Your interest rate is just shy of 7%. This is nearly twice the current 30 year mortgage rate. The bond is amortized just like a 30 year mortgage so it is front loaded with interest. After 10 years, you will have paid a total of about $16K and about $3K of that will have gone to principal. The administrative fee alone is nearly $1K for those 10 years. Since none of this is an ad valorem tax, it is non deductible on your federal taxes. The future value of the money, if invested, notwithstanding, if you will be in your house 10 years it is probably worth paying off the bond because you will wind up paying the money one way or another. If you pay off the bond, take the annual savings and dollar cost average it back into equities.
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Originally Posted by hifred123
The developer collects the interest and the administration fees on the bonds. Our interest on our bond (we live in Charlotte - unit 196) is $1,174.13 and the administration fee is $97.59. The actual bond payment is $354.78. That is highway robbery. How was this interest rate determined? We just bought our home in August you can bet I am paying off the bond before July to avoid having to pay any more interest to The Villages.
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