Quote:
Originally Posted by biker1
I see the bond as a non-issue. There is a cost associated with the bond, whether it is paid off or not. If it is not paid off then your annual costs will be higher. If it is paid off then your mortgage will be higher because the selling price will be higher, but you won't have the annual cost of the bond. The interest rate on a mortgage is probably less than the interest rate on the bond so there may be an advantage with it paid off. Also, the interest on the bond is not tax deductible but it will be with a mortgage on a house with a paid off bond. If the house with the bond paid off won't appraise at the higher price then that would be an issue. A cash deal is a bit different to evaluate.
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You have pretty well covered things to think about when factoring in the bond, although I do not think it is always a non-issue. -- The issue often is more nuanced than that. If I may, I would like to add a few specifics...................
We own a house between 466 and 466A. The remaining bond is in the mid-teens which added around $1300 on the recent (annual) property tax bill -- though that amount is not tax-deductible, as you said. The interest rate on our mid-teens total-remaining bond amount is 4.25%.
We choose not to pay off the bond because we probably will not keep the house forever and while a paid bond might be an icing-on-the-cake selling point, I am not sure that the seller can expect always to get the pay-off amount back in the price.
When a thread on the topic of the pre-owned market appears, a potential TV buyer usually can find more information about the ins and outs of the bond than they might have already known.......
I hope potential buyers know to ask about the bond amounts. The sales website appears to list the bond simply as paid or not paid. The property tax office does not know the payoff amount. TV must be called directly for that information on pre-owned homes. But I would think agents would make that information available, though a buyer might have to ask.