Bond payoff

[TNLAKEPANDA]

When is the best time to pay off your Bond? Anyone know for sure?
I know that realtors do not recommend paying off the Bond... however the
Interest is around 6% which is very high.

Thanks

[DAIII]

Sooner the better- the longer you wait the more interest is accrued. I paid mine off first year and it's a wonderful feeling to not pay double in 30 years with the interest.

With that said...

If you're not going to be here in 30 years.. or if you sell to move to another home. best to not pay it off as the bond follows the house not the owner.

I personally am staying in this home (no exceptions)

[bandsdavis]

When is the best time to pay off your Bond? Anyone know for sure?
I know that realtors do not recommend paying off the Bond... however the
Interest is around 6% which is very high.

Thanks

Not sure when the best time is, but if you want the payment reflected on your annual bill, and therefore not have a charge on the November bill, you must pay off the bond by the end of July (actual date may vary by year). As for me, we have determined that we make more by leaving the money invested and paying annually than we would be withdrawing it to pay off the bond.

[CWGUY]

:) From the District Web Site:

Residential Bond Assessment Information (https://www.districtgov.org/departments/finance/bond_info.aspx)

Residential Bond Assessment Information
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 County Tax Collector's Offices 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 16, 2021 to eliminate the bond assessment on your 2021 Tax Bill.

[CWGUY]

///

[Bill14564]

For us the decision point is 10 years. If we are staying more than 10 years then it makes sense to pay off the bond and save on interest. If we feel we will be moving in less than 10 years then the pay off amount will be more than the amount we would pay in annual payments.

Good thought about investments too. If you are making more than about 6% on your investments then you would actually do better to leave the money invested and make the annual payments

[JohnN]

The interest rate is high. If you're planning to say, just pay it off.

[retiredguy123]

I hate debt, but I have not paid off my bond. I think the biggest disadvantage to paying it off is that you will lose money when you sell the house. You will not be able to convince a buyer to reimburse you for the money you used to pay off the bond. And, very few people actually know how long they will keep their house before selling.

[John41]

:) From the District Web Site:

Residential Bond Assessment Information (https://www.districtgov.org/departments/finance/bond_info.aspx)

Residential Bond Assessment Information
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 County Tax Collector's Offices 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 16, 2021 to eliminate the bond assessment on your 2021 Tax Bill.

Thanks for the information

[Stu from NYC]

I hate debt, but I have not paid off my bond. I think the biggest disadvantage to paying it off is that you will lose money when you sell the house. You will not be able to convince a buyer to reimburse you for the money you used to pay off the bond. And, very few people actually know how long they will keep their house before selling.

That is exactly why we do not plan to pay off the bond early.

Have heard they might refinance the bonds to reduce the interest rate.

[charlieo1126@gmail.com]

If you plan on moving never and if you plan on staying never , real low interest rate in can do better with the money in my vanguard index funds , I’ve sold 5 homes here soon to be 6 never gave a discount for the bond and always sold homes over the assessed value

[Toymeister]

I hate debt, but I have not paid off my bond. I think the biggest disadvantage to paying it off is that you will lose money when you sell the house. You will not be able to convince a buyer to reimburse you for the money you used to pay off the bond. And, very few people actually know how long they will keep their house before selling.

You do get a portion of a paid bond back much in the same way you get other home improvements back. Two homes, otherwise identical, will sell for different amounts for say an enclosed lanai. Two identical homes will not sell for the same if one has a paid bond.

The increased sale amount will not be comps + bond balance just as the enclosed lanai cost is not 'paid' .

I place the savings/ increased sale price at a point that the home must be kept in 7-10 years to break even.

[Topspinmo]

I hate debt, but I have not paid off my bond. I think the biggest disadvantage to paying it off is that you will lose money when you sell the house. You will not be able to convince a buyer to reimburse you for the money you used to pay off the bond. And, very few people actually know how long they will keep their house before selling.

So, going to pay the interest which you will get NO money back on and still not pay the bond down that much.

[Stu from NYC]

You do get a portion of a paid bond back much in the same way you get other home improvements back. Two homes, otherwise identical, will sell for different amounts for say an enclosed lanai. Two identical homes will not sell for the same if one has a paid bond.

The increased sale amount will not be comps + bond balance just as the enclosed lanai cost is not 'paid' .

I place the savings/ increased sale price at a point that the home must be kept in 7-10 years to break even.

I asked several real estate agents who have been around for awhile and know the market whether it makes sense to pay off the bond and they all said not worthwhile unless you are sure you will stay in your home for 10 years or so.

In our case we are here less than a year and not 100% sure this will be our only home so not paying off bond at this time.

