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Originally Posted by BrianL99
All this nonsense about bonds, baffle me. The Bond is nothing more than an additional cost when you buy a home in TV, new or pre-owned. It's not a "pay as you go" expense, unless you elect to do it that way ... in which case, you get an exorbitant interest rate and any associated fees. Along with the fact that it's legally not tax deductible.
WTH? If I home is $500,000 + $30,000 Bond, the true selling price is $530,000. It's not complicated.
Granted, not all pre-owned homes are identical, but if one has a $20,000 outstanding Bond, you're paying $20,000 more than the sale price.
Geez, it's 4th grade math.
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Quote:
Originally Posted by Altavia
Really?
A buyer who sells the home three years later passing the bond on does not pay $20K.
There are bonds from just a few years ago near 4%, you can easily earn more than that in investments or even CD's now days.
What if interest rates go back to +10%, would it have been smart to pay off the bond?
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Where did I say it was smart or not smart to pay off a bond?
& if someone sells a home in 3 years, you're right ... he didn't pay $20,000 ... he/she paid the interests & costs and borrowed the money. Those "near 4% Bonds" you mentioned, were a great deal when you could borrow money at 3%, huh?
A bond is just another type of mortgage. You borrow the money and pay it back over time. The exact same considerations someone would make with a mortgage, is exactly what you'd do with a Bond. Weigh the interest rates and do what you think is prudent. It's just a mortgage that's secured differently. As someone else pointed out, it's not backed with a personal guaranty, but backed by it's priority lien, so it's not a "personal debt".
The one and only time I can think of, when a Bond is different than a mortgage from a Buyer's perspective, is when the financing ratio is tight. A Primary Lender who's selling mortgages on the secondary market, has Loan to Value ratios to worry about. A CDD Bond is a slightly different circumstance from that viewpoint. That said, it sort of washes itself out, as it affects income to expense ratios.