Quote:
Originally Posted by merrymini
I assume the bond interest is amortized like a home mortgage and, like a mortgage, over 20 or 30 years. Since the best of accounts, even on line, appear to pay only about .6 Percent these days, those bond payments, I think mine was close to 6 percent, can really bust the bank, your bank that is. People underestimate how much it costs them over the life of the loan because the yearly payments do not seem that big. Use an amortization calculator and you will see how much in interest you wind up paying. Ouch! We paid off our bond on purchase because we planned staying in the house long term.
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So true. If you do the math for the 30 years the bond can be paid out, the cost is nearly double the original price of the bond. The thought that you get to deduct it on your taxes has to be offset with your ability to itemize and your tax bracket. It does not make sense to pay a $1 in interest to get 25 cents back from the government. Interest is not something you want to pay. Very rarely do you come out ahead over life of a loan by paying interest. If we were ever to sell, which we will not, we would just add the bond price that would be outstanding at that point into the price of the house.