Bond?

[francesco]

Could someone please explain to us "what is a bond?"
Thanks
Linda & Frank

[Sidney Lanier]

The developers of The Villages creates a new village by first having the infrastructure of the village built: roads and streets, underground utilities for each house, water hydrants, sidewalks, and so forth. The costs for this are then passed on to each new home buyer in that village in the form of a bond that runs for 30 years at (so I've heard) 6% interest, with one annual payment made along with the property tax payment. As with other such loans like mortgages, early payments are primarily interest. And with each new village, bonds are higher because costs of construction are higher today than they were X number of years ago.

Some buyers opt to pay off their bonds when they purchase new construction, or may do so sometime later, or may do so when they sell, or may not pay it off at all. Thus, while new construction automatically comes with a bond, resales can have the original bond, part of a bond paid off, or the complete bond paid off. This has to be factored into the price of a house, whether new or resale, and can be a significant amount of money. We ourselves purchased a resale that the original owners had paid off the bond at the time they purchased it as a new house, so that was a great benefit to us by effectively resulting in a lower price of the house.

Hope this helps. If I can answer any more questions, please feel free to send a PM or post whatever you'd like to know about. Though not related to the bond in particular, it's worth being aware that closing costs for buyers of new construction are much higher than those of a resale.

[francesco]

Thank you very much. You were a great help. We are going to come down to look at some property in April. We will keep that in mind. Thanks again.

Frank & Linda

[Villages Kahuna]

Sidney gave you a good answer below. There are tons of posts regarding the bond associated with each house in The Villages. Just do a search for the word from the black bar at the top of the TOTV home page.

In as few words as possible, think of the bond as the share of the cost of developing the infrastructure of the community that is allocated to each house or piece of property in that community. The developer of any community like TV has a choice of simply burying those costs in the prices of the houses he sells, thereby increasing the selling prices, or keeping it separate and passing it along to home buyers by itself. The reason it's called a "bond" is that after the developer builds the infrastructure (roads, sewers, electrical, water, street lights, etc.) he arranges for the issuance of a revenue bond to repay the expenses he has borne out-of-pocket. The repayment of principal and interest of that revenue bond becomes the obligation of the governmental entity governing the community. Each homeowner's share of those bond expenses are typically passed along each year as a part of the real estate tax bills. (Although each homeowner doe have the option of paying off his portion of the bond in a single payment.) When the term "bond" is used relative to a Villages house, it means that portion of the total revenue bond which has been issued that is the responsibility of each house or property owner.

Occasionally, you'll see a term "bond paid" associated with pre-owned homes. That means that the owner has opted to pay his portion of the bond off in its entirety, meaning that subsequent owners will not have to make any further bond payments. Typically, the fact that the bond has been paid is reflected in a higher asking price for the house.

[Don H]

Just a quick question on the bond thing. Can anyone give me an idea of about how much a bond is? I realize there are probably a number of variables..but is there a ball park figure in dollars? Thanks....

[villages07]

Don,

For new homes, depends on what type of house...

For patio villas, I have heard about $13K; for Designers, $21K; for Premiers, up to $30+K; not sure if courtyard villas are same as patios.

For resale homes, the number will be all over the place...depending on when the house was bought, where it is, and how much has been paid down.

[JohnN]

villages07 is pretty darned close, I asked a month ago and was told for villas (including those with the fences ) would run $11K - $15K

[Don H]

Got it. Thanks for the info...

[deeva211]

Just visited the new premier homes in Bridgeport of Miona Shores and their bond is $45,000!!

[Sidney Lanier]

Holy cow! $45,000 bond for a Premier home--and $13,000 bond for a Patio Villa? Wow! It makes resales more desirable, because with them (as in our case), if the bond is paid off, that's a huge savings. Even a partial payoff is a help! When looking at new construction, be absolutely sure to factor in the cost of the bond, not only for the actual figure but for the percentage it adds to the price of the house!

[Indy-Guy]

Check out this previous post about the bond for those who have not seen it.

https://www.talkofthevillages.com/smf/index.php/topic,1702.0.html

[NJblue]

Perhaps someone can clear up some confusion regarding bonds and the ability to deduct the payments on them on your income taxes. In another thread that I found on TOTV, it was indicated that since the bond is not tied to the value of your house (I believe the term used was "non-ad valorem"), that you could not deduct annual payments on your income tax as you could with property tax. What I am reading here, there certainly does appear to be a direct linkage between property value and the size of the bond. What's the story?

[chacam]

In Summerhill, for an Amarillo 3/2, the original bond in 2002 was $8900. NOT SURE but I think all the homes in Summerhill (maybe all of district 3) may have the same original bond, except maybe the villas.

[under55]

I plan on deducting our bond payments I am sure it will be as confusing to a IRS agent as it is to everyone else.

[gonzy]

The bond is not tax deductable for federal income taxes. If you have a mortgage on your home you can make it deductable and probably get a better interest rate by taking out a home equity loan and paying off the bond, if you do that the interest on the home equity loan is deductable. The IRS gave a specific ruling to AARP when we were doing income taxes in TV indicating that the bond is not deductable.

[pqrstar]

And to compare the cost of a bond to taking a home equitity loan to pay it off. . .

What are the current terms for the bond?
Interest rate?
Years to pay off?

[villages07]

Paid off over 30 years; interest rate was about 6% in Aug 06; someone with more recent purchase will have to tell you current rates. You pay it annually as part of your property tax bill (that is the collection mechanism). Each year, in approx July, you'll get a notice of your balance and are given an opportunity to pay it off in its entirety.

In August 06 our designer neighborhood had a bond of about 14,500; every house on our adjoining 3 streets pays the same bond...whether they paid 200,000 for their house or 550,000 for their house. Each house in this section pays the same share of the initial infrastructure costs for the section.

[Happy62]

Sidney gave you a good answer below. There are tons of posts regarding the bond associated with each house in The Villages. Just do a search for the word from the black bar at the top of the TOTV home page.

In as few words as possible, think of the bond as the share of the cost of developing the infrastructure of the community that is allocated to each house or piece of property in that community. The developer of any community like TV has a choice of simply burying those costs in the prices of the houses he sells, thereby increasing the selling prices, or keeping it separate and passing it along to home buyers by itself. The reason it's called a "bond" is that after the developer builds the infrastructure (roads, sewers, electrical, water, street lights, etc.) he arranges for the issuance of a revenue bond to repay the expenses he has borne out-of-pocket. The repayment of principal and interest of that revenue bond becomes the obligation of the governmental entity governing the community. Each homeowner's share of those bond expenses are typically passed along each year as a part of the real estate tax bills. (Although each homeowner doe have the option of paying off his portion of the bond in a single payment.) When the term "bond" is used relative to a Villages house, it means that portion of the total revenue bond which has been issued that is the responsibility of each house or property owner.

Occasionally, you'll see a term "bond paid" associated with pre-owned homes. That means that the owner has opted to pay his portion of the bond off in its entirety, meaning that subsequent owners will not have to make any further bond payments. Typically, the fact that the bond has been paid is reflected in a higher asking price for the house.


And by the way... If two identical homes are side by side and one has the $20-30000 bond paid, the homes will comp out the same... Makes them more saleable if paid, but has Little if any impact on its value... :a20: