Jul
17
2008

  Paid Off the Mortgage

We had been making money on our condo mortgage for years, but since we started losing money on it, we decided to pay it off.

We bought our NJ condo back in 2003 when rates were low-- we got an ARM at 4.75%. At the time, we also had equivalent funds invested at over 5% interest, so it made sense to take out the mortgage, pay 4.75% interest expense and keep earning 5%+ on the cash balance and pocket the spread.

However, I can no longer reliably find high-yield accounts above 4.75% in which to deposit funds, so I'm paying off the remainder of the mortgage. We're getting ready to rent or sell the condo in a few months, so this will also reduce the paperwork required when the time comes.

Especially since we're thinking about seller-financing the sale; we'll charge an above-market rate on the mortgage, or do a rent-to-own sort of thing until the buyer has paid us the equivalent of a 20% down payment, and that will get us a better return than we can get from any bank. Plus since it will be collateralized, we'll just evict and sell the condo again if the buyer defaults. We sold Terry's company twice, that was a much bigger hassle than selling a condo twice, I'm sure.