[Toymeister]

I asked several real estate agents who have been around for awhile and know the market whether it makes sense to pay off the bond and they all said not worthwhile unless you are sure you will stay in your home for 10 years or so.

In our case we are here less than a year and not 100% sure this will be our only home so not paying off bond at this time.

I also asked several RE agents who told me that you do get a portion of the paid off bond back. I went further and examined newer homes for sale with paid off bonds and they do sell for more than comps w/o bonds.

[perrjojo]

You may not get all of your bond money back if you sell but a paid bond is a plus to buyers.

[Stu from NYC]

I also asked several RE agents who told me that you do get a portion of the paid off bond back. I went further and examined newer homes for sale with paid off bonds and they do sell for more than comps w/o bonds.

Agreed that you get some of your money back but to me not worth paying it off early unless we fully expected to live say 10 years in our house. At this point hard to say for sure.

[Carla B]

Have been bond-free for ten years now, it's a good feeling.

[Topspinmo]

Have been bond-free for ten years now, it's a good feeling.


I’ve been debt free for 15 years. Cash is king. Interest is lame:faint:

[mrf6969]

Jump on The Villages Gov. site and see how much our bonds really cost us over time. Not to mention the interest charged they also tack on an admin fee every year. I looked at some bonds in district 13 that were $40k but by the time you have paid them off the true cost on your bond in that district came to $157K. If your planning to stay in your home then pay it off and even if you don't stay you will sell the home quicker when it has "NO BOND"

[askcarl]

Paying Off Your Bond (https://www.districtgov.org/departments/Finance/bondPayoff.aspx)

[TheWarriors]

As more homes age, more bonds will be paid off and it will actually be a detriment to sell a home that still has a bond payment. Agents will then be telling clients why it’s better to purchase the paid off bond homes.

[retiredguy123]

So, going to pay the interest which you will get NO money back on and still not pay the bond down that much.
To me, a mortgage debt and a bond debt are two different things. I would never carry a mortgage debt because it has to be paid off at some point and it has no benefit to me or to whoever buys my house, because they can get their own mortgage. But, a bond debt can be transferred to the buyer, and it can be a benefit to a buyer because they can either assume the debt or pay it off at their option. If I pay it off, the buyer cannot reinstate it. So, a house with an unpaid bond offers the buyer an option that is not available on a house without a bond. Options are good. This can often result in a financial benefit to the seller in terms of the overall investment.

[eeroger]

When is the best time to pay off your Bond? Anyone know for sure?
I know that realtors do not recommend paying off the Bond... however the
Interest is around 6% which is very high.

Thanks

Not all bonds are 6%. District 8 refinanced their bond during the summer. I believe it is somewhere around 4%. Even with the tax increase, our total tax bill was $530 less this year than last year.

[MandoMan]

Sooner the better- the longer you wait the more interest is accrued. I paid mine off first year and it's a wonderful feeling to not pay double in 30 years with the interest.

With that said...

If you're not going to be here in 30 years.. or if you sell to move to another home. best to not pay it off as the bond follows the house not the owner.

I personally am staying in this home (no exceptions)

However, a paid off bond was a powerful inducement to my buying the house I bought. So were a new roof and HVAC system. That’s a bit like getting a $50,000 (or whatever) discount.

[RICH1]

Sooner the better- the longer you wait the more interest is accrued. I paid mine off first year and it's a wonderful feeling to not pay double in 30 years with the interest.

With that said...

If you're not going to be here in 30 years.. or if you sell to move to another home. best to not pay it off as the bond follows the house not the owner.

I personally am staying in this home (no exceptions)
But if you pay it off , you save 6% interest and your home will be more competitive when you sell it! As a recent buyer, I only looked at homes with the bond Paid Off!

[Skunky1]

Is your Real estate agent a financial advisor?

[noslices1]

That is exactly why we do not plan to pay off the bond early.

Have heard they might refinance the bonds to reduce the interest rate.

You could just get a second Mortgage at a lower rate and pay it off.

[Mrprez]

As more homes age, more bonds will be paid off and it will actually be a detriment to sell a home that still has a bond payment. Agents will then be telling clients why it’s better to purchase the paid off bond homes.

That situation already exists. The houses in the northern areas are mostly bond free or small balances and I see no impact on new home sales in the south. I will take a new home over a 20 year old house any day.

[TNLAKEPANDA]

I hate debt, but I have not paid off my bond. I think the biggest disadvantage to paying it off is that you will lose money when you sell the house. You will not be able to convince a buyer to reimburse you for the money you used to pay off the bond. And, very few people actually know how long they will keep their house before selling.

