Profile picture for vinny427

paying off a mortgage

I've paid off the bulk of my mortgage and was wondering if there were any advantages/disadvantages to having a mortgage open when I purchase my next home? 

Wasn't sure if it was best to completely pay off the remaining balance, or pay almost all of it now and leave some amount unpaid.  Also, are there any tax advantages to having the mortgage remain open for a few more months? I'm likely going to be selling my home in Feb-Mar of next year and purchasing a new home at some point before that. 

Thank you.
  • October 28 2013 - US
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Be a Good Neighbor. Be respectful and on-topic. No spam or self-promotion! See our Good Neighbor Policy.

 
 

Answers (2)

In considering whether or not to pay off your current mortgage, there are several items to consider.  I recommend talking to both your tax advisor and a lender about paying off your current mortgage.  One of the benefits of a mortgage is the interest write-off.  However, if your loan is almost paid off, you might not be paying much interest now.  Your tax advisor can best advise you in this area.  If you are financing your replacement home, the current mortgage may negatively affect the size of loan you will qualify for in the replacement home.  Your lender can look at your total financial situation and let you know how your current mortgage would affect a new mortgage and whether or not it is advisable to pay off your current mortgage.  Your real estate agent can refer you to a lender.   
  • October 28 2013
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

If you don't have a mortgage at the time you apply for a new mortgage, it will make the documentation stage a little easier, but it doesn't make a big difference either way.

The only tax advantage to keeping the mortgage would be the potential tax write-off for the mortgage interest paid.  If you have money just sitting in an account, not currently doing anything for you, then I would recommend you use it to pay off the mortgage.  But, if the money is earning a good return (higher yield then your mortgage interest rate), then leave it be.

Thanks,
Julio Zapata
(623) 396-6855
  • October 28 2013
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.