Quote:
Originally Posted by biker1
I suspect one of the reasons why The Villages sales agents tend to suggest that you not pay off your bond is because it may increase the probability that you will buy another house. Perhaps with the bond paid off, you are more likely to stay put??
In our own case, we paid off the bond - about $22K. The thinking was that we would probably be in the house for at least 10 years. During this time, we will have paid about $14K in non-deductible interest and fees and about $3K in principal. There is definitely a cost to the lost opportunity if the money was invested but the returns have uncertainty. For those who didn't pay if off, it was refinanced recently and the annual payment appears to have dropped about 13%.
|
Banks love people who think like that.
$22k would have grown to $40K if invested at 6% for 10yrs.
Plus it is unlikely you will recover that $22K at time of sale, much less the $40 it would have grown to safely invested.