We had a similar situation with closing on our house. Kind of a weird situation, but it was a lawyer handling the closing for the seller, even though we are on the west coast. Bank approved on a Wednesday, needed to be funded on Thursday to close on Friday. They were going to “Table fund”, which is a fancy way of saying that they would have the money approved as soon as we signed the papers with the lawyer, from what I understand. We were on a tight timeline with my H who was traveling for business the following week - we had planned on closing on Friday, getting keys that day and start a local move that evening. Delusional.
We signed forms at 8 am with lawyer, but it has to record with county before the keys could be transferred. We waited around all day kind of killing time because we thought it would happen pretty soon. It was much closer to 4 pm before the lawyer and agent said that it was recorded and the key exchange could happen. Got keys at 430. Moved that weekend, just in time to put him on a flight Monday am.
IF all the parts of this puzzle got shifted in any way, I have no idea how we would have handled him signing papers - maybe mobile notary, but we certainly wouldn’t have gotten the loan closed that day. And he wouldn’t have been able to help us make that move on the weekend. We had another week on our short term lease from a rental, so we needed to be out and cleaned up that week.
Lesson learned. When it comes to moving assume that your inconvenience really doesn’t matter in the scheme of things and block out extra time just in case things do not go according to that plan! Also, on the seller side there can be issues which change the date of closing which you have no control over. We cut it close, but it certainly didn’t seem like it when given our original escrow date.
Also moving twice in less than a year is terrible.
In the future I would advise that you never sign loan docs and ‘fund’ on a Friday. If your bank sends the funds into a title company, you start paying the mortgage. You are now paying the mortgage for about 3 days of not having possession of the house because you have to wait until Monday afternoon for the Grant Deed to get recorded and confirmed. Don’t fund on a Friday !!
Moving is a real pain. Cant imagine doing it twice. Well, they did the $$ escrow thing and she headed off to her bachelorette party in the wine country. So DS is batching it at the old homestead. He said it consists of adding to his ever-growing “to do” list.
We lived in same home for 25 years, relocated out of state to short term rental while house shopping. Thought it would be easier and wouldn’t have to settle.
In some ways, it helped us understand area better, but many boxes never unloaded from first move. And huge anount of downsizing before that one. (Still not enough purging, either!)
CB- Do 3 days really make a big difference in the scheme of things for funding the mortgage. Yes, 3 days of a several thousnd dollar mortgage is not pocket change, but over the many years they hope to own the house, its probably not a deal breaker. DS is going out of town on business Sunday so yesterday was the only day to do the closing. Oh well, it is what it is. They will be doing some repairs/possible upgrades over the next month and probably move in in April…
On the house I recently bought, I intentionally set up my transaction for my loan to fund on a Friday, and i made sure that the deed would be recorded the same day. I had also confirmed with the seller that I could move into the house over the weekend even if the deed hadn’t been recorded. I was in the middle of a trial and I had literally one day I could move – a Saturday. I had three days to move out of the house I was selling after it closed, and I needed the proceeds from the old house to close on the new one, so in order for the Saturday move to work everything had to proceed like clockwork and my purchase HAD to close on the Friday. It all worked but I drove lots of people crazy.
Because I am a real estate investor I tend to watch every cost very carefully. If purchasing a principal residence, and a very busy work life creates a specific situation, of course you should go sign your loan documents whenever you can. But, even if you are signing the loan documents on Day X, you can always request that the bank ‘fund’ on a different day if you want. In your DS’ situation, it is very possible that the loan did not fund until Monday anyways. Maybe they were just signing the documents on a Friday.
But, as an example, interest on a $500,000 loan at 4.5% interest rate is about $63/day. So, that’s $180 that can be saved. That pays the entire utilities for two months on one of my projects.
Okay, there seem to be a lot of knowledgeable real estate pros on this thread, and certainly many who have plenty of experience. So here’s a question for you. Is it always a good idea to pay off your mortgage?
I understand not wanting to be in debt, not wanting a payment after retirement, that great feeling of completely owning your own home. However, if it is a large part of your net worth—do you want to take all the risk? I was just reading about some of the people who lost their homes in the terrible Oso mudslide in Washington. Nobody has landslide insurance, from my understanding, it doesn’t exist at any price. After the disaster, some people paid off their mortgages, apparently not realizing that in many cases the banks would have forgiven the loans, or they could have let it go into foreclosure.
Now I’m all for paying ones bills, however, a mortgage company does take on risk when they lend. We live on a hill, and while our house is built like a fortress, there are slides sometimes in the area, and I can’t guarantee what the hill behind us wouldn’t take out, if there was a landslide. Does it make sense to actually take on so much risk yourself, when you can still have a very low rate mortgage? It seems to me that it might be wise to max out the amount you borrow on your home, if it is a significant portion of your net worth, invest the money elsewhere, and not worry about losing it all.
And NO, I don’t want to avoid all risk, and move off the hill! That would torment my husband.
My FA says that as long as your investment growth is greater than your mortgage rate, it is actually foolish to pay off your mortgage. I just downsized (but not downpriced) with a brand new 30 year mortgage. At my interest rate, and with the allowed interest deduction, it is the wisest financial decision.
@mominva, your FA either left off part of the truism, or you forgot it. When comparing things like a mortgage and investments, you have to compare the two net of taxes and with risk-adjusted returns.
From the Boglehead wiki
For a personal anecdote, we paid off our mortgage at a time when the stock market was roaring. Some colleagues (at the time I had not yet learned to keep my finances out of the office) called me stupid for not investing in QQQ options instead of paying down the mortgage. Well, we know how that ended, and I have had a paid off house for some number of years.
Re the interest deduction, that is sometimes useful and other times an illusion. It depends on your personal tax situation. Realtors love to push the mortgage interest deduction, but for some people not having a mortgage and using the standard deduction works best. Others find alternating between standard deduction and itemizing (by tax planning deductions into alternate years) works best.
to have and have not a mortgage is a personal decision. If you think you will never have a down spot in your next thirty years of life, than by all means you should keep a mortgage. Not having a mortgage is to have a peace of mind that no one will ever foreclose on you and always have a roof over your head.
@nottelling, based on the amount of money owed by the person who sold our house to us, getting foreclosed on for non-payment of property tax takes quite a while :). Your point is valid though.
Yes, but that is the cost of owning a real estate, so you have utility bills etc. If you cannot afford that, you are bonded to lose your home to a tax sale.
In addition, you will not get a interest income from a bank higher than the mortgage rate. To put money in the bank is the lowest risk investment. Other than that, you are trading risk for returns and sky is the limit. So, if you are risk averse, pay off the mortgage seems be the most conservative investment.
May they be very happy in their new home.