My mind is racing this morning and sleep is not an option. I am running thru possible scenarios and fairly certain as to what to do, but not quite certain.
I will close (sell) a house that was a primary residence on Jan 2nd. No mortgage is held on it. This was the house my sons and I lived in prior to my current wife and I marrying and purchasing our house 3 years ago. A mortgage is held on our current residence. The original mortgage was 4.5% for 15 years and after 15months we took advantage of lower rates and refied to 3.5% for 10 years.
We have made extra payments on that mortgage and at the current schedule with no extra payments it will be paid off in appx 6 years. The current balance is about $70,000.
We are both 57 years old and have no other debt other than car loan for $10,000. Both our careers are fairly secure, I am in sales (variable income) and she has a stable (for now) career in education. We have no pension and fund our retirement accounts. Our retirement is well funded and I have plans to work for another 8 - 10 years. We have three adult children working and our youngest is a senior in high school with college around the corner. College seems to be funded with savings and potential full scholarship offer (at least for one year).
In addition to well funded 401k, 403b, IRA, and Roths, there is investment property (farm), and other non retirement assets such as I bonds, Vanguard tax free munis, dividend paying stocks, etc. Asset allocation is about 45% /45% with 10% in cash.
We live comfortably but well within our means...."comfortably frugal". We plan to stay in our current home for foreseeable future...our adult kids are all within an hour and the house meets our needs.
I love the thought of being debt free, as does she. With a variable income, it is great to have low fixed personal costs. The house I am selling was where my two boys grew up. There mother died 12 years ago and I took the boys thru the house one last time yesterday. This was "our home" for 25 years.
So, as I write this, it is obvious there is more here than just a "payoff the mortgage or not" scenario. I have no doubts or regrets selling the house, as I did a poor job as a landlord (I was a pushover and was taken advantage of...well documented on this forum).
Are there ANY reasons not to payoff the existing mortgage that my wife and I hold? This will transfer some of "my assets" (pre-nup legal stuff) to "our assets" (our home). I feel great about that (yes, pre-nups, while necessary in blended families do create a bit of a "chill" in the air for awhile). The mortgage payoff would consume about 50% of the proceeds, so there will be $$$ left over ( we are going to remodel the master bathroom). The proceeds can easily fund our ROTHs for 2012/2013 and still have proceeds.
My oldest son has struggled, having entered the job market right when the "great recession" hit. He has worked hard and gained some traction, but is pretty much paycheck to paycheck. I co signed for his car loan and am considering eliminating that debt (only about $4000) to free up a little $$$ for him monthly.
I really enjoy this forum community and have asked for and offered advise over the years. So now I ask...is there any reason NOT to pay off this mortgage. Yes, the rate is low but the feeling of being debt free is a great one (experienced it on the other home). Probably the biggest struggle I am having right now is whether or not to gift to my boys, as this is their last physical tie to our previous home (and their mother). Yes, she will always be in their memories, but this sale really shuts another door in their lives.
Thanks for putting up with this...I really needed to write this (if you cant tell).