Quote:
Originally Posted by 784caroline
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.
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.
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The part you are missing is that mortgage companies and banks are going to consider a persons total debt obligation to be sure that the borrower can maintain the home and service the debt on the mortgage! Banks will consider the bond as credit debt that is essential to maintain the home (similar to property tax)!
IMO, if a buyer does not consider it... it is due to their ignorance on the matter. Matter of fact, they would be the only party involved in the transaction that would be ignorant of the issue.
IMO; If a buyer is ignorant of the issue, it is due to the Real Estate company and agent not informing the buyer of that unique aspect about TV!
Do real estate agencies and agents purposefully not inform buyers about the bond?