Quote:
Originally Posted by Bill14564
Let me type this more slowly this time:
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"It's a mortgage with a different name, folks. Nothing more, nothing less."
- Except the mortgage is directly related to the value of the home - the bond is not
- Except the mortgage on my home is likely different than the mortgage on my neighbor's - the bond is the same
- Except principal on the mortgage can be paid early - principal on the bond cannot
- Except the mortgage must be satisfied for the home to change hands - the bond does not
- Except I can refinance the mortgage to obtain a better rate - I have no ability to refinance the bond
- Except I can itemize interest paid on the mortgage - I cannot itemize interest paid on the bond
Perhaps you meant to say, "It's a mortgage with a different name... except when it isn't"
There are different ways to think about the bond and some are more correct than others.
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I'm not sure it matters how fast or slow you type, if what you're typing is wrong.
The Bond is directly related to the value of your property. Not to the home, but to the lot.
Bonds are not the same for everyone. As for mortgages, you get to choose how much your mortgage is, as does your neighbor. It's not fixed by anyone but the mortgagor.
You absolutely can pre-pay the Bond.
As I've said, it differs from a Mortgage, in that it is "assumable". It does not have to be paid off to sell the property.
You absolutely can refinance your Bond, anytime you wish Call your bank and if you're credit worthy, you're good to go.
As for the deducting the interest? See above. If you opt to refinance your Bond with a 2nd Mortgage on your Primary Residence, that Interest now becomes Tax Deductible (with some limitations).
No, there are no different ways to look at a Bond. It is what it is. The Bond was a loan to the developer to build the infrastructure. When he was done and started building houses, he added up all his costs, split them between all the lots and a mechanism was set up for the buyer's to pay their share. This document explains it:
VCDD Pay Off Bond.
The bottom line is the same. If you have a BOND, you do not own your land "free & clear". You have a loan against it that is transferable. It is a debt to the land, not the person. Essentially, the Town/Collector of Taxes/Bond Holder holds an interest in that land, as shown on your Tax Bill. It is different than taxes, as taxes accrue yearly and is not a fixed amount.
(If someone wants to nit pick and talk about the difference between the Note, the Mortgage, a Lien or any general encumbrances, I get it. But to simplify the discussion, I'm lumping them all in together as "mortgage".)