Conference nyoss1::market_investing

    
    Well, I'm no expert, but what I think I'd do...
    
    If I were thinking seriously about moving in a year, I'd sit tight.
    Assuming I had the funds to pay off the mortgage, I'd keep them 
    somewhat liquid, somewhere where I can get to them at the time I move.
    If you're then thinking of buying a new house, you can possibly (if
    the lender allows it), make a bid on the new house without placing
    a contingency on the sale of your current one.  Cash is king when
    you're buying, and I believe you'd have a greater degree of flexibity.
    
    As long as you buy another house within the 2-year grace period, 
    capital gains tax on the appreciation isn't an issue, no matter what
    you decide.
    
    If you'll be in your current house long term, I'd pay off a 10%
    mortgage.  True, you lose a deduction, but you also lose the interest
    payment.  10% is significantly higher than any risk-free investment
    I could make right now, and I personally like the idea of having my
    options open.
    
    Having said that, you'll probably find the next reply to disagree
    entirely, but this is what I'd do.
    
    	Dave
            

    Paying off the mortgage early does not affect your capital gains.  The
    capital gains are based on the price you pay for the house, what you
    sell it for, the cost of improvements, and the costs of buying and
    selling.
    
    Bob

    When mortgage money is tough to get, it is easier to sell a house with
    a large mortgage than a house with no mortgage.
    
    Reasoning: The bank already has a large amount invested in your house.
    they don't have to come up with much money if any to finance a new
    buyer. With no mortgage, the bank has to come up with the entire
    amount.
    
    Of course if you finance the buyer yourself thats not a problem. But
    then...
    

    RE: -.1  Isn't that assuming the buyer will use the same mortgage
    company that the seller does?
    
    	Dave

    
    	Re: .last two
    
    	And even more, it presumes that the original mortgage is assumable.
    Skipping the added complexity of the secondary market, the bank lent
    the money to person A based on person A's financial ability to repay
    the loan.  If A sells to person B, even if B goes to the same bank
    there is no guarantee that the bank will likewise appreciate the
    financial situation that B has and want to have the same money lent
    out.  The money is lent to the person, not the property.
    
    	If the mortgage was sold, the same problem exists: the buyer of the
    mortgage was buying a loan to the person, not the property.  The bank
    would then have to try to talk the mortgage owner into entering into
    a mortgage with the new person.  All in all, I suspect it would be less
    work for the bank to just offer this new mortgage to all potential
    buyers to see who will come up with the cash.
    
    							-craig

    It does NOT assume the mortgage is assumable. In very tight money
    markets it is easier to negotiate with the same mortgage company.
    
    If I (the bank) hold a mortgage for 100K at 7 1/4 % and I can re
    mortgage the same property with a mortgage of 120K @ 8 1/2%, I only
    have to layout 20K and I can increase my income on a 120K loan. If you
    (the new owner) go to a mortgage company that does not hold a mortgage
    on the property, the mortgage company has to layout 120K. 
    
    There are times when a mortgage company can get maximum benifit by
    selling new mortgages on six of its existing properties than taking on
    one new mortgage. There is other criteria that does come into play. I
    sold Real Estate for 4 years full time in a tough money market. There
    were times when we could NOT get a mortgage on a property unless the
    mortgage company held the existing mortgage.
               

    In my seldon_very_humble opinion,  you only need to answer two
    questions.  Where can my money provide the highest return?  How much
    risk am I willing to assume?
    
    To the question of risk, you have a GUARANTEED ROI of money that pays
    off a debt.  No risk involved.  
    
    To the question of highest return,  you need to answer the second
    question.
    
    For instance,  I have a modest balance in our mortgage at 8.25%.  I had
    an opportunity to pay off the balance last summer.  However, I believed
    that the Stock Market was bumping around on the low end of the S&P
    chart and that I could pick up high quality mutual stock funds at
    extremely low costs relative to where I felt the market was going.
    Also, and MOST IMPORTANT, I could afford to lose all of the money
    without affecting our monthly cash flow.  So far, that modest sum has
    increased by approximately 20% net taxes.
    
    HOWEVER, last summer the pundits were predicting a replay of the
    October 1987 crash.  Had they been correct (and they seldom are, but
    that's another controversial opinion), I would have lost some of my
    principal.  
    
    Pay off the mortgage with funds you do not NEED and the WORST that will
    happen is that you will grumble about opportunities lost.  Put the
    money elsewhere for hopes of better return and you run the risk of your
    spouse reminding you (often) of your Financial acumen. :-)