Quote:
Originally Posted by Stu from NYC
I have moved on from totally agreeing with Keynesian economics. 
If market price of your house appreciates you sell you are getting the appreciation when you sell and not necessarily the total value of the bond you paid off.
We are in our house now for one year and not sure if we will move to a larger one. As a result we have decided not to pay off the bond now and will wait to see what we wish to do when the world allows us to travel again. |
I never disagreed with that statement.
I disagreed with people who said that you
never get your bond payment back, therefore you should never pay off the bond. I disagreed with people who said that
they don't believe that they ever get their bond payment back if they pay it off.
If you read my posts, I suggest that with the recent rate (say 2017 onwards ) of house appreciation for new houses, you will get your bond payment back between 3-5 years of house appreciation, based on a bond of approximately 10% of the house value and an appreciation rate of 2.5% to 3%. So, if you want to save the cost of interest, which is significant over 20 years, and you plan to stay over 5 years, then you will get the cash you paid back, and save a ton on interest payments, thereby making your retirement income last longer.
So I don't disagree with your actions of not paying it off if you are thinking about moving within 3-5 years, I just disagree with the people who say that you
never get your bond payment back if you pay it off early, or
don't believe that they ever will.
Kind of like debunking an old realtor tale to never pay it off, which if everyone paid off their bond, would cause the cost of the villages public bonds to be more expensive as they would get a reputation for never lasting their stated duration.
sportsguy