To Pay Off Bond, or Not To Pay Off Bond ….

[Michael 61]

I’m a younger retiree, and just closed two months ago on a new patio villa - need to hear from others - should I pay off the bond and just be done with it, or make the yearly payments? I know there is no “correct” answer to this question - I have the funds to pay it off, but would like to hear from others their thoughts, and what they have decided to do. As always, thanks for the support and great information I receive on this site! 😀

[brianherlihy]

i have a new home and at the closeing we pay it off

[Bogie Shooter]

This thread has 106 opinions......

https://www.talkofthevillages.com/forums/villages-florida-general-discussion-73/bond-questions-332983/?highlight=bond+payoff

[Al2014]

I’m a younger retiree, and just closed two months ago on a new patio villa - need to hear from others - should I pay off the bond and just be done with it, or make the yearly payments? I know there is no “correct” answer to this question - I have the funds to pay it off, but would like to hear from others their thoughts, and what they have decided to do. As always, thanks for the support and great information I receive on this site! 😀
Consider this Financially: How much do you save by paying it off? How much are you making on the "funds to pay it off"?
The answer does not matter except to help with what you want to do.

[rustyp]

I’m a younger retiree, and just closed two months ago on a new patio villa - need to hear from others - should I pay off the bond and just be done with it, or make the yearly payments? I know there is no “correct” answer to this question - I have the funds to pay it off, but would like to hear from others their thoughts, and what they have decided to do. As always, thanks for the support and great information I receive on this site! 😀

If you would use the search feature like Bogie did you will find more threads have been started about bond payoff than dog poop.

[Bill14564]

A few things to consider:

- What interest rate are you paying and what gains might you be able to make with that same money? If 2% interest but 5% gains then it would be to your benefit to keep the money.

- Some will say that having a balance on the bond will make the house less attractive when you go to sell. It wasn't even a consideration for us.

- How long will you be in the house? We plan to be in this house long enough that we would save money on interest by paying it off (the sum of our payments over the time we plan to be here would be greater than the payoff amount as of two years ago).

If you are making a good rate on your investments, have a low interest rate, plan to sell in a few years, and don't think having a balance will affect your sale then keep the bond.

If you are losing money on your investments, have a high interest rate, plan to be in the house for a while, or expect that the bond balance will affect the sale then pay it off.

We chose option A. As it turns out given what the markets did, it was a good choice.

[Stu from NYC]

If you would use the search feature like Bogie did you will find more threads have been started about bond payoff than dog poop.

Two well regarded real estate agents said you will likely not get more for your house if you pay off the bond.

As a result since we are not 100% sure we will stay in this house for say the next 10 years we have chosen not to pay it off at this time.

[villagetinker]

OP, if you have a financial advisor, ask them, if not as mentioned above look at potential savings versus potential investment gains. I have no idea what the current bond interest rate is, but be aware you cannot write this off on taxes. So IMHO, if you are paying a higher interest rate then you are making in the market it may be worth paying it off. If you do this, I would take the payment that you would be making on the bond, and invest that money.

[Two Bills]

If you can earn more with the amount invested, stay with the debt.
Worked for us over the years.

[jimbomaybe]

I’m a younger retiree, and just closed two months ago on a new patio villa - need to hear from others - should I pay off the bond and just be done with it, or make the yearly payments? I know there is no “correct” answer to this question - I have the funds to pay it off, but would like to hear from others their thoughts, and what they have decided to do. As always, thanks for the support and great information I receive on this site! 😀

As many have said "it depends" its the calculus of your overall financial situation, not only the interest rate of the bond but mortgage rate, I was inclined not to have a mortgage but rates were so low at the time I bought I took a much bigger loan than I otherwise would have, and paid the bond off, People have said that paying the bond off has no effect on price, I can not see where a buyer would not factor that in a decision ?

[Michael 61]

As many have said "it depends" its the calculus of your overall financial situation, not only the interest rate of the bond but mortgage rate, I was inclined not to have a mortgage but rates were so low at the time I bought I took a much bigger loan than I otherwise would have, and paid the bond off, People have said that paying the bond off has no effect on price, I can not see where a buyer would not factor that in a decision ?

Its hard for me to imagine that if there were two identical homes on the market and one was priced a little higher with no bond, that it would not be more desirable to a potential buyer than the one priced a little lower, yet with a bond.

[Bill14564]

As many have said "it depends" its the calculus of your overall financial situation, not only the interest rate of the bond but mortgage rate, I was inclined not to have a mortgage but rates were so low at the time I bought I took a much bigger loan than I otherwise would have, and paid the bond off, People have said that paying the bond off has no effect on price, I can not see where a buyer would not factor that in a decision ?

The reason is because the seller also factors that in the decision. If there were two nearly identical homes at the same price but one had no bond then the decision would be easy. My guess is you won't find those homes. My guess is the seller will use the paid bond as a selling point to justify an increased price.