That’s a good point and I have thought about it. I just hate paying over $1000+ interest on a $1500 yearly bond payoff.

[TNLAKEPANDA]

Not all bonds are 6%. District 8 refinanced their bond during the summer. I believe it is somewhere around 4%. Even with the tax increase, our total tax bill was $530 less this year than last year.

We are at 5.25% I believe.

Thanks

[TNLAKEPANDA]

To me, a mortgage debt and a bond debt are two different things. I would never carry a mortgage debt because it has to be paid off at some point and it has no benefit to me or to whoever buys my house, because they can get their own mortgage. But, a bond debt can be transferred to the buyer, and it can be a benefit to a buyer because they can either assume the debt or pay it off at their option. If I pay it off, the buyer cannot reinstate it. So, a house with an unpaid bond offers the buyer an option that is not available on a house without a bond. Options are good. This can often result in a financial benefit to the seller in terms of the overall investment.
That’s a different point of view. Don’t know if I agree or not but thanks for sharing.

[Jsan143]

We owed about $2000 when we purchased the house 2 years ago, my wife inquired on payment. We were surprised when we were told that we owed $2232. And it wouldn’t be paid off until 2032. The payment of $283.59 a YEAR was broken down to $159.73 in principal and the remaining balance of $123.86 was interest and ADMINISTRATIVE FEES! If we continued paying it on their schedule we would have paid an additional $1700. What a scam, they never talk about the ADMINISTRATIVE FEES. Pay it off if you can.

[Catalina36]

I just recently purchased a home in TV. For me the Bond was paid off. Just curious, how much is a typical Bond amount when a new home is purchased. I know the Bond amount may vary depending on what year your home was built.
Thanks

[Catalina36]

I would think it would be a good selling point to have your Bond paid off.

[Bill1701]

One strategy I have heard of is to put down enough on the house and basically roll the bond into the mortgage. That way you get a lower interest rate, but you do need to put more money down.

[fastboat]

When is the best time to pay off your Bond? Anyone know for sure?
I know that realtors do not recommend paying off the Bond... however the
Interest is around 6% which is very high.

Thanks

Pay it off as soon as possible. The interest you're paying is high and NOT tax deductible.

We took out a Home Equity loan and paid it off. The RATE was lower AND the interest paid was deductible. Iike getting a twofor.

[Mrprez]

Our house, a Bungalow CYV was built in 2018. The bond was just north of $17k and the interest rate is 3.9%.

[Stu from NYC]

You could just get a second Mortgage at a lower rate and pay it off.

I could but if we decide to go to a larger home would still not get the money back for the bond in full.

[retiredguy123]

In a perfect world, you would pay off the bond, save money on the interest, and, when you sell, the buyer would reimburse you for the principal amount of the bond that you paid off. Unfortunately, it is not a perfect world, and the buyer will not reimburse you for the full principal amount. So, you need to assess the value of the potential savings in bond interest versus the loss of principal when you sell.

[retiredguy123]

Pay it off as soon as possible. The interest you're paying is high and NOT tax deductible.

We took out a Home Equity loan and paid it off. The RATE was lower AND the interest paid was deductible. Iike getting a twofor.
I think for most retirees in The Villages, their mortgage interest is not really tax deductible either. The higher standard deduction and no Florida income tax makes it more advantageous to not itemize their deductions.

[tvbound]

If we come across two equally liked homes with the bond completely paid off on one and the other that still had a bond balance, we would factor in the non-bond home as being a bit advantageous, but would never consider paying a higher price that fully equals the difference in bond balances. As buyers, I don't think we're alone in that viewpoint.

[rmd2]

When is the best time to pay off your Bond? Anyone know for sure?
I know that realtors do not recommend paying off the Bond... however the
Interest is around 6% which is very high.

Thanks

I paid mine off when I bought the house that I currently have lived in for 9 years. I'm glad I paid it off. If I hadn't paid it I would have paid interest all these years and still have owed the bond. The least that will happen if I sell it in the future is it will be a quick sell for someone who wants NO BOND vs what could be a $20,000 bond.

[rmd2]

So, going to pay the interest which you will get NO money back on and still not pay the bond down that much.

////

[dewilson58]

Our house, a Bungalow CYV was built in 2018. The bond was just north of $17k and the interest rate is 3.9%.
Don't forget the monthly admin fee.............that greatly impacts your effective interest rate. $$$

[ron32162]

Your also paying a carry over fee each year of around 60.00 no one tells you about plus the interest. pay it off anytime I did

[Jdasta]

You do get a portion of a paid bond back much in the same way you get other home improvements back. Two homes, otherwise identical, will sell for different amounts for say an enclosed lanai. Two identical homes will not sell for the same if one has a paid bond.

