When to pay off home bond

[Bay Kid]

My home was built in 2004. When is it smart to pay off the bond? What time of year is the best to pay?

[village dreamer]

I'm thinking , are you going to stay in this house until you die ? do you want to pay 6% or can you make more than 6% on your money? do you want a payment??

[asianthree]

When you know this is the house you are not going to sell

[Bogie Shooter]

My home was built in 2004. When is it smart to pay off the bond? What time of year is the best to pay?

The infrastructure of the District in which you live was built with tax-exempt bonds. The bonds are repaid with monies collected in the annual tax bill sent out by the Sumter or Marion County Tax Collector's office and appear in the Non-Ad Valorem section of the tax bill as "Bond Debt Assessment".

You may pay off your bond assessment in full at any time. You are not required to pay off this assessment in advance.
�If you choose not to pay off the bond debt before the �July cut off date�, the annual assessment will continue to appear on the tax bill until the debt is paid off.
�If you choose to pay off your remaining bond assessment before the July cut off date, the yearly installments will be eliminated from your annual tax bill.
�If you pay off your bond between the July cut off date and September 16th you will owe no additional interest; however, you will still have one more annual bond assessment on your tax bill.
�If you pay off your bond between September 17th and March 16th you will owe six months additional interest.
�If you pay off your bond between March 17th and the following July cut off date, the full annual assessment of interest is owed.

Contact the Bond Unit at (352) 751-3900 for your Bond Payoff amount.

The July cut off date is July 22, 2016 to eliminate the bond assessment on your 2016 Tax Bill.

[dewilson58]

I hate debt.

I hate monthly payments.

The effective interest rate on these bonds suck.

If you like debt, if you like monthly payments........get a home equity loan or a mortgage loan and pay off the bond, the effective interest rate will be less.

[tommy steam]

Can you pay percentages of the bond off, 25, 50 or more?

[dewilson58]

Can you pay percentages of the bond off, 25, 50 or more?


http://www.districtgov.org/departments/finance/bond_info.aspx

[NavyNJ]

I hate debt.

I hate monthly payments.

The effective interest rate on these bonds suck.

If you like debt, if you like monthly payments........get a home equity loan or a mortgage loan and pay off the bond, the effective interest rate will be less.

Plus....if you go with this option (Home Equity Loan, etc.) even though you will continue to have payments, at least the interest will be deductible on your federal taxes, unlike the bond interest.

[JoMar]

I'm thinking , are you going to stay in this house until you die ? do you want to pay 6% or can you make more than 6% on your money? do you want a payment??

Life expectancy also plays into in.

[Bogie Shooter]

Can you pay percentages of the bond off, 25, 50 or more?

No.

[patfla06]

I also hate debt.
I did not like seeing the bond amount on the tax bill.
And the interest rate was too high.

We paid it off 1 year after moving in (2 yrs. after buying).
Our plan is to stay in our house.

It all depends on what works for you.

[ColdNoMore]

When is it smart to pay off the bond?

It all depends.

Is the interest rate you're paying on the bond, higher than the gains you can reasonably expect to make investing it?

If so, pay the bond off.

If that same money returns a higher % rate investing however, take the money you would use to pay off the bond and go invest it.

[Barefoot]

When you know this is the house you are not going to sell
My advice ...
If you're going to keep the house for a long time, pay off the bond.
If there is a possibility you'll be moving anytime in the next few years, don't pay off the bond.
It will make your home more attractive to advertise it as "bond free".
But strangely, it doesn't mean that prospective purchasers will be willing to pay an increased amount for your home.

[Bay Kid]

I sent them a check. Thank you for all the ideas. Free and clear!

[Villageswimmer]

I sent them a check. Thank you for all the ideas. Free and clear!

Congrats!

[Chatbrat]

Debt keeps poor people poor and makes rich people richer. Avoid it like the plague. If you owe any money on your residence, you don't own it, you're renting it from your lending institution < ( another name for landlord)

[ColdNoMore]

Debt keeps poor people poor and makes rich people richer. Avoid it like the plague.