With everything else to consider, the presence of a bond was very low on my list of determining factors. However, the newer homes have higher bonds and higher interest so if I was in the market today I might order that list differently.

[retiredguy123]

Another factor to consider is that some buyers will be getting mortgage that requires an appraisal. I don't think that appraisers add any value to the house due to a paid off bond.

[rustyp]

Since we insist on doing the broken record thing - No mortgage, no bond, no car payment, no credit card debt. Quality of sleep - priceless. It's not always about money. If it is about money to you the answer is easy. Do a ROI analysis. Just remember the answer is only as good as the assumptions you plug in. Did you foresee a pandemic a couple years ago ?

[retiredguy123]

I’m a younger retiree, and just closed two months ago on a new patio villa - need to hear from others - should I pay off the bond and just be done with it, or make the yearly payments? I know there is no “correct” answer to this question - I have the funds to pay it off, but would like to hear from others their thoughts, and what they have decided to do. As always, thanks for the support and great information I receive on this site! 😀
My advice is to not pay it off immediately. Wait at least a year or so to see how long you will live in the house. If you pay if off now, and then sell the house, you will lose money.

[dewilson58]

Its hard for me to imagine that if there were two identical homes on the market and one was priced a little higher with no bond, that it would not be more desirable to a potential buyer than the one priced a little lower, yet with a bond.

You are right.

The only exception is if you have an ignorant buyer.

:ho:

[retiredguy123]

You are right.

The only exception is if you have an ignorant buyer.

:ho:
And, of course, there are none of those.

[CoachKandSportsguy]

more posts than dog poop posts is correct.

Simple example, approximates our house
Purchase Price $350,000
Bond $30,000

annual house appreciation 3%
Bond cost + house cost = $380,000

Appreciated cost of house:
Year 0 $350,000
Year 1 $360,000
Year 2 $371,000
Year 3 $382,000

in three years, the house appreciation has increased equivalent to the bond price. .
Therefore, you have recovered the cost of the bond in 3 years if you want to stay in the house greater than 3 years.
so if you pay off the loan, the house appreciation on sale will get your month back,
stay another year or two and you will recover the lost real estate commission on the bond portion. .

So if you are staying put for more than 5 years, you save on high interest payments as the payment is all
interest and very little principal. . . and get the prepayment back in the sale price. . .

So your answer is:
The real estate agents are NOT financial geniuses and certainly aren't being paid to be financial consultants, but more marketing and sales reps. . they are not the correct source of financial information.

good luck, but if you are retired, then minimizing expenses means that can live more easily off of social security and less off of your savings and investments. . . renting money can be expensive on a social security.

[Tvflguy]

Since we insist on doing the broken record thing - No mortgage, no bond, no car payment, no credit card debt. Quality of sleep - priceless. It's not always about money. If it is about money to you the answer is easy. Do a ROI analysis. Just remember the answer is only as good as the assumptions you plug in. Did you foresee a pandemic a couple years ago ?

Completely totally agree with this. After being in our new TV home for 6 years we decided to a Bond payoff. Did not enjoy seeing that charge every year. So now for the last 3 years, only the Bond Maintenance $$$ and Taxes. Peace of mind. And we not really worried about resale $$, that will be the kid’s thing after we’re gone.

[Altavia]

I’m a younger retiree, and just closed two months ago on a new patio villa - need to hear from others - should I pay off the bond and just be done with it, or make the yearly payments? I know there is no “correct” answer to this question - I have the funds to pay it off, but would like to hear from others their thoughts, and what they have decided to do. As always, thanks for the support and great information I receive on this site! 😀

Any future buyer will have to assume the bond. There is no evidence having a bond or not impacts home sales price.

Worse case is to manage the difference when selling the home. But it is likely they will just asdume the bond.

Otherwise it is just a gift to a future buyer of the home.

[MrFlorida]

We paid off our bond, its a personal choice. Do what works for you.

[Babubhat]

You can earn more money than the bond interest rate in many CDD. Nothing to consider

[retiredguy123]

Any future buyer will have to assume the bond. There is no evidence having a bond or not impacts home sales price.

Worse case is to manage the difference when selling the home. But it is likely they will just asdume the bond.

Otherwise it is just a gift to a future buyer of the home.
If you were listing your house for sale today, and you told your listing agent to raise the listing price by $30K because you will be paying off the $30K bond tomorrow, I think that your real estate agent would have a fit, and strongly advise you to not pay it off. That is clear evidence that paying off the bond impacts the sales price and the profit potential for the house. Ask any agent.

[Stu from NYC]

If you were listing your house for sale today, and you told your listing agent to raise the listing price by $30K because you will be paying off the $30K bond tomorrow, I think that your real estate agent would have a fit, and strongly advise you to not pay it off. That is clear evidence that paying off the bond impacts the sales price and the profit potential for the house. Ask any agent.

Buyers are not nearly as sophisticated as some people think they are.

[Altavia]

If you were listing your house for sale today, and you told your listing agent to raise the listing price by $30K because you will be paying off the $30K bond tomorrow, I think that your real estate agent would have a fit, and strongly advise you to not pay it off. That is clear evidence that paying off the bond impacts the sales price and the profit potential for the house. Ask any agent.

Exactly, people confuse the bond with a debt like a credit card. The bond is a debt against the property, not the owner.

[CoachKandSportsguy]

If you were listing your house for sale today, and you told your listing agent to raise the listing price by $30K because you will be paying off the $30K bond tomorrow, I think that your real estate agent would have a fit, and strongly advise you to not pay it off. That is clear evidence that paying off the bond impacts the sales price and the profit potential for the house. Ask any agent.

That argument makes no sense. The house is priced at market price, whether the bond is paid off or not. Thinking that the house can be priced above the market is the fallacy part of the argument.

The bond payment may affect the buyers' desire to pay the market price. A shrewd buyer will subtract the bond balance from the house market price OR will negotiate the bond cash back from the buyer at closing at the market price. So the bond may affect the negotiated price down from the offer, but never above market.

The only answer here to get the bond payment back from prepayment is when the current market price of the house covers the original prepayment cost above the cost of the house . . plus inflation from the prepayment if you want to get really financial . .

But the most important point everyone misses is that a house one buys and lives in is NEVER an investment. The fact that a house retains value and goes up or down in price like an investment, does not make it an investment. It is an illiquid asset at best

A Wharton Professor Explains Why a Home Isn't an Investment (https://www.businessinsider.com/wharton-professor-home-not-an-investment-2016-10)

be wary of sales pitches making that claim, because only sales pitches want you to confuse your thinking. Like selling future junk as an investment. . . (that would be a car)

[retiredguy123]

That argument makes no sense. The house is priced at market price, whether the bond is paid off or not. Thinking that the house can be priced above the market is the fallacy part of the argument.

The bond payment may affect the buyers' desire to pay the market price. A shrewd buyer will subtract the bond balance from the house market price OR will negotiate the bond cash back from the buyer at closing at the market price. So the bond may affect the negotiated price down from the offer, but never above market.

The only answer here to get the bond payment back from prepayment is when the current market price of the house covers the original prepayment cost above the cost of the house . . plus inflation from the prepayment if you want to get really financial . .

But the most important point everyone misses is that a house one buys and lives in is NEVER an investment. The fact that a house retains value and goes up or down in price like an investment, does not make it an investment. It is an illiquid asset at best

A Wharton Professor Explains Why a Home Isn't an Investment (https://www.businessinsider.com/wharton-professor-home-not-an-investment-2016-10)

be wary of sales pitches making that claim, because only sales pitches want you to confuse your thinking. Like selling future junk as an investment. . . (that would be a car)
It's not an argument, it's a fact. If the agent has priced the house, and then you decide to pay off the bond the day after listing the house for sale, you need to recover the bond payoff amount, or you will lose that money. Ask any listing agent if they want you to pay off the bond. They will say "NO WAY".

[Stu from NYC]

That argument makes no sense. The house is priced at market price, whether the bond is paid off or not. Thinking that the house can be priced above the market is the fallacy part of the argument.

The bond payment may affect the buyers' desire to pay the market price. A shrewd buyer will subtract the bond balance from the house market price OR will negotiate the bond cash back from the buyer at closing at the market price. So the bond may affect the negotiated price down from the offer, but never above market.

The only answer here to get the bond payment back from prepayment is when the current market price of the house covers the original prepayment cost above the cost of the house . . plus inflation from the prepayment if you want to get really financial . .

But the most important point everyone misses is that a house one buys and lives in is NEVER an investment. The fact that a house retains value and goes up or down in price like an investment, does not make it an investment. It is an illiquid asset at best

A Wharton Professor Explains Why a Home Isn't an Investment (https://www.businessinsider.com/wharton-professor-home-not-an-investment-2016-10)

be wary of sales pitches making that claim, because only sales pitches want you to confuse your thinking. Like selling future junk as an investment. . . (that would be a car)

My business degree is not from Wharton but do think it is an investment (not a particularly liquid one though) if done correctly. Too many people rush into buying a home without considering all the factors you need to consider.

For example at some point you will want to sell it or your heirs will. Being next to a turnpike or quarry or prison is not going to help you in that regard.

[MrChip72]

Being next to a turnpike or quarry or prison is not going to help you in that regard.

But some some reason TV has had their highest sales year on record selling homes mostly in the vicinity to a turnpike, a quarry, or a prison.

It seems to be more of a concern to the other people in TV that don't live in those areas, not potential buyers.

[MrChip72]

My bond is 3% interest. I would have to pull money from investments making a lot more than 3% on average to pay off the bond so it's an easy decision. Basic logic.

[CoachKandSportsguy]

It's not an argument, it's a fact. If the agent has priced the house, and then you decide to pay off the bond the day after listing the house for sale, you need to recover the bond payoff amount, or you will lose that money. Ask any listing agent if they want you to pay off the bond. They will say "NO WAY".

The fallacious argument is your timing of the payment in relationship to the sales and marketing of the house within a contractual obligation, and tieing the return of the cash to the listing price.

The listing agent doesn't want to change the sales price of the house at this point in the sales and marketing process.

However, consider these two scenarios:
Scenario A:
You list your house for $400K, bond is $20K remaining
The best bid you get is 380K, and you sell. .

Scenario B:
You list your house for $400K, you paid off the $20K remaining
You get a full market price bid, and you sell.

In Scenario B Did you get your bond payment back?
Yes, relative to the future sales price of A
No, relative to the listing sales price.

the difference is that the "current market price" of the house was not the listing amount in scenario A. The problem is that the current market price is just an estimate and an assumption and that may or may not happen. . and within the time frame of the sales process, you may get the bond payment back if the actual value of the future transaction is known with and without the bond paid off. . still just an assumption . .

If that scenario A happens, the listing price was incorrect, or the buyer was smart, and the sales rep only lost 5% of 6%, he/she can move along to the next listing. . volume means more than a small price variation to a sales rep. .

its all relative to the assumptions and the future outcomes, and you can't run exact comparisons because every house and location is unique, unlike shopping for items at the store.

good luck

[Garywt]

In a round about way we do not see the payments or the bill so it is nothing for us. The monthly payment is part of our mortgage payment. Our escrow consists of taxes, bing and insurance. Then the bill is the tax bill which is paid by the bank so we never see any of it. Yes our mortgage payment would drop about $120 a month if it was paid off but that doesn’t really matter.

[patfla06]

The interest rate on our bond was 6% back then so we paid it off after a year.

We knew we weren’t the type to move a lot so just paid it off.

[Allyson]

Its hard for me to imagine that if there were two identical homes on the market and one was priced a little higher with no bond, that it would not be more desirable to a potential buyer than the one priced a little lower, yet with a bond.

I agree~

[crash]

Its hard for me to imagine that if there were two identical homes on the market and one was priced a little higher with no bond, that it would not be more desirable to a potential buyer than the one priced a little lower, yet with a bond.

Well you would be wrong. The average Villager moves 3 times you will be paying off 3 bonds. It might help move your home a little faster but as a previous poster replied most realtors say you will not get the money you paid for the bond back in a sale.

[La lamy]

I didn't have to deal with a bond when I bought, but as others have said, you may want to make payments until you think this is your long term home.

[terleonard]

You pay interest on that bond over 20 years and it is not tax deductible. Are you going to sell it soon? Good luck and welcome to the Villages!

[dewilson58]

My bond is 3% interest. I would have to pull money from investments making a lot more than 3% on average to pay off the bond so it's an easy decision. Basic logic.

You are kidding yourself, add in the admin fee to get your effective rate.

[CoachKandSportsguy]

Its hard for me to imagine that if there were two identical homes on the market and one was priced a little higher with no bond, that it would not be more desirable to a potential buyer than the one priced a little lower, yet with a bond.

First, there is no scenario of identical houses, the lot size, location, view, make each sale unique.
Since there can't be same colors on the same street in general, the colors are unique.

Second, definition of a little.
in general, after a year, when one can sell and not lose the profit, the bond is about 8-9% of the original price, so lets just round number it and say 10%. . . is 10% a little in your view?

That would be $435K versus $399K, me thinks that is a big enough spread which would influence the sale. . .

ugh. . .

[dewilson58]

The average Villager moves 3 times .

FAKE NEWS


This is NOT true.

The closest true statement: Of the Villagers who move, they move three times. NOT the average Villager moves three times.
:BigApplause:

[mkjelenbaas]

I’m a younger retiree, and just closed two months ago on a new patio villa - need to hear from others - should I pay off the bond and just be done with it, or make the yearly payments? I know there is no “correct” answer to this question - I have the funds to pay it off, but would like to hear from others their thoughts, and what they have decided to do. As always, thanks for the support and great information I receive on this site! 😀
I think it is time for you to make a decision - you can do it - give it a shot!! GO FOR IT!!

[PoolBrews]

My advice is to not pay it off immediately. Wait at least a year or so to see how long you will live in the house. If you pay if off now, and then sell the house, you will lose money.

Regardless of the factors that you use for your final decision, there's no reason to pay it off if you wait several years. Most of the interest on the bond hits you very early in first couple of years, and then drops off significantly in the later years. i.e., if you wait 5 years you won't be saving that much, but if you pay it off immediately you'll lower the amount you pay by thousands of dollars. I don't have the specific numbers in front of me, but I had a spreadsheet at one time that detailed savings based on year pay off.

[msilagy]

You may decide to move so don't pay off the bond - you'll sell your home either way. It's better to get a return on that money than using it to pay off a bond. Buyers decide if they like the home not if the bond id paid off in my opinion. Your choice however.....

[Ritagoyer]

I’m a younger retiree, and just closed two months ago on a new patio villa - need to hear from others - should I pay off the bond and just be done with it, or make the yearly payments? I know there is no “correct” answer to this question - I have the funds to pay it off, but would like to hear from others their thoughts, and what they have decided to do. As always, thanks for the support and great information I receive on this site! 😀
Is this your forever home? If not why pay the bond. Use the money for your next home.

[tvbound]

Every person's situation/opinion is different, but it really boils down to determining if the money spent to pay off the bond (or even a mortgage) can earn more if used elsewhere. If a person is paying 5% on a bond/mortgage, but can earn 8% by investing that same money - it would be silly to pay it/them off.

[Sunflower33]

I’m a younger retiree, and just closed two months ago on a new patio villa - need to hear from others - should I pay off the bond and just be done with it, or make the yearly payments? I know there is no “correct” answer to this question - I have the funds to pay it off, but would like to hear from others their thoughts, and what they have decided to do. As always, thanks for the support and great information I receive on this site! 😀

I would not pay off if you think you will move again. The bond travels with the house. We are in our last house so we did pay off the bond. We had 3 other places and never paid off bond. It went with the house when we sold it. Your decision

[bark4me]

I’m a younger retiree, and just closed two months ago on a new patio villa - need to hear from others - should I pay off the bond and just be done with it, or make the yearly payments? I know there is no “correct” answer to this question - I have the funds to pay it off, but would like to hear from others their thoughts, and what they have decided to do. As always, thanks for the support and great information I receive on this site! 😀
It's depends how long you plan on living there. We bought a new home and moved again within 15 months. We weren't looking at moving but found a great home with a great opportunity. Had we paid off the 1st bond we would be right at square 1 with the 2nd house. They say you move an average of 3 times here so think about that 🤔

[PennyAnn]

Pay it off if you can. They may small a low-ish rate to carry it, but what they don't tell you is all the admin fees they tack on.

[Bill14564]

Regardless of the factors that you use for your final decision, there's no reason to pay it off if you wait several years. Most of the interest on the bond hits you very early in first couple of years, and then drops off significantly in the later years. i.e., if you wait 5 years you won't be saving that much, but if you pay it off immediately you'll lower the amount you pay by thousands of dollars. I don't have the specific numbers in front of me, but I had a spreadsheet at one time that detailed savings based on year pay off.

You might want to find that spreadsheet or get the real numbers from the districtgov.org website.

Real numbers:
- Bond started in 2014
- $21,400 principle
- 5.5% interest rate (effective rate higher due to fixed Admin charge)
- $1,475 yearly payment

In 2021, with 23 years left to pay, payoff amount was just under $18,000 and interest was $936 (about 65% of payment).

By paying $18,000 in 2021 I made the equivalent of 12 years of payments to eliminate 11 years of payments. (pay $18,000 once or $34,500 over time)

2021 was a good year for my investments so I lost some investment income on that $18,000 but 2022 was a terribly year for investments and I would have lost far more on that $18,000 if it was still in my account.

If I don't stay in this house until 2033 then it could be argued that I lost money since I could have passed the bond to the next owner. But, I don't know if I'll move again and even if I did there is some thought that a house with no bond will be easier to sell - maybe we'll see.

[Wondering]

I’m a younger retiree, and just closed two months ago on a new patio villa - need to hear from others - should I pay off the bond and just be done with it, or make the yearly payments? I know there is no “correct” answer to this question - I have the funds to pay it off, but would like to hear from others their thoughts, and what they have decided to do. As always, thanks for the support and great information I receive on this site! 😀
I was told if you plan on keeping/staying in the house for a number of years, pay the bond off, if you can afford it. If you plan on selling it in 3 to 5 years, don't pay it off and buyer assumes it. If you it was paid off, when you sell the house, it will be a selling point and you can fold it into your selling price.

[chappy]

Pay it off if you plan on living in your house until you die.

[sborlove]

If you plan on moving within the next few years...YOU do NOT pay it off. If you are keeping the home then you pay it off. The interest rate The Villages is collecting is close to 8% in which they make money on it. Not a good investment of your money. We paid ours off.

[petsetc]

IMHO you should not pay off the bond for the many reasons already stated, the main one being if you decide to move you (probably) will not recoup the bond in full.

But I think the more important question about the bond or whether to have a mortgage is the opportunity cost. Once you "pay in full" that money will never be available again unless you sell and I would rather pay a small differential to have a pot of money always readily available. One could say that if you suddenly need money you could refi or get a heloc, but the hardest time to get credit is when you suddenly need it.

Here is a bond analysis I posted about 18 months ago which may be of interest;

Been on TOTV almost 7 years and have read numerous threads on bonds and mortgages without comment. Now I would like to offer my thoughts based on numbers. If you are a believer in “Debt-Free” (as is my wife), this post may not be for you.

Main reasons people give for and against paying off the bonds include;
Pro – Debt-free, high interest rate, can recoup if you sell…
Con- May adversely affect future resale price, can’t be recouped if you sell, you have the money
available…

I have not seen anyone attempt a cash flow analysis, so that is my approach using my own bond number in CDD10 – Unit204 with an interest rate of 5.993%
CCD10 Unit 204 5.992%
...............Principal...Interest........Admin.. .....Total............Balance.......Tax Discount 4% *
2020.............................................. .....................................20,806.43
2021........417.30....1,211.15.........111.35....1 ,739.79......20,389.14.........69.59
2022........439.00....1,189.21.........111.35....1 ,739.53......19,950.14.........69.59
2023........462.37....1,166.11.........111.35....1 ,739.82......19,487.77.........69.59
* Assumes you pay in November and take advantage of the 4% discount.

Looking specifically at 2022, the “cost” is $1,230.98 (interest + admin - discount)

My thoughts are, you put the balance in a S&P500 fund or a Total US Equity Fund and take a “safe withdrawal” of 4% or $798.01 for a net negative flow of $432.97 and you still have about $20K available should you suddenly need it. In additional, the remaining balance is in the market growing at 8% (historical rate). If you use a more aggressive withdrawal rate the numbers improve (I use 5%).


Looking at a new house, I arbitrarily chose CCD13 Unit 52V with an interest rate of 3.670%
CDD13 Unit 52V 3.670%
..............Principal.....Interest......Admin... ...Total...........Balance......discount 4% *
2020.............................................. ...................................31,276.03
2021.......629.89.....1,072.78.......120.32....1,8 22.99.......30,646.14.......72.92
2022.......645.51.....1,056.04.......120.24....1,8 21.79.......30,000.63.......72.87
2023.......662.86.....1,038.86.......120.25....1,8 21.97.......29,337.77.......72.88
* Assumes you pay in November and take advantage of the 4% discount.

Again, using the same analysis,

Looking specifically at 2022, the “cost” is $1,103.41 (interest + admin - discount)

You put the balance in a S&P500 fund or a Total US Equity Fund and take a “safe withdrawal” of 4% take $1,200. for a net POSITIVE cash flow of $96.59 and you still have about $30K available should you suddenly need it. In additional, the remaining balance is in the market growing at 8% (historical rate). If you use a more aggressive withdrawal rate the numbers improve.

[john352]

I’m a younger retiree, and just closed two months ago on a new patio villa - need to hear from others - should I pay off the bond and just be done with it, or make the yearly payments? I know there is no “correct” answer to this question - I have the funds to pay it off, but would like to hear from others their thoughts, and what they have decided to do. As always, thanks for the support and great information I receive on this site! 😀

When I purchased my Villages home in 2004, I asked what is the interest rate on the bond. I was planning to have a short-term mortgage on the new home until I sold my old home up North. In this situation, the obvious answer was to pay off the bond and increase the principal on the mortgage.

I recently purchased a 9-month CD providing an interest rate of 4.7%; depending on the interest rate of the bond a longer-term CD at this time may make more sense than paying off the bond now.

[Bilyclub]

If you were listing your house for sale today, and you told your listing agent to raise the listing price by $30K because you will be paying off the $30K bond tomorrow, I think that your real estate agent would have a fit, and strongly advise you to not pay it off. That is clear evidence that paying off the bond impacts the sales price and the profit potential for the house. Ask any agent.

Ask any agent about a unrealistic scenario ?

[joelfmi]

I look at the bond as the price of the home. There are so many hymns and so few noodle about the bond

[retiredguy123]

Ask any agent about a unrealistic scenario ?
Listing agents determine a listing price by doing a market analysis of recent sales. Do you really think they factor in the full value of the bond when they recommend a listing price? I don't.

[MidWestIA]

Happened to a friend - you pay it off oh oh you need to sell. Guess what you are competing with non paid bond houses - people just want the cheaper price you lose some portion of that to get a sale

[Bilyclub]

Listing agents determine a listing price by doing a market analysis of recent sales. Do you really think they factor in the full value of the bond when they recommend a listing price? I don't.

No, but nobody in their right mind would pay off a bond if they knew they were selling.

