Quote:
Originally Posted by CoachKandSportsguy
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 |
I think we have an issue of semantics. The value of a paid off bond is less than the amount used to pay it off. So, if your house has a market value of "X" on Monday and you pay off a $10,000 bond on Tuesday, you would hope that your house will be worth "X plus $10,000" on Wednesday. Unfortunately, your house will actually be worth much less than "X plus $10,000" on Wednesday. So, if you are going to sell your house tomorrow, don't pay off the bond today.