Some of the the largest corporations in the world disagree with you.

Very few of them don't have some type of debt.

They simply made the calculation that their debt service is less, than what they will benefit from when using that same money elsewhere.

If you're paying off a bond that is at say 5%, but you can make your money work in other places for you at 7%, then you are losing out....and that really isn't being very fiscally astute. :shrug:

[dewilson58]

Some of the the largest corporations in the world disagree with you.

Very few of them don't have some type of debt.

They simply made the calculation that their debt service is less, than what they will benefit from when using that same money elsewhere.

If you're paying off a bond that is at say 5%, but you can make your money work in other places for you at 7%, then you are losing out....and that really isn't being very fiscally astute. :shrug:


I agree with the Corporate America statements........leveraging debt works.

After adding in the Admin Fee, the effective rate on my bond was in excess of 7%. My investment return would have to be in excess of 10% (less taxes), to breakeven. So a guaranteed return of 10% (by paying off the debt), I decided to pay it off.

Every situation is different, every logic is different. Good luck to all on the chosen path.

[Chatbrat]

Corps make $$ based on the products and services , not money --I've invested in a lot of venture investments of small companies before they went public--

[Villageswimmer]

Look at your own Amortization Statement to see what the bond is really costing you over the 30 years. There is also an "administrative fee" tacked on annually.

[Chatbrat]

Don't worry about saving $$, worry about making $$---

[patfla06]

Some of the the largest corporations in the world disagree with you.

Very few of them don't have some type of debt.

They simply made the calculation that their debt service is less, than what they will benefit from when using that same money elsewhere.

If you're paying off a bond that is at say 5%, but you can make your money work in other places for you at 7%, then you are losing out....and that really isn't being very fiscally astute. :shrug:

Where can you get 7%??????

[patfla06]

Talking about debt in our age group is a different discussion.
You don't want to take "risks" now that you might have
taken in your younger years.
IMHO at this age I don't want ANY debt or to take risks.

[CWGUY]

:wave: If you are thinking about paying your bond off.... better move quick. The cut off so it will not be on the next tax bill is July 22nd. Only have 2 days counting today.

[Chatbrat]

Gabelli Utility Trust--pays 8.77% .05/monthly--if you reinvest your dividends, you get shares @5% discount from mkt

[RickeyD]

Gabelli Utility Trust--pays 8.77% .05/monthly--if you reinvest your dividends, you get shares @5% discount from mkt



What is mkt ?

[Chatbrat]

market

[RickeyD]

market



[emoji1303]

[justjim]

Debt keeps poor people poor and makes rich people richer. Avoid it like the plague. If you owe any money on your residence, you don't own it, you're renting it from your lending institution < ( another name for landlord)

What you say is absolutely correct, however, you are also "leasing" your property from the Government. You pay your lease in the form of taxes each year. So in reality you never really own your home free and clear so to speak.

[justjim]

The infrastructure of the District in which you live was built with tax-exempt bonds. The bonds are repaid with monies collected in the annual tax bill sent out by the Sumter or Marion County Tax Collector's office and appear in the Non-Ad Valorem section of the tax bill as "Bond Debt Assessment".

You may pay off your bond assessment in full at any time. You are not required to pay off this assessment in advance.
�If you choose not to pay off the bond debt before the �July cut off date�, the annual assessment will continue to appear on the tax bill until the debt is paid off.
�If you choose to pay off your remaining bond assessment before the July cut off date, the yearly installments will be eliminated from your annual tax bill.
�If you pay off your bond between the July cut off date and September 16th you will owe no additional interest; however, you will still have one more annual bond assessment on your tax bill.
�If you pay off your bond between September 17th and March 16th you will owe six months additional interest.
�If you pay off your bond between March 17th and the following July cut off date, the full annual assessment of interest is owed.

Contact the Bond Unit at (352) 751-3900 for your Bond Payoff amount.

The July cut off date is July 22, 2016 to eliminate the bond assessment on your 2016 Tax Bill.

Thanks Bogie, very informative post. Also, you can use "search" on TOTV as there are several threads and posts regarding paying off your bond.

[JRichm369]

The bond is a second mortgage that stays with the property until it is satisfied, thus it is part of the value of the property. If it has been paid off you or your estate will be able to sell at a higher price.

[kstew43]

What you say is absolutely correct, however, you are also "leasing" your property from the Government. You pay your lease in the form of taxes each year. So in reality you never really own your home free and clear so to speak.

Very depressing thought.....

[Boomer]

Gabelli Utility Trust--pays 8.77% .05/monthly--if you reinvest your dividends, you get shares @5% discount from mkt


Made me look, Chatbrat..........

Gotta luv the symbol it trades under. :) -- a reminder of what can (or should) be a big factor for every individual making investment decisions.

[Chatbrat]

I've had GUT forever, I've been averaging 15%, with reinvesting dividends--its a no-brainer--Mario Gabelli is a straight shooter

Its a stock,no need to pay anyone to invest it for you-

[RickeyD]

The bond is a second mortgage that stays with the property until it is satisfied, thus it is part of the value of the property. If it has been paid off you or your estate will be able to sell at a higher price.


No, no and no.

[ColdNoMore]

Where can you get 7%??????

Take your pick. :D


Please note the date on the bottom of the valley. ;)

[ColdNoMore]

No, no and no.


Yes, yes and yes...you are absolutely correct. :thumbup:

[ColdNoMore]

I agree with the Corporate America statements........leveraging debt works.

After adding in the Admin Fee, the effective rate on my bond was in excess of 7%. My investment return would have to be in excess of 10% (less taxes), to breakeven. So a guaranteed return of 10% (by paying off the debt), I decided to pay it off.

Every situation is different, every logic is different. Good luck to all on the chosen path.

Look at your own Amortization Statement to see what the bond is really costing you over the 30 years. There is also an "administrative fee" tacked on annually.

Absolutely good points.

You need to actually know both what the debt service is really costing you, as well as what your actual returns are on investments when including the expense ratio.

However, if they are almost identical there is still something to be said for maintaining a certain amount of liquidity....for an opportunity that might arise. :shrug:

Conversely, the personal feeling of no longer having that debt, while hard to quantify except by each individual....is also something to consider.




dewilson nailed it with.... :thumbup:


Every situation is different, every logic is different.

Good luck to all on the chosen path.

[theorem painter]

No, no and no.

The bond is a second mortgage that stays with the property until it is satisfied, thus it is part of the value of the property. If it has been paid off you or your estate will be able to sell at a higher price.

I disagree. When people buy a house they look at the comps. Not comps plus the bond or minus the bond. If you pay off a $25K bond there is no way you are going to get $25K more for your house than your neighbor's house that has a bond. It might sell more quickly but not at a higher price.

[VApeople]

What you say is absolutely correct, however, you are also "leasing" your property from the Government. You pay your lease in the form of taxes each year. So in reality you never really own your home free and clear so to speak.

You are absolutely correct. We do not actually own anything. Our government has decided to say that we own our belongings and our property. We depend on our government to have enough military power to keep other countries from taking over our property. If our government fails to do that, we lose everything.

That is what happened to my Native American ancestors. Their government fought the European settlers in a war and lost everything. They were either killed in the war or captured and sold into slavery. Their daughter was then adopted into a white family, later married a white man, and that is why I am here today.

[Challenger]

I disagree. When people buy a house they look at the comps. Not comps plus the bond or minus the bond. If you pay off a $25K bond there is no way you are going to get $25K more for your house than your neighbor's house that has a bond. It might sell more quickly but not at a higher price.

Show me the data--- and then it can be a rational discussion. Until then there is much misinformation circulating about the "bond" and the appropriate decision for each individual homebuyer.

