@Ashton
This could be a compromise that allows you to save on some interest while also being considerate of the loan officer’s situation.
As a loan officer, I can confirm that commissions are impacted by early payoffs. If you appreciate the service your loan officer provided, you might consider waiting the six months to ensure they receive their full commission as a form of thanks for their service.
@Ainsley
I wasn’t aware that loan officers worked on commission only. It’s good to know that paying off the mortgage early could have unintended financial consequences for them.
If you have the financial means to invest the money at a higher return rate than your mortgage interest, consider investing instead of paying off the mortgage. However, if not, paying off the mortgage could provide peace of mind and long-term savings.
The main reason to wait six months is related to the financial penalties the lender might incur due to early payoff. If this isn’t a concern for you, there may be no compelling reason to delay paying off your mortgage.
It primarily benefits the loan originator if you wait six months to pay off your mortgage, as they would otherwise need to return their commission. If you’re comfortable with the financial impact on yourself, it’s worth considering their position.
Make sure you’re not facing capital gains taxes on the sale of your original house before deciding to pay off the new mortgage. If you’re clear of such taxes, paying off the mortgage could be a sound financial decision.
@Sage
Thank you for the advice. We’ve confirmed that there are no capital gains taxes on the sale, so we’re considering paying off the mortgage.
Clayton said:
@Sage
Thank you for the advice. We’ve confirmed that there are no capital gains taxes on the sale, so we’re considering paying off the mortgage.
That’s great to hear! It sounds like paying off the mortgage could be a good move for you financially.
As a loan officer, I would say go ahead and pay off the mortgage if it makes financial sense for you. While it’s true that paying off early can affect commissions, the financial security and savings from not having a mortgage can outweigh these concerns.
@Weston
We’re leaning towards paying it off given our financial situation and the potential savings on interest. Thank you for your input.
If you have the means to pay off the mortgage early, doing so can save you on interest and provide financial freedom sooner rather than later.
Thank you, everyone, for your insights. It seems the consensus is that there’s no financial benefit to us for waiting to pay off the mortgage, aside from considerations regarding the loan officer’s commission. We’ll make a decision based on our financial goals and the impact on all parties involved.
@Clayton
It’s great that you’re considering all aspects, including the impact on your loan officer. Whatever decision you make, it sounds like you’re well-informed and considering the best interests of everyone involved.
The primary concern with early payoff is related to the loan officer’s commission. If you’re financially able to pay off the mortgage and willing to absorb the minor additional costs of interest by waiting six months, it could be a kind gesture towards the person who facilitated your loan.
If your investment options can’t guarantee a higher return than the interest you’re paying on the mortgage, it might be wiser to pay it off and save on the interest.
Consider whether investing the money that would go toward paying off the mortgage could yield a greater return than the cost of the mortgage interest. If so, it might be more beneficial financially to invest rather than pay off the mortgage immediately.
Paying off part of your mortgage and then recasting the loan can change your payment schedule and reduce monthly costs, while allowing you to use the remaining funds for other investments or expenses.
Consider the financial implications of paying off all but a small portion of your mortgage to preserve some flexibility and possibly avoid large commission chargebacks for your lender.
Rex said:
Consider the financial implications of paying off all but a small portion of your mortgage to preserve some flexibility and possibly avoid large commission chargebacks for your lender.
That’s a thoughtful approach. I’ll discuss with our loan officer if there’s a way to manage the payoff that benefits both parties.