The increased sale amount will not be comps + bond balance just as the enclosed lanai cost is not 'paid' .

I place the savings/ increased sale price at a point that the home must be kept in 7-10 years to break even.

Whether a bond is paid or not, has no bearing on the appraised value of your home. A bank will not finance a home for more than it is worth. So, don’t think you can automatically sell your home for more than its appraised value just because the bond is paid. The only criteria for paying off a bond is like others have said. Do you get a better return on your investments than the interest rate on your bond? Will you be in your home more less than 10 years? I you answer “yes” to both questions, then do not pay off the bond.

[biker1]

You can see the details of the bond on your home at the following website:

Bond Amortization Schedules (https://www.districtgov.org/departments/Finance/amortization.aspx)



I just recently purchased a home in TV. For me the Bond was paid off. Just curious, how much is a typical Bond amount when a new home is purchased. I know the Bond amount may vary depending on what year your home was built.
Thanks

[B-flat]

Our alternative was finding a resale with the bond paid off.

[pro200]

If you have cash laying around why not.
When they sell you house i think they trickus intp getting the bond.
there is a 100 fee along with he 30 year pay off.
I paid 20500 dollars or so two years ago saving the 5% interest that never goes away.

So brokers are linked to the morse crowd so it is great if the money they make off bonds
keeps going.

so when you sell your house if you do not give the buyer a 5% cost of the bond so i think if you are making money or have money pay it off.

i just sent mortage company 27,500 towards va 4.5 percent mortgage.
to save 200 dollars a month by getting a 2.25 mortgage made no sense.
if i pay 2000 over monthly rate it would be paid off in 10 years.
4000 a month paid off in 2 years.

Sorry i lost track of bond question. Pay it off lowering mortgage payments for me was 150 a month less if you have mortgage. on 20500 balance.

I am happy not to support the morses banks and thei:bigbowr wealth.

[J1ceasar]

You would think two identical homes one with the bond payoff and one without, the one paid off you would get more money. But unfortunately it's not like that you'll probably get a percentage more but not the full amount. It's like two homes one with a new roof and one with a 15-year-old roof. You won't get your full value for buying a new roof. Just like never getting money for the granite you put in

[biker1]

Yes. For my bond, the admin fee is about 0.4% initially with a bond interest rate of just over 5%. It, of course, steadily increases, as a percentage, with time.

Don't forget the monthly admin fee.............that greatly impacts your effective interest rate. $$$

[Mrprez]

You don’t pay the interest up front. A portion of your payment goes to the bond amount each month.

[Sunflower33]

If you aren’t going to stay in your home and may sell and buy again I wouldn’t pay it off as it travels with your house. If you are in your last house until you die I would pay it off as it costs you a lot in interest as well as the bond. Just my opinion

[Mrprez]

Your also paying a carry over fee each year of around 60.00 no one tells you about plus the interest. pay it off anytime I did

You can find out everything you need to know about the bonds quite easily without having to be told anything. Do your homework.

[CoachKandSportsguy]

From a "finance" point of view, the sale of the house recouping an early bond payoff is a simple calculation, but the payoff is a cash flow decision. figure the bond percent of the home purchase price, say 10% and then estimate the annual increase in house pricing, compounding of course, so 5% increase per year, after two years, (1+increase%) ^ number of years = expected increase > 10% . you have recouped your bond pay off in the price of the house. 3% takes about 3 years, 2 % takes about 5 years. Asking real estate agents, whose goal is to sell houses without regard to a specific price level as the impact to them is minimal, may not get a "skin in the game" answer like you have all your "skin in the game"

So do the math, figure the cross over when the house price increase is greater than the house purchase plus bond.

But paying off the bond is a cash flow decision. Can you pay off the bond without impacting your income or your lifestyle significantly? Can you create a temporary saving account and put a fixed amount away each month to save without impacting your lifestyle?

No matter what, tax deductible or not, interest costs reduce your annual income, you can't get around it. Do the math, and if your tax bracket is 20%, you are still losing 80% of the interest in after tax cash flow.

Using the cash for investment income versus paying off the bond and interest has risks as well: the risk is that the income producing stream will continue as long as your bond is not paid off. 20 years ago, you could have 40K in treasuries and get a 5 % interest rate, and you would have thought that situation would be stable indefinately. The point is that there is risk in the income stream, uncertainty that the income stream will remain long enough. There is no uncertainty that the bond payment is due with interest.

