much longer period of time. So we wanted to own it. Completely.
You may be wondering why we decided to pay off the mortgage at all. Some would argue that it would make more sense to invest that cash while stocks are on sale. That argument would have a lot more appeal to me if we were younger. As baby boomers, we have a different perspective on things. Indeed, if the U.S. economy experiences a “lost decade” like Japan did in the ’90’s, paying off mortgage debt can make sense for younger folks as well. For more of my thoughts on this, read “Your Home as an Investment? Let’s Re-think this” and “Striving for a Mortgage Free Life.”
The real seeds of what happened yesterday were actually planted years ago, when Mrs. ToughMoneyLove and I were first married and sans kids. I will save that story for another day. For now, I will enjoy the afterglow of a mortgage death. I encourage each of you to also strive for a mortgage-free life, as we continue to do. One down, one to go.
Image credit: Kristian Risager Larsen