[Barefoot]

The bond is a second mortgage that stays with the property until it is satisfied, thus it is part of the value of the property. If it has been paid off you or your estate will be able to sell at a higher price.

I disagree. When people buy a house they look at the comps. Not comps plus the bond or minus the bond. If you pay off a $25K bond there is no way you are going to get $25K more for your house than your neighbor's house that has a bond. It might sell more quickly but not at a higher price.
:agree: With no bond, your home may sell faster. But there is no guarantee it will sell at a higher price.

[Challenger]

:agree: With no bond, your home may sell faster. But there is no guarantee it will sell at a higher price.

Show me the data that supports this premise. The is never any guarantee that the next sale will be comparable to anything.

[Bay Kid]

PAID! Free of debt.

[RickeyD]

PAID! Free of debt.



The human experience has proven, we are all never free from debt. We all owe someone/something, something. But Congrats to you !!!

[graciegirl]

I'm thinking , are you going to stay in this house until you die ? do you want to pay 6% or can you make more than 6% on your money? do you want a payment??


That was our guiding philosophy. We didn't pay the bond on the first house here and we haven't paid the bond on this house, although both homes were paid for. We never know if another home here may catch our fancy. It is cheaper and easier to move here in TV and houses sell quick if they are nicely decorated and priced fairly. Not adding the bond in, catches the eye of potential buyers as a lower price. Just our view.

[biker1]

Ideally, the real estate sales people will be able to articulate the financial benefits of a paid off bond. In my case, it is about $1600/year (non tax deductible) with an effective interest rate of about 5.5%. I paid it off. I look upon it as part of my diversified portfolio.

Show me the data that supports this premise. The is never any guarantee that the next sale will be comparable to anything.

[Villageswimmer]

We must have one of the highest interest rates--6.125 % not counting the administrative fee, and you're correct not dedictible.

[VApeople]

In my case, it is about $1600/year (non tax deductible) with an effective interest rate of about 5.5%. I paid it off. I look upon it as part of my diversified portfolio.

How is a debt part of any portfolio?

If a debt is part of a portfolio, then I guess we can all go borrow a bunch of money and claim we are rich.

[Chatbrat]

If the rule of 72 holds true, the bond holder will have doubled his bond back in 12 years

[justjim]

Most agree, if your house in TV is "final", in good health, and expect to live average life expectancy, pay off of the bond certainly makes sense. On the other hand, to each his own.

It makes a lot of "economic sense" not to own two houses. One here and another up north. But we choose to do so. To each his own.

[biker1]

Huh? Where did that come from? I never said that, or implied it. Go back and reread. I paid off the bond.

How is a debt part of any portfolio?

If a debt is part of a portfolio, then I guess we can all go borrow a bunch of money and claim we are rich.

[VApeople]

Huh? Where did that come from? I never said that, or implied it. Go back and reread. I paid off the bond.

OK, I misunderstood your post. I didn't realize you had paid off your bond. I didn't know what 'it' referred to when you said this:

I paid it off.

I guess you are considering a paid-off bond to be part of your portfolio because you reasonably assume that a paid-off bond will help you sell you house for more money. That makes sense to me, but others seem to disagree.

We are closing on a new house in two months and we are trying to decide if we should pay off the bond or not.

[Duke-SRT]

You say if I pay between the July cut-off date and Sept.16th ther will be one more assesment on my tax bill. Will I have to pay this assesment even though the bond is paid off?

[Bogie Shooter]

You say if I pay between the July cut-off date and Sept.16th ther will be one more assesment on my tax bill. Will I have to pay this assesment even though the bond is paid off?

See post #4.

[Jimmydoodlebug]

What you say is absolutely correct, however, you are also "leasing" your property from the Government. You pay your lease in the form of taxes each year. So in reality you never really own your home free and clear so to speak.

Completely correct. You never really own your house, you just rent it from the government. Stop paying your taxes and out you go.