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Originally Posted by ronda
Finance guy, interesting thoughts. I guess this is where behavioral economics come in.
I've grappled with how to think about the bond for a bit, before I bought my house. In my brain the bond is an ongoing carrying expense every year, like a mortgage. It's not a 100% comparison, because then bond can be transferred to the person who buys your house, if you sell it. So, I think it somewhat depends on how long you plan to keep the house. Not sure if you sell a house wiht a lower bond, if you get a higher selling price. My guess is no, but it might be viewed as more desirable than one with a higher bond, and therefore get more offers.
Also, if you buy a house without a bond, you can always take a mortgage out on it for the value of the bond you would have paid on the other house you were going to buy and call it even, if you keep the house. If you sell the house, of course you need to pay off the mortgage,, where bonds get passed on to the new homeowner.
Well, those are my thought, for what they are worth.
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Good for you! The question is actually difficult to answer, because every transaction is unique, just as every buyer and every house is unique. That being said, your question comes down to the buyer, can he/she afford and find your property worth the sales price and the bond, if any? If not, you wait until there is one.. . the problem with selling a house is usually being motivated to sell, ie, one needs the money asap and can't afford to wait to realize the desired sales price, excluding this market.
But, you also type as if you aren't sure whether you the bond should be paid off. That is a different question. If you are young 55-65 and after a year or two, you think that this is a forever type home, then paying off the bond, if easily affordable, removes rented money and a monthly expense, assuming that you save monthly for the annual payment, removing the payment from the your capital base, and keeping it within your annual income. That last statement was written for those who confuse a monthly expense with an annual payment. . .
Reducing fixed expenses from a fixed income stream, whether a salary or a social security payment gives more flexibility to discretionary spending, and reduces stress on unexpected expenses . .
Will you get your money back if you pay off the bond early? yes, if the sales price is greater than the purchase price plus the bond value. . . which has recently happened with the surge of prices due to excess demand by retiring peeps. . . but this is unusual in how fast it happened.
So the OP, be sure you understand what the bond means, and the implication for you finances and affordability of whatever you decide to buy.
Although many advise to rent to figure out exactly where you want to buy, there are times when getting in sooner gives you more options in the future, especially if your finances are tight, or you truly can't make a decision in a relatively reasonable time, when supply is desirable and limited. We did buy in our first week of our first visit when Marsh bend was just opened, and little amenities or retail was built, as we could envision the future and the lot was close to alot of current and future desirable options.
figure out what is important to you and look for that scenario