So from a finance fiduciary point of view, the best answer is to always pay off the bond ASAP whenever your cash flow scenario can support the payoff. There is no "savings" from not paying if off if you can. There is no free lunch in finance, but there are mental accounting tricks which may convince you there are.

Mental Accounting - Biases & Heuristics | The Decision Lab (https://thedecisionlab.com/biases/mental-accounting/)

or google behavioral finance - mental accounting

Same question: which choice would you make: $10,000 today or $13,000 in a year from now?

Different question: which has the higher cold war ROI: a battleship or a spy?

sportsguy

[Topspinmo]

Not all bonds are 6%. District 8 refinanced their bond during the summer. I believe it is somewhere around 4%. Even with the tax increase, our total tax bill was $530 less this year than last year.

Aaa, the old refinancing scheme, start all over with high hardly no principle paying towards the loan.

[biker1]

I'm so sure about that. It is now amortized over 20 years. Wasn't the original bond amortized over 30 years?? If so, they essentially pick up at the same point in the bond lifetime but with a lower interest rate going forward.

Aaa, the old refinancing scheme, start all over with high hardly no principle paying towards the loan.

[Mrprez]

Not quite. In the beginning it is 1/3 to the bond and 2/3 to interest and admin fee. Amortized over 30 years.

[PugMom]

I’ve been debt free for 15 years. Cash is king. Interest is lame:faint:

:bigbow:

[dewilson58]

Yes. For my bond, the admin fee is about 0.4% initially with a bond interest rate of just over 5%. It, of course, steadily increases, as a percentage, with time.


nevermind.......the prez posted numbers

[NY2TV]

If you are just buying a house and taking out a mortgage, it your mortgage interest rate is lower than your bond rate, add more to mortgage and pay off bond. If you already own, it depends on what your bond rate is and how much your money is earning for you. If you are earning more than bond rate on your investments, don't pay it off. If you have extra money sitting in a low interest savings account getting, then pay it off. Make sure you won't need that money or else you may need to borrow it later at a higher rate.

[OhioBuckeye]

I hate debt, but I have not paid off my bond. I think the biggest disadvantage to paying it off is that you will lose money when you sell the house. You will not be able to convince a buyer to reimburse you for the money you used to pay off the bond. And, very few people actually know how long they will keep their house before selling.

That’s exactly what I thought & why I didn’t pay my bond off!

[Villages Kahuna]

If you do the arithmetic, it’s probably never wise to pay off the bond early.

The municipal bond interest rate on The Villages development bonds is around 5% I think. You certainly couldn’t borrow money to pay off the bond at anything close to the municipal bond rate. Equally certainly, it probably would be easy to earn returns on the investment of the funds needed to pay off the bond before maturity that probably would exceed the bond coupon.

Also as noted above, if you sell your home you won’t enjoy a higher sales price because it is “bond free”. You can list it as a feature of the house, like a view, pool, landscaping, etc., but like any of those features, it’s unlikely that you will benefit in a higher sales price because the bond was paid off.

Unless you simply have a strong resistance to debt, paying off the bond early is probably a bad idea.

[Chateau]

Totally Agree. If you earn more (after tax) than the rate on the bond don’t pay it off

[Jazzman]

When is the best time to pay off your Bond? Anyone know for sure?
I know that realtors do not recommend paying off the Bond... however the
Interest is around 6% which is very high.

Thanks

Maybe you should go back to the same realtor and ask their view on resale homes that have no bond. Realtors I’ve spoken to all say that’s a plus versus a resale with a bond

[jebartle]

When is the best time to pay off your Bond? Anyone know for sure?
I know that realtors do not recommend paying off the Bond... however the
Interest is around 6% which is very high.

Thanks

Or move to Lake County, no bond.

[charlieo1126@gmail.com]

I’ve already sold 4 homes in villages soon to be 5 and altogether in Florida a total of 10 in 30 years I’ve never put more then 20% down , why waste your money when the interest rate is so low .Paying off the bond if your going to move is never a good idea I never had a problem , you may get a few people who will try to low ball you because of bond but your house will sell for the price it’s worth , one of my homes here sold for more then a neighbors who paid off bond the only difference was s fee upgrades

[DAVES]

When is the best time to pay off your Bond? Anyone know for sure?
I know that realtors do not recommend paying off the Bond... however the
Interest is around 6% which is very high.

