Quote:
Originally Posted by Altavia
What part of the bond financing the infrastructure makes no sense?
The effective cost of a bond is the difference between the bond interest and what you could earn investing that money.
For example, you have a $50K bond @ 4.5%. Instead of paying it off, take your bond money and purchase a 4.5% CD, the bond is now effectively costing 0%.
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True to some extent. If you don't have a bond, you can use interest earned on something more enjoyable. Personally, I would rather use the earnings on a spectacular vacation. Especially when we live in a community with cookie cutter homes. It is simple to find the model you like with the bond paid off.
If interest rates go down, then you must use your savings to pay the bond. A house with no bond will not have that issue.