It’s official — I own my house outright! Well… depending on how you look at it.
Technically it’s mine
By all government records, I own the house. Buuuuut I was only able to pay off the mortgage because my mom gave me the money as a 0% loan.
Her reasoning was that I’ll get the money at some point anyway. And since that won’t be for another 150 years,* she said I may as well benefit from some of it now by getting a no-interest loan from her.
Hard to argue with that. Or with saving the approximately $2,500 I would’ve paid in interest in the next few years.
So I accepted.
Of course, I first made sure she would have plenty left in savings if she gave me this loan. I didn’t want to strain her finances for my own benefits.
But as most of you know, she’s very frugal and has always made sure she has a healthy cushion. So she assured me that the loan wouldn’t imperil her finances.
So while she was here, we went to her bank, and she got a cashier’s check, which we took over to Bank of America and paid off the mortgage. A few days later, I got confirmation that my mortgage was paid in full.
But I do still owe someone money for the mortgage amount. It’s just not the type of owing where I could lose my house if I can’t repay it. So I guess my house, like Schroedinger’s cat, is in a quantum state of both being owned outright and having a loan on it.
*The time period she has agreed to stay alive, so I don’t have to deal with losing her. I should really get that agreement written up and notarized so it’s binding.
We made sure to have a written agreement — both to protect her from a gift tax and to protect me in the extremely unlikely event that the IRS wants to know how I paid off $32,500 in one fell swoop. When Mom picked up the cashier’s check, we had the employee notarize the agreement, so it’s nice and official.
The terms are that I’ll start making payments of no less than $600 a month starting in December and that the full amount should be repaid within five years.
A surprising turn of events
Funnily enough, the loan terms technically raise my base housing cost a little.
My absurdly low mortgage was $612.57 a month, but now each month I’ll pay Mom $600 and will need to set aside $230ish each month in preparation for property tax and insurance premiums.
So my bare minimum housing costs will go from $612.57 to $830. But by the time I realized the calculation error, everything was notarized. And given that I was make payments to Bank of America that were at least twice the base amount, even $830 frees up at least $400 a month.
Which is good. Because the patio project proved a little more expensive than anticipated — and more notably, the house very much needs repainting and the bathroom will get tiled before too much longer. So my savings will take a $7,000 to $8,000 hit. So for the next several months, I’ll want to increase the amount I put into savings.
Honestly, it hasn’t completely sunk in that I technically own my house free and clear now. Partially because, as mentioned, I still owe the money, but also because it’s such a huge shift in mindset.
Each month, I’d throw a bunch of extra money at the mortgage, knowing that I was one step closer to being done. Which I anticipated would be another three and a half years.
So to suddenly be done with trying to pad my mortgage payment is a bit strange. Good strange, but still strange.
So maybe I’ll just keep opening the email the bank sent me on Monday until it’s less of a foreign concept.
Anyone else have a story of a house payoff? Or near-future payoff?