Thanks
This question comes up often. If, you call your bank they will tell you the phone number of the office that administrates the bond. I wish I had the number to give you. They were helpful and can give your the right answer to your question as to when. The question is when the interest is applied.
As you will see from other posts, to pay it off of not is not that simple. Is the payment deductible to you? Where will the money come from to pay it off and what are you earning on that money? As to the 6%, it is not negotiable. I may be wrong but we bought new about 8 years ago and it was 5%. On a resale, it may be lower. Do not act on my advice without checking but, I was told the interest rate will renegotiate in two years.
Others posted that the realtors tell you if you pay off the bond you will not get anything more when you sell. In my mind that is a Villages rumor. Think, when you sell you are selling to one person not an average. Say you have a pool. It cost you serious money.
If, I was buying your home I would not want it. Someone else may be thrilled. Same is true of all the commonly done things, landscaping, etc. As to the bond, if I was buying a resale and the bond was paid, it is an added value. If, for example a home needs a roof you would lessen your offer compared to a home where they have a more recent roof.

[tophcfa]

If you do the arithmetic, it’s probably never wise to pay off the bond early.

The municipal bond interest rate on The Villages development bonds is around 5% I think. You certainly couldn’t borrow money to pay off the bond at anything close to the municipal bond rate. Equally certainly, it probably would be easy to earn returns on the investment of the funds needed to pay off the bond before maturity that probably would exceed the bond coupon.

Also as noted above, if you sell your home you won’t enjoy a higher sales price because it is “bond free”. You can list it as a feature of the house, like a view, pool, landscaping, etc., but like any of those features, it’s unlikely that you will benefit in a higher sales price because the bond was paid off.

Unless you simply have a strong resistance to debt, paying off the bond early is probably a bad idea.

I agree and disagree with the above. The part about being able to easily earn more than the bond rate through investments is misleading. First, you need to earn more than the bond rate, after taxes. Second, and more importantly, in the current market environment, it is not easy to earn more than the bond rate without taking a fair amount of risk. Interest rates are near zero, so forget about earning your target ROR with relatively risk free bonds, which leaves one investing in much more risky (volatile) investments, at a time where the stock market is hovering at it's all time high and a lot of both economic and political uncertainty. Paying off the bond, is a risk free investment with a guaranteed ROR. I agree that you will probably not recover the full cost of paying off the bond if the home is sold.

[biker1]

My admin fee is about $95 per year. I wonder why the admin fee is less in the example you posted ($60+).


Not quite. In the beginning it is 1/3 to the bond and 2/3 to interest and admin fee. Amortized over 30 years.

[KRM0614]

:) From the District Web Site:

Residential Bond Assessment Information (https://www.districtgov.org/departments/finance/bond_info.aspx)

Residential Bond Assessment Information
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 County Tax Collector's Offices 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 16, 2021 to eliminate the bond assessment on your 2021 Tax Bill.
The bond is paid off but the maintenance line item is there forever you never ever get rid of the greed.

[KRM0614]

That is exactly why we do not plan to pay off the bond early.

Have heard they might refinance the bonds to reduce the interest rate.
No they won’t reduce the interest rate !
That’s just gossip ! TV makes the owners pay for everything. It’s ingenious

[KRM0614]

The interest rate is high. If you're planning to say, just pay it off.
Wrong

[biker1]

No greed involved. The annual maintenance fee, about $500 in my CDD, pays for maintenance of various CDD assets.


The bond is paid off but the maintenance line item is there forever you never ever get rid of the greed.

[KRM0614]

If you plan on moving never and if you plan on staying never , real low interest rate in can do better with the money in my vanguard index funds , I’ve sold 5 homes here soon to be 6 never gave a discount for the bond and always sold homes over the assessed value
But you used the villages to sell your house and they charged you 6% when others are only charging 6% now. Everything is negotiable

[biker1]

I took a closer look. It appears that the annual administration fee is about 0.4% of the initial bond amount - the higher the initial bond amount the higher the administration fee. Near the end of the 30 years, this represents a pretty large percentage of the outstanding balance.

My admin fee is about $95 per year. I wonder why the admin fee is less in the example you posted ($60+).

[Kenswing]

The interest rate for our bond will be 3.67%. Why pay it off? I can take that $30k and invest it in something that pays a better return.

[jbrown132]

When is the best time to pay off your Bond? Anyone know for sure?
I know that realtors do not recommend paying off the Bond... however the
Interest is around 6% which is very high.

Thanks
I think it’s pretty simple. These assumptions are based on the premise you are never going to move. If you are 70 and have 10 years left on the bond pay it off if you have 15 or 20 years left you just may want to pay yearly. If you are 60 and are in reasonable good health and have 10-20 years left I would pay it off. Anything over 20 it’s probably a crap shoot. If your 55 and can afford it, pay it off. If you are 80 or older. It’s not worth it.

