I will construct a simple example, where I will ignore the future value of money. A house with a $23K bond will cost about $1600/year. After 10 years you will have paid $16K and still have a bond balance of $19K. At that time if you wish to sell the house I would suspect you can ask for a price premium of more than $7K (the difference between what you paid in bond payments and what it would have cost you to pay off the bond initially). Factoring in the future value of money will change the equation but I hope you see the point.
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Originally Posted by Boomer
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.
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