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I have decided to payoff my mortgage so I can own it free and clear. My strategy is then if I decide to relocate I can close the house down, have someone watch over it and pay the minimal utilities bills each month. It would not cost me much to own it while away and I could do this until I am certain I want to stay in the new area at which time I can sell my home.
Ok, so what I am contemplating is which is the wisest source to use for payoff...
A. several mutual fund investments I have which have declined below what I bought them at. I would not need to use all of them, maybe a third of current value. The advantage to this is right now they are not doing me much good and the stock market may tank even more, further weakening their value so why not get some use out of them now? The con, is I would be selling at a loss.
B. Some stable cash funds. The advantage is I am not selling anything at a loss and would allow source A (above) the option to recover its value should the market recover, which there are signs of.
So... Is it wise to sell a portion of source A off at a loss in order to payoff the mortgage and thus save me interest payments each month or is that a foolish idea?
Location: central, between Pepe's Tacos and Roberto's
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I would consult a CPA on this. I believe if you sell off the mutual funds at a loss then you can write off the loss, but I'm not sure. What are the cash funds doing for you? Are they working for you or are they earning someone else interest?
Although I am usually a fan of leverage, it sounds like the losses taken on the funds compounded by the interest paid towards the mortgage is a losing combination. Perhaps if you could re-assess your investment strategy then the leverage would be a good thing, but the current course of action does not sound like it is working.
Since you have the cash, and assets, simply continue to make the mortgage payments, after you move, leaving the assets as a reserve.
Consider renting your home out, letting the tenants pay your mortgage payment for you. While you will be away, and long distance managment is difficult, you can hire a management company to do this for you.
Before deciding, talk to your insurance company about leaving your house vacant. In some instances it can be prohibitively expensive.
golfgod
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