Quote:
Originally Posted by eweissenbach
I STRONGLY disagree that the bond is "no big deal". I had a Villages realtor try to tell me that last year and I felt she was insulting my intelligence. The bond on new homes is in the $20k range for cottages and designers, and the interest on the bond is in the 6% range. The interest on a mortgage can be had in the 4% range right now. The interest on the bond is not tax deductible, so the real rate is 6% while the real rate (with the tax deduction) on the mortgage is 2.5 to 3%. If you pay off the bond it is unlikely that you will be able to recoup it on resale, whereas if you amortize it the interest is problematic. Now, I am not saying the bond is a reason to not buy new, but I am saying it is a drawback and should be taken into consideration. What I do when comparing home prices is add the bond remaining to the asking price to determine the real cost of the home.
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But let's compare apples to apples. A resale house, with lower bond, will require major repairs (e.g., roof, A/C) sooner than a new house with a higher bond. I think you need to factor in the speed-up of such housing costs.
Gene