The outstanding principal balance is 101,000.
Interest rate is 2.375%
In addition to paying the principal
I pay insurance and taxes of $1170 per month. Now here’s the question, I only have to pay the insurance and taxes until I pay off the mortgage so does it make sense for me to pay it off immediately, and save the 7-8 years of insurance and taxes?
I could take the $1170 I pay now on taxes and insurance and put it back in my investment account.
Paying off my wife’s mortgage as part of our divorce settlement
byu/CryptographerSea4565 inpersonalfinance
Posted by CryptographerSea4565
9 Comments
And you’re responsible for 50% or 100% or some other % of the outstanding mortgage balance?
Follow the settlement agreement. If the agreement allows both, yes, sooner saves you money with the facts you provided
Without running any numbers, yes. It makes sense. Is the settlement final? If you can get them to exclude the insurance and and taxes from now going forward, then you can easily make more than 2.375 percent right now in treasuries or CDs. And in that case, you might as well let it ride. But if not, pay it all off now.
Unclear if the responsibility for property tax and insurance ends with the mortgage being paid off. All this does is stop the payments from being made monthly yo an escrow account. The tax and insurance bills continue after the mortgage. Are you off the hook for them just because the mortgage got paid?
If you have the funds to pay it off and it truly eliminates any obligation to pay taxes and insurance going forward, then it is a no brainer to pay it off. Plus, it provides a complete and clean financial break.
The divorce agreement states that I am responsible for paying the mortgage until it is satisfied. I currently have $300k in investments so I’d have to pull $100k out to pay off the mortgage. Then I’d be completely free and clear of insurance and taxes. It would be her responsibility.
Not a lawyer
But a buddy of mine got divorced
He kept his old mortgage that both of them took out, paid it to 0 over the years.
When he went to sell, wife was still on it.
They went to court, end of the story is the wife got half. The agreement didn’t specify who gets the equity, so in the end despite the agreement saying he would pay the mortgage.
He didn’t get to keep the house fully, she kept half of the proceeds on the sale.
Just realize some states treat the assets and mortgages as separate items
She needed to quit her claim, which she never did.
So…..be aware
At 3% interest, you can do better in a simple savings account.
Pay off the mortgage.
I would pay it off and move on. I would rather be angry once, than every month for the next however many years.