Quote:
Originally Posted by Challenger
Operative word = appears. In fact total initial obligation is the same. For those able to benefit from interest deducition paying off bond and including that amount in the mortage provides greater interest deduction and probably lesser overall financing costs depending on the rate of bond interest.
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You are talking Obligations I was talking Outlays. The amount of money needed (cash today - outlay) to actually buy the $200K house is less. However if you werre talking total obligations (that you incurr), the $200K house would actually cost you more in the long run because you would be paying all the interest on the bond whereas it would have already been paid if you bought at $215K. Even if you are deducting mortgage interest, the most you would be getting back is approx 28% (or less) of interest paid. BTW I read someplace a while back that approx 50% of the new homes sold here are paid for in Cash.
If mortgage money was tight (as it was 2008-2011), you may not get a bank (except Citizens) to finance the house mortage at 95% if it includes the bond for the appraisal has to come in at the right number compared to comparables in the area...alot of variables here.
Bottom line: there have always been and will be 2 sides to the story wether you should pay cash for the house and pay off the bond. Everyones financial situation is different as well as their comfort level in knowing their house is paid off (along with the bond), or they continue to carry a large mortgage. No one answer fits all situations.