Thursday, September 8, 2011

Paying off Our Mortgage

Y and I had a heart to heart last night about our finances and wanting to build our house.  We have about 61K that is liquid cash as of right now.  We agreed that we would put 43K down on our mortgage.  The current balance is just over 86K so that will pay it in half.

We decided that we've gotten too used to having a big safety net and our spending has increased accordingly.  That's not what we want because we really want to build our house in the spring of 2013.  We need to pay off our mortgage because we will have to refinance anyway and get a construction loan to build.  Our original plan was to keep our mortgage and increase our cash so Y could build most of the house himself.  We decided to just hire it done and get a construction loan.  That way it is done in a timely manner and we don't need to stress about building it.  I think that this way will be much better for our marriage :)

It's a little nerve-wracking to decrease our savings by so much but we need to cut our spending and I think that having a goal of paying off our mortgage ASAP will do it. 

I haven't made the huge payment yet.  I decided to wait a few days to think on our decision.  Also, I need to move the money out of ING and that will take a few days.

Any thoughts?

12 comments:

  1. That's an amazing amount to save! And I think it sounds smart to pay down the mortgage...and what an amazing feeling to get that much paid off!

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  2. I think that's a very smart thing to do. We're the same way, when we have more money, we end up spending more.

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  3. I agree that is an unbelievable amount to thave saved. But I agree when we have extra money the urge to spend is there. I just cant wait to get out of debt!

    congratulations

    Judy

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  4. I would do it. This is exactly why we're paying off our mortgage really early. The want to spend is too much (for us) with a big safety net.

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  5. I'd put it on the mortgage!! It's be a HUGE chunk & will save you a tonne of interest in the future!! :)

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  6. Wow! Amazing savings/loan payoff. I think it is truly admirable how level headed you are about this decision.

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  7. I vote mortgage as well.. You did amazing on saving some dough.

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  8. How sure are you that you can get a construction loan? Just because such loans exist doesn't mean they happen very often - my parents just bought land to build a house to retire on, and while they got an Agricultural loan for the property, they are having to use their cash to pay for the building because they could not get a loan to build the house. (And they have excellent credit.) Just a point to worry about although I don't know how far into the process of researching this you are...

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  9. Bye Bye Mortgage! I vote for mortgage. Good Luck!

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  10. Thank you all for your comments. Most of the money we have saved but about 20K was from the sale of our other home that we didn't need after putting down 20% on our current loan.

    Kellen, excellent point. I work in the mortgage industry and the bank that I work for does a lot of construction loans. I already talked to another loan officer and my manager who would approve my my loan. I can't say that its a done deal yet but there aren't any roadblocks in our way. I would need to wait until 2013 to have 2 years employment at my job to use my income since I will be commission based.

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  11. I think it is an excellent choice you made but even better is that you took the time to think it over with Y and after coming to such a huge decision you are taking a few more days to make sure you have no doubts about it.

    I think with your current plan going ahead and paying off the big chunk is terrific. It also helps in lots of other ways like saving on interest and less debt.

    I also like the construction loan plan as I can see a lot of benefits compared to DIY completely.

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  12. You should ask an advisor 'bout this. Mortgage advisors can provide useful advice to get around problems like this. However, the greatest advice that an individual can give you is to save, spend and save again. Money should continue flowing.

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