Wednesday, January 6, 2010

Any way to get above 4%?

If and when we ever sell our other house, we have to decide what to do about this mortgage. We'll likely get enough proceeds from the sale of our house to pay off the equivalent of half of the mortgage of this house.

Our current interest rate is 4% with a 5/1 ARM. Yes, it was intentional. Yes, I know about ARMs.

Now do we pay off half of our mortgage, or do we put it an another (relatively safe) investment?

My uncle's crazy thought is to provide owner financing on our old house. That means to be the holder of the buyer's mortgage. Let's say they can't get a mortgage through the bank, we could offer to hold their mortgage, charge them 7% interest or so, and use that money to help pay our mortgage. Sorry, that's too much like renting the house. I don't trust people. I don't want to deal with foreclosing on them if they don't pay and dealing with what damage they did to our house. After all, that house is like our other child, and I couldn't stand for anyone being mean to it (a la the Hwangs). That idea has been discarded.

Yeah, there are pretty good mutual funds around. But if the market tanks, I don't want to lose 40% on that much money.

CDs are only paying 1 - 1.5% right now.

If you have any ideas, let me know.


Melissa said...

I'm an idiot about things like that, but GOOD LUCK!

Scrapping in Circles said...

I'd pay off as much of the mortage as possible, but I hate having debt.

Krista said...

I think I would also put it back into your current mortgage.