Quote:
Originally Posted by retiredguy123
Even if they do the math and they are willing to pay an extra $20k for the house because the bond is paid off, at today's current mortgage rate of 6 percent, that is an extra $1,200 per year in interest. For some buyers, that may disqualify them for a mortgage. But, as I understand it, mortgage lenders do not even consider a bond on the house when they appraise the house or determine the buyer's mortgage eligibility.
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You address two good points I hadn't considered. One being if the extra $ in paid bond would affect how the mortgage underwriters appraise the loan. The other point, which I think is more intriguing is that I've always been looking at this with the idea that existing mortgage rates are less than the bond rate. However, as you point out, that's not the case right now. That changes the dynamic. Having paid off the bond, and now wanting to get it back in purchase price is working against you compared to the house for sale that has that same amount of bond locked in a at a lower rate.
Good point.