[retiredguy123]

No, but nobody in their right mind would pay off a bond if they knew they were selling.
Correct. That was the point of my post.

[ron32162]

Interest fees AND Carrying Fees are charged to you every year with a bond. The Villages will never say pay it off and will never mention the carrying fee added in yearly. Its just like carrying a credit card balance with a yearly fee for having that credit card and it will end in 25 years.

[jrref]

more posts than dog poop posts is correct.

Simple example, approximates our house
Purchase Price $350,000
Bond $30,000

annual house appreciation 3%
Bond cost + house cost = $380,000

Appreciated cost of house:
Year 0 $350,000
Year 1 $360,000
Year 2 $371,000
Year 3 $382,000

in three years, the house appreciation has increased equivalent to the bond price. .
Therefore, you have recovered the cost of the bond in 3 years if you want to stay in the house greater than 3 years.
so if you pay off the loan, the house appreciation on sale will get your month back,
stay another year or two and you will recover the lost real estate commission on the bond portion. .

So if you are staying put for more than 5 years, you save on high interest payments as the payment is all
interest and very little principal. . . and get the prepayment back in the sale price. . .

So your answer is:
The real estate agents are NOT financial geniuses and certainly aren't being paid to be financial consultants, but more marketing and sales reps. . they are not the correct source of financial information.

good luck, but if you are retired, then minimizing expenses means that can live more easily off of social security and less off of your savings and investments. . . renting money can be expensive on a social security.

Listen to this response because it's the right one. Basically if you are going to live in the house for 3-5 years and if the bond is at a high interest rate then pay it off. Also, if the bond is $30,000 for example, adding this amount to a $400,000-$1,000,000 house here in the Villages won't be noticed so you can always get your money back. You can look up your bond payment schedule and basically it's like a mortgage. You pay mostly interest for many years then the principal. So what you will see is if you payed off the bond every year until completion you will be paying roughly 2x the cost of the original bond. The only time i would keep the bond is if you live in an older area and the interest rate is in the 2-3% range. Then, at least right now, you can make more money keeping the money in the bank.

Also, from a real estate prospective, a paid off bond is just another feature of the home you are selling.

[jrref]

IMHO you should not pay off the bond for the many reasons already stated, the main one being if you decide to move you (probably) will not recoup the bond in full.

But I think the more important question about the bond or whether to have a mortgage is the opportunity cost. Once you "pay in full" that money will never be available again unless you sell and I would rather pay a small differential to have a pot of money always readily available. One could say that if you suddenly need money you could refi or get a heloc, but the hardest time to get credit is when you suddenly need it.

Here is a bond analysis I posted about 18 months ago which may be of interest;

Been on TOTV almost 7 years and have read numerous threads on bonds and mortgages without comment. Now I would like to offer my thoughts based on numbers. If you are a believer in “Debt-Free” (as is my wife), this post may not be for you.

Main reasons people give for and against paying off the bonds include;
Pro – Debt-free, high interest rate, can recoup if you sell…
Con- May adversely affect future resale price, can’t be recouped if you sell, you have the money
available…

I have not seen anyone attempt a cash flow analysis, so that is my approach using my own bond number in CDD10 – Unit204 with an interest rate of 5.993%
CCD10 Unit 204 5.992%
...............Principal...Interest........Admin.. .....Total............Balance.......Tax Discount 4% *
2020.............................................. .....................................20,806.43
2021........417.30....1,211.15.........111.35....1 ,739.79......20,389.14.........69.59
2022........439.00....1,189.21.........111.35....1 ,739.53......19,950.14.........69.59
2023........462.37....1,166.11.........111.35....1 ,739.82......19,487.77.........69.59
* Assumes you pay in November and take advantage of the 4% discount.

Looking specifically at 2022, the “cost” is $1,230.98 (interest + admin - discount)

My thoughts are, you put the balance in a S&P500 fund or a Total US Equity Fund and take a “safe withdrawal” of 4% or $798.01 for a net negative flow of $432.97 and you still have about $20K available should you suddenly need it. In additional, the remaining balance is in the market growing at 8% (historical rate). If you use a more aggressive withdrawal rate the numbers improve (I use 5%).


Looking at a new house, I arbitrarily chose CCD13 Unit 52V with an interest rate of 3.670%
CDD13 Unit 52V 3.670%
..............Principal.....Interest......Admin... ...Total...........Balance......discount 4% *
2020.............................................. ...................................31,276.03
2021.......629.89.....1,072.78.......120.32....1,8 22.99.......30,646.14.......72.92
2022.......645.51.....1,056.04.......120.24....1,8 21.79.......30,000.63.......72.87
2023.......662.86.....1,038.86.......120.25....1,8 21.97.......29,337.77.......72.88
* Assumes you pay in November and take advantage of the 4% discount.

