The narrator seems to be insane from the things he claimed he did. But in every "truth" told, there is a little bit of exaggeration, a little bit of lies, and a little bit of something that never happened. The narrator could be reflecting and explaining his actions after he is caught. However, because he is insane, it is possible that this entire scenario never happened--it was all him hallucinating.
If that was the case, then his psychological issues drove him to have an inexplainable hate against the old man. His strategic planning to kill the man was all in his head. The part where the narrator says he heard the heart beat under the floor planks suggests that the narrator was hallucinating. There is no way that a heart can still beat after the person was smothered to death and the body having been severed.
