Quote:
Originally Posted by Pookirgirl
Another thing to keep in the back of your head......
IF you do get a mortgage, they will be paying your homeowner's insurance after the first year. We were "surprised" when the bank informed us of a deficit in our escrow account and our mortgage suddenly went up an additional $200 a month! That is a big jump for anyone on a truly "fixed income"....especially when you think you've got it all figured out!!
They did tell us that it would probably drop next year because they usually over estimate.
|
Pookir, it might be worth a discussion with your bank (if you have good equity in your property) to see if they'll eliminate the escrow account and allow you to manage your own payments for taxes and insurance. What you describe is exactly what happened to us years ago with the bank carrying a mortgage we had. I went through their math and was able to demonstrate to them that their calculations were very much on the high side for what was necessary to cover taxes and insurance for many years into the future. I then proposed to them that the escrow account be dropped - we had sufficient equity in our place at the time so they were fine with that. Again, this was quite a number of years ago so maybe the prevailing mentality today regarding escrow accounts is different for some financial institutions.
Quote:
Originally Posted by aljetmet
I'm just a wannabee, but this is my understanding.
The bond is charged at about 7% interest and is drawn down over 30 years.
If you are planning to have a mortgage, based on current rates, it seems to me that it would make sense to bump up the mortgage amount by the amount of the bond. This way you pay off the bond at a lower interest rate and the mortgage interest is tax deductible. If I remember correctly, you can pay off the outstanding balance on the bond once a year. So you pay it off when you can. The interest on the bond when paying it off in the conventional manner is not tax deductible.
|
True.....but then this thought comes into play: You probably won't ever see the amount you have invested in paying off your bond if you were to sell within a few years. Some people believe that to be the case - others don't.
There's no "one size fits all" answer when it comes to how to deal with the bond, unfortunately. Choose the route that meshes best with your mindset!
Bill