[Cheapbas]

The interest rate is near 7 but is dropping to 3% on February 1st. My payment of 1600 was 1100 in interest

[patfla06]

When is the best time to pay off your Bond? Anyone know for sure?
I know that realtors do not recommend paying off the Bond... however the
Interest is around 6% which is very high.

Thanks

We paid our bond off after the first year.

We knew we loved it here and love our house so we paid it off.

We are in our 60’s, live in our houses 15-17 years and have no plans to ever move.

Why pay DOUBLE for the bond over time. We also hate any debt.

[golfjuly11]

We just paid off our bond last year. We have owned our home for 6 yrs. and do not intend to sell. We paid it off after we refinanced to a 15 yr. mortgage. The interest on the bond was the tie breaker to pay it off.

[Challenger]

Most of the info offered on this issue is either, dead wrong, self serving(realtors) , misguided or otherwise questionable . The biggest issues in the decision are: what is the interest rate on the bond that you are inheriting, whether you have excess cash, or low performing assets, where might you find an absolute guilt edged investment that will guarantee complete safety at a rate equal to or higher that the bond interest rate. If you don't understand the computations in order to make the right decision for your situation find someone that you trust who does . Easy to make an expensive mistake in this situation.

[curler1]

It is a pretty simple financial decision. I was able to get mortgage money at 3% so I got a mortgage with enough to pay off the bond as my investments were/are paying off at double to triple that interest rate. Use others money to make money.

[Villagesgal]

Bond is so high now. When we bought it was only $3,500 so we paid it off at closing. Still in same house 19 years later and glad we paid it off. Friends just bought with a $30,000 bond. Don't think I'd pay that off. You can earn more than the 6 percent charged by investing the money wisely.

[dewilson58]

When is the best time to pay off your Bond? Anyone know for sure?
I know that realtors do not recommend paying off the Bond... however the
Interest is around 6% which is very high.

Thanks


There is not correct answer (as you can tell).
This topic "comes up every year".
Lots of opinions (same every year), with no right answer.
Personal preference.
:coolsmiley:

[Mrprez]

Bond is so high now. When we bought it was only $3,500 so we paid it off at closing. Still in same house 19 years later and glad we paid it off. Friends just bought with a $30,000 bond. Don't think I'd pay that off. You can earn more than the 6 percent charged by investing the money wisely.

If you friends just bought, they aren’t paying 6%. Less than 4% in districts 12 and 13. I only found two districts that had an interest rate of 6% or more. If I remember right they were 9 and 10.

[Timothyimitchell]

There is no advantage to carry any type of debt.

[Neils]

The whole bond concept is almost a scam on buyers.
The cost to build any house, including all the infrastructure, should be the purchase price.

The bond simply allows a lower original selling price helping the builder appear to be offering a better deal to unsuspecting buyers.

Would you consider buying a new car for a great deal, but with the engine and transmission on a separate 10 year payment plan, plus interest?

[biker1]

Nonsense to your claim of "almost a scam". Everything is upfront and spelled out, if people care to look and listen. You can use your financing for the house and use their (The Villages) financing for the bond (infrastructure), or pay cash for the house and finance the bond using their financing, or finance the bond with your own financing, or pay cash for both. Nobody is forcing anyone to buy here or use their financing for the bond. Your car comparison is a strawman argument.

The whole bond concept is almost a scam on buyers.
The cost to build any house, including all the infrastructure, should be the purchase price.

The bond simply allows a lower original selling price helping the builder appear to be offering a better deal to unsuspecting buyers.

Would you consider buying a new car for a great deal, but with the engine and transmission on a separate 10 year payment plan, plus interest?

[biker1]

I believe he was trying to state that by not paying off the bond then you are choosing to pay interest that cannot be deducted on your Federal taxes (it is not an ad valorem tax) and if you are at the start of the 30 year amortization of the bond then you are paying down relatively small amounts of the principle.

wtf??

[Papa_lecki]

Maybe you should go back to the same realtor and ask their view on resale homes that have no bond. Realtors I’ve spoken to all say that’s a plus versus a resale with a bond

I agree. The realtors downplay the bond, they say its like property taxes, you’re paying for infrastructure.
I also wonder if buyers of a resale, don’t always know the details of the bond, until they fall in love with a place.
As a buyer, the first question I ask the realtor is “what’s the bond”. Two identical houses, I’m going for the one bond free.
Agree, you may not get back 100% of the bond balance paid (just like you don’t get 100% of the cost of the pool or new kitchen) when you sell.

[Bay Kid]

Like credit card bad debt. Paid mine off 1st year. I hate to owe money.

[retiredguy123]

I agree. The realtors downplay the bond, they say its like property taxes, you’re paying for infrastructure.
I also wonder if buyers of a resale, don’t always know the details of the bond, until they fall in love with a place.
As a buyer, the first question I ask the realtor is “what’s the bond”. Two identical houses, I’m going for the one bond free.
Agree, you may not get back 100% of the bond balance paid (just like you don’t get 100% of the cost of the pool or new kitchen) when you sell.
That is the problem. You don't get back 100 percent of the bond balance paid. That is why you can't view a bond the same way that you view a mortgage loan. When you pay off a mortgage, you always get back 100 percent of the amount you pay off in terms of your total investment return.

[Bill14564]

Like credit card bad debt. Paid mine off 1st year. I hate to owe money.

Only difference is if you think you might sell in the next few years you can pass that credit card debt on to the next owner.

If you plan to stay long term then definitely pay it off now rather than paying interest.

[mydavid]

Not sure when the best time is, but if you want the payment reflected on your annual bill, and therefore not have a charge on the November bill, you must pay off the bond by the end of July (actual date may vary by year). As for me, we have determined that we make more by leaving the money invested and paying annually than we would be withdrawing it to pay off the bond. That don't make much since to me, I'm not a big on investments, but 6% is a lot of interest considering under 3% is the norm.

[Mrprez]

That don't make much since to me, I'm not a big on investments, but 6% is a lot of interest considering under 3% is the norm.

Very few people are paying 6%. Do the research, it isn’t that hard.

[Topspinmo]

The interest rate for our bond will be 3.67%. Why pay it off? I can take that $30k and invest it in something that pays a better return.

Or you could lose you’re ?

[Bill14564]

Very few people are paying 6%. Do the research, it isn’t that hard.

Over 10 CDDs with over 40 different amortization schedules each... sure, not really that hard but I sure don't have the time or inclination to calculate 400+ interest rates.

For mine, the pure interest rate seems to be 5%. However, that isn't all I pay. When I add in the Admin fee I get an effective interest rate of 5.5%. Still not quite 6% unless you round but since the Admin fee is the same every year, the effective interest rate will increase a small amount every year.

[Mrprez]

Over 10 CDDs with over 40 different amortization schedules each... sure, not really that hard but I sure don't have the time or inclination to calculate 400+ interest rates.

For mine, the pure interest rate seems to be 5%. However, that isn't all I pay. When I add in the Admin fee I get an effective interest rate of 5.5%. Still not quite 6% unless you round but since the Admin fee is the same every year, the effective interest rate will increase a small amount every year.

What calculate? The interest rate is stated right there on the schedule. Plus all the of CDDs that are over 29 years old are paid off. Get real.😀

[VApeople]

We bought our house four years ago and were told our interest rate was 6%. We paid the bond off after two years.

[donfey]

When is the best time to pay off your Bond? Anyone know for sure?
I know that realtors do not recommend paying off the Bond... however the
Interest is around 6% which is very high.

Thanks

The bond is financed and is the same as any other loan. If you're making more money, net, in some investment, why would you use that money to pay off the bond "loan?"

[dewilson58]

The bond is financed and is the same as any other loan. If you're making more money, net, in some investment, why would you use that money to pay off the bond "loan?"


Again, Personal Preference.

[manaboutown]

The bond is financed and is the same as any other loan. If you're making more money, net, in some investment, why would you use that money to pay off the bond "loan?"

As I understand it the interest a homeowner pays on the bond is not tax deductible. Most investment income other than municipal bond interest is taxable either at regular income or capital gain rates; municipal bond interest may be subject to tax if one pays AMT. If bond interest is 5% one needs to net 5% after taxes just to pay the bond interest. One would likely need to securely earn at least 10% before taxes to make it worthwhile IMHO which might be pretty difficult to accomplish.

[Stu from NYC]

As I understand it the interest a homeowner pays on the bond is not tax deductible. Most investment income other than municipal bond interest is taxable either at regular income or capital gain rates; municipal bond interest may be subject to tax if one pays AMT. If bond interest is 5% one needs to net 5% after taxes just to pay the bond interest. One would likely need to securely earn at least 10% before taxes to make it worthwhile IMHO which might be pretty difficult to accomplish.

Paying off a bond at 6% is also a guaranteed rate of return of 6%

[manaboutown]

Paying off a bond at 6% is also a guaranteed rate of return of 6%

Yes indeed if one remains in the home. If one then sells the home with a paid off bond it remains an open question as to whether the full amount of the bond payoff can be recovered in the sales price. Some say yes; others say no.