Bond

[billlaur]

Does the bond interest rate change at all during its term? Is it a fixed rate for lenght of loan?

[villagetinker]

I believe this is a fixed rate (the reason I paid ours off), however you can call District Customer Service to get to the correct party to give you the exact answer, as there is a possibility different bonds have different terms. Ours was fixed at around 6%, way too high especially this is not tax deductible.

[retiredguy123]

It is a fixed rate for the entire term. But, other properties may have a different interest rate, based on the market when the bond is initiated.

[biker1]

It could change as some CDDs have refinanced their bond. However, it probably won't change.

Does the bond interest rate change at all during its term? Is it a fixed rate for lenght of loan?

[retiredguy123]

It could change as some CDDs have refinanced their bond. However, it probably won't change.
If the CDD refinances the bond, I don't think it will change the current property owner's amortization schedule or their interest rate. It could affect new property owners interest rate.

[biker1]

You know that for sure? The bond follows the house. Why wouldn't the property owners benefit from a refinance of the bond?

If the CDD refinances the bond, I don't think it will change the current property owner's amortization schedule or their interest rate. It could affect new property owners interest rate.

[biker1]

The interest rates vary as the CDDs were developed at different times. They are all 30 year amortizations, as far as I can tell. The terms for each CDD are available on districtgov.org.

I believe this is a fixed rate (the reason I paid ours off), however you can call District Customer Service to get to the correct party to give you the exact answer, as there is a possibility different bonds have different terms. Ours was fixed at around 6%, way too high especially this is not tax deductible.

[retiredguy123]

You know that for sure? The bond follows the house. Why wouldn't the property owners benefit from a refinance of the bond?
No, but The Villages publishes an amortization schedule for every property, and I have not received any notice that this schedule is anything but a payback schedule based on a fixed rate loan. If they want to reduce the payments, that is fine with me, but I don't see any reason or obligation for them to do so. They definitely could not increase the interest rate. I could understand the CDD refinancing the bond, and pass the savings on to future buyers. My opinion.

[biker1]

As I stated previously, some CDDs have refinanced their bond (to a lower interest rate, they wouldn't refinance to a higher rate). I am assuming they passed the savings onto the residents and modified the amortization schedule. I could be wrong. My CDD (10) has not refinanced. I believe it was some of the more northern CDDs that refinanced. The rate on my bond wasn't that high, 5.25% IIRC. I did pay it off upon settling on the house. In retrospect, it may have been better to put the money in equities. I wrote a check for $20K and don't have a $1600 line item on my tax bill. It is what it is.

No, but The Villages publishes an amortization schedule for every property, and I have not received any notice that this schedule is anything but a payback schedule based on a fixed rate loan. If they want to reduce the payments, that is fine with me, but I don't see any reason or obligation for them to do so. They definitely could not increase the interest rate. I could understand the CDD refinancing the bond, and pass the savings on to future buyers. My opinion.

[retiredguy123]

As I stated previously, some CDDs have refinanced their bond (to a lower interest rate, they wouldn't refinance to a higher rate). I am assuming they passed the savings onto the residents and modified the amortization schedule. I could be wrong. My CDD (10) has not refinanced. I believe it was some of the more northern CDDs that refinanced. The rate on my bond wasn't that high, 5.25% IIRC. I did pay it off upon settling on the house. In retrospect, it may have been better to put the money in equities. I wrote a check for $20K and don't have a $1600 line item on my tax bill. It is what it is.
You are correct. After 10 years the bond will be evaluated, and possibly refinanced to a lower rate. In that case, the property owners will get a revised amortization schedule that will be based on a lower interest rate. This is according to The Villages bond assessment office.

[retiredguy123]

Does the bond interest rate change at all during its term? Is it a fixed rate for lenght of loan?
I thought it was fixed, but it is not. It could go down if the bond is refinanced. See Post No. 10.

[Mortal1]

, James Bond

[DAVES]

Does the bond interest rate change at all during its term? Is it a fixed rate for lenght of loan?

If, you have a mortgage, you can ask your bank. If, not the Villages offices can tell you who to call. It is not the same on all properties. Does it make sense to pay it off, like most things it is endless debate. Some will say you will not recover it, if you pay it off. My view, on a resale one has a paid off bond the other ??? nicer landscaping-both have value and the seller or salesperson needs to understand and explain it.

For all, it depends. Where would the money come from and what is that money producing for you now. It is not a reversible decision. You cannot pay off the bond and then decide you want to put the bond back on your property. The bond as an investment. Check it out. It has changed. You could at one time buy the bonds, the interest was tax free and the bond is secured by a home in the villages. I believe the bonds were called and it is no longer tax free to the bond holder.

[DAVES]

You are correct. After 10 years the bond will be evaluated, and possibly refinanced to a lower rate. In that case, the property owners will get a revised amortization schedule that will be based on a lower interest rate. This is according to The Villages bond assessment office.

Confusing to say the least. Interest rates are currently very low. I expect the supplied information that a new bond has a clause to renegotiate interest in 10 years, is correct.
It could well go up in ten years. My view. Mortgage was 3.5%, It is lower now. Bond is/was roughly 20,000 at 5%. If, that money/cost was in the house, the interest would have been 3.5%. Would you would we have bought our home for 20,000 more than we paid?

[DeanFL]

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We got another 'reminder', when getting our tax bill, to check out the bond etc.

Our bond (district 9) is about $20K. Decided to NOT pay it off early. Bought new house in 2015, so 6 years paid already.

Reviewing the online ammort schedule, over the 29 years life of the bond - the total INTEREST paid would be MORE than the net bond$$$. Approx $20K Principle and $21K Interest. Rate is 5.507%.

So back in 2015, for us, it made sense to NOT pay the bond...at that time. NOW, we will pay off the bond.
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[dewilson58]

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Approx $20K Principle and $21K Interest. Rate is 5.507%.

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PLUS the admin fee.

BIG effective rate.

[Bay Kid]

Like a bad loan. Paid mine off the year I bought my home.

[Stu from NYC]

Many people have told us that if you pay off the bond early and than sell you will not get full value from buyers for the lack of a bond so we are not paying it off now.

[dewilson58]

Many people have told us that if you pay off the bond early and than sell you will not get full value from buyers for the lack of a bond so we are not paying it off now.

And many people said, you keep doing that and you will go blind. :ohdear:

[Stu from NYC]

And many people said, you keep doing that and you will go blind. :ohdear:

Wonder how that happens. My post had two lines when posted.

[retiredguy123]

Confusing to say the least. Interest rates are currently very low. I expect the supplied information that a new bond has a clause to renegotiate interest in 10 years, is correct.
It could well go up in ten years. My view. Mortgage was 3.5%, It is lower now. Bond is/was roughly 20,000 at 5%. If, that money/cost was in the house, the interest would have been 3.5%. Would you would we have bought our home for 20,000 more than we paid?
Note that there is no clause to renegotiate the bond interest rate with an individual property owner. The bond assessment office told me that the rate can only go down, never up, if they decide to renegotiate it with whoever holds the overall bond. It seems strange, but that is what the woman told me.

[DAVES]

Note that there is no clause to renegotiate the bond interest rate with an individual property owner. The bond assessment office told me that the rate can only go down, never up, if they decide to renegotiate it with whoever holds the overall bond. It seems strange, but that is what the woman told me.

Talk about strange, no one seems to understand this-including me. "Told me," we paid our bond off. At the time either the bank or the bond assessment told us the interest rate would be reviewed in two years from the time we decided to pay it off. Decision made-done-we paid it off. Truth, I do not know if the rate went down of by how much.

[Goldwingnut]

Remember, the bond is not a loan, it is an investment bond issued by the CDD to pay for infrastructure. We all are paying off our respective bonds issued to the investors.

The bonds rates are higher than a loan's rate because they are different instruments. Bond owners purchase them to make a known return on their investments. This is why they can only be reissued at given intervals, the investors expect to make x% for z years. You cannot renegotiate the bond because you are not the owner, you are the one guaranteeing the bond. Depending on market conditions, at the 10 year point they can be reissued, but will only be reissued if the rate is favorable (lower), when reissued, all those guaranteeing the bond (us the residents) will see a reduction in the interest rate on the bond.

Again, the bond is not a loan as you are accustomed to.

[eeroger]

Does the bond interest rate change at all during its term? Is it a fixed rate for lenght of loan?

We live in district 8 and the bond was reduced to 3.74% a couple of years ago. We make a whole lot more than that in investments. Not worth tying up that money with the stock market breaking new records daily/weekly.

[crash]

As I stated previously, some CDDs have refinanced their bond (to a lower interest rate, they wouldn't refinance to a higher rate). I am assuming they passed the savings onto the residents and modified the amortization schedule. I could be wrong. My CDD (10) has not refinanced. I believe it was some of the more northern CDDs that refinanced. The rate on my bond wasn't that high, 5.25% IIRC. I did pay it off upon settling on the house. In retrospect, it may have been better to put the money in equities. I wrote a check for $20K and don't have a $1600 line item on my tax bill. It is what it is.

The maintenance portion of the bond never goes away. The interest you pay is fixed at the rate when the bond was issued.

[biker1]

What is the "maintenance portion of the bond"? Read post #23 regarding the interest.

The maintenance portion of the bond never goes away. The interest you pay is fixed at the rate when the bond was issued.

[merrymini]

Like any amortization, the heaviest interest paid is in the beginning. Waiting to pay it off only means less to your saving money.

[Goldwingnut]

The maintenance portion of the bond never goes away. The interest you pay is fixed at the rate when the bond was issued.

You appear uninformed on what your Bond and Maintenance Assessment are.

The Bond paid for the common infrastructure in your portion of the community, this would include utility mains, stormwater and retention pond system, roadways, and initial landscaping. This is a one-time cost that most developers simply roll into the cost of the home. In The Villages and many other communities in Florida this cost is separated. In either case, you are going to pay the costs. This is a fixed amount, financed by a series of investment bonds that are sold to investors who expect an agreed to rate of return. These bonds are guaranteed by the homeowners purchasing homes in the community. Your annual bond payments pay the investors the agreed to interest and a portion of the principal each year. They are not a loan to you and have different rules. If you pay your bond off early as I and many others have, that money and the rest collected each year are used to pay the bond holders their agreed to annual bond payments, the rest is held in reserves and invested. In the closing years of the bond the invested reserves are depleted as they are used to help pay the final installments to the bond holders.

The Maintenance Assessment is assessed by the CDD annually to cover recurring and one-time maintenance and repair costs of the infrastructure within their boundaries. This would include landscaping maintenance, storm water collection system maintenance, and general infrastructure maintenance. Except for CDD 12 and 13 this would also include Villa community road maintenance. For the rest of the roads, maintenance is the responsibility of the county, not the CDDs. CDD 4 is the exception, it is responsible for all road maintenance. The on-going maintenance costs will not stop, nor will they decrease over time.

One is not tied to the other, paying off your Bond will not impact or eliminate your Maintenace Assessment. Neither do they have a common obligation source of funds to pay their cost.

Just as the guy cutting your grass couldn't care less about your mortgage and the bank holding your mortgage doesn't care how much you are paying to have your pool cleaned, each expects to be paid and doesn't care about the other.

Here's links to videos that help explain the bond and maintenance assessments

41 Bond Information and The Villages 5-30-19 Construction update - YouTube (https://youtu.be/nGwf7AcmyEI)
42 Maintenance Assessment and The Villages 6-19-19 Construction Update - YouTube (https://youtu.be/Ufm_ycOnbto)