Paying Off Rental - Selling in Three Years

[Jason Dammer]

Hi all,

I'm looking for advice on a short term issue. I own one rental that we bought as our primary residence 8.5 years ago. We bought a different house and moved out about five years ago and it has been rented ever since. 

My wife and I own a business and we're looking to build a commercial building in about 3.5 to 5 years. Land runs around 750k and the building will most likely be in the 4-5 million range. We plan on selling it when the time comes to have additional down payment money. Does it make sense to pay off the mortgage this year or just save the cash with the info below? I estimate we could sell the house now for about 190k after spending 6k or so to get it in sale ready condition.

Purchase Price: 170k
Original Mortgage: 167k
Current Balance: 110k
Interest Rate: 4.375
Savings Account Rate: 2%

As far as I see it with the spread on the mortgage and interest rates we're only coming out just over 2% ahead or maybe 2.5k a year. It seems like it might be more prudent to hold onto the cash but if it's almost 100% guaranteed that we'll sell the house in the next four years would it be worth the roughly 10k in saved mortgage interest? 

Any thoughts would be appreciated! 

Jason