Quote:
Originally Posted by twoplanekid
It’s interesting that when you finance, the bond is not included in the appraised value of the house. So, the approved loan amount from the bank and the monthly payments don’t include a bond payment. With bank help you pay the owner/developer the purchase price and then are automatically approved or somehow assumed to be a good risk to pay off the bond. Does anyone else know of a similar bond situation in another location in the US that is treated in this manner?
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The bond is a superior lien against the house. It has nothing to do with the value of the property. An appraisal values the property without regard to this lien. The value is the value with or without the bond.
The cost of the property ,on the other hand, is the purchase price paid plus the total of outstanding and unpaid liens , in these cases the Bond.
Total consideration for a house with$200,000 price and a $10,00 bond is $210,000 without regard to the appraised value.
Since the Bond debt runs with the property , there is no approval process needed. In priority it is superior to the mortgage debt.