Again, using the same analysis,

Looking specifically at 2022, the “cost” is $1,103.41 (interest + admin - discount)

You put the balance in a S&P500 fund or a Total US Equity Fund and take a “safe withdrawal” of 4% take $1,200. for a net POSITIVE cash flow of $96.59 and you still have about $30K available should you suddenly need it. In additional, the remaining balance is in the market growing at 8% (historical rate). If you use a more aggressive withdrawal rate the numbers improve.
This is all true only if you can guarantee a rate of return on your money greater than what the interest rate you are paying on the bond is over the long term.

[jrref]

When I purchased my Villages home in 2004, I asked what is the interest rate on the bond. I was planning to have a short-term mortgage on the new home until I sold my old home up North. In this situation, the obvious answer was to pay off the bond and increase the principal on the mortgage.

I recently purchased a 9-month CD providing an interest rate of 4.7%; depending on the interest rate of the bond a longer-term CD at this time may make more sense than paying off the bond now.

Are you getting 4.7% on a CD for more than a couple of years, No, so this is not a good example.

[Olyrain]

#1 Experienced real estate agents will tell you that you don't get your money back when you sell. Yes, it makes your home attractive and stand out but will not be reflected in sales price.
#2 "But this home is perfect and I am not going to sell." I would have bet the ranch that our first, second and now third home was our "one and only." There are a multitude of reasons why we and others sell. Villages move an average of 3 times. You are young with lots of transition time ahead.
Welcome to The Villages, Have a Blast!

[manaboutown]

This is all true only if you can guarantee a rate of return on your money greater than what the interest rate you are paying on the bond is over the long term.

And after taxes on the earned income as the bond interest and administrative fees are not tax deductible.

[LonnyP]

In my opinion it really depends on whether or not you are going to keep that place. Many Villagers buy then sell and move again to a different house in the Villages. If you are going to stay there for good then I believe it is worthwhile to pay it off and stop paying the higher interest rate that they are charging.

[snbrafford]

I have been here 4 years and we struggled with that question too. Our situation is a little different as we bought a home at was built in 2009 so we look forward to the bond being paid off in the not too distant future.

Our thoughts were:
1. Money sitting is our investments is better off there making more for us.
2. Many people we talk to have moved within TV - two-three-four times - so if you become one of these folks - you are back in the bond situation again. We even looked at "exchanging" homes to downsize and would have been into a higher bond payment on a smaller home. This is probably the biggest reason for us.

[TerryCamlin]

I have two homes and you could pay me a million $$ and I would not be able to even tell you what my Bond balances are. In the beginning your balance could be high my homes are now over 10 yrs old. It was never a consideration when buying and most people change locations more than once. If you pay it off it is $$ you will never get back. I know I will most likely sell and buy again so I will not do it. The yearly bill is around $1k for both.

[Villages Kahuna]

It’s an easy decision.

First, if you pay off the bond it’s unlikely there will be much benefit if and when you sell your house. Confirm that with your own research.

But deciding whether to pay off the bond is an easy decision. Municipal bond interest rates are always quite low, probably in the range of 2-3%. So not paying off the bond is like borrowing money at that low rate.

Assuming that the funds you would use to pay off the bond are invested, they could easily be yielding more than the muni bond rate. As an example, one-year U.S. Treasury bills were paying 4.9% as of yesterday.

So your decision is easy. Would you sell an investment paying you 4.9% to use to pay off a bond that’s costing you only 2-3%? Particularly when paying off the bond won’t benefit you if and when you sell your house.

Answer to your question? Easy peasey.

[Villages Kahuna]

In my opinion…it is worthwhile to pay it off and stop paying the higher interest rate that they are charging.

“They” (the bond market) is NOT charging high interest rates. Municipal bond interest rates are among the lowest other than issuances of the U.S. Treasury.

Why would you choose to pay off a bond with a lower interest rate than you would pay to borrow the money to pay it off, and almost certainly less than what you would earn keeping your money in low risk investments like U.S. Treasury bonds, bills or notes?

Your answer to OP’s question is incorrect!

[Deluna65]

Great question. I think it has a easy answer. If you love ur home & have no intention of selling it to purchase another home in ghe Villages- then definitely pay it off. The interest & admin fee can easily double the amount of the bond over 30 years. If you’re not sure, have any doubt whatsoever that your new Village home isn’t your ‘forever’ Village retirement home- then don’t payoff the bond. Let it ride because it’s hard to recoup the money you paid within the constraints of a active market’s Selling price.

[Hifred]

I’m a younger retiree, and just closed two months ago on a new patio villa - need to hear from others - should I pay off the bond and just be done with it, or make the yearly payments? I know there is no “correct” answer to this question - I have the funds to pay it off, but would like to hear from others their thoughts, and what they have decided to do. As always, thanks for the support and great information I receive on this site! 😀

You need to look at the interest rate they are charging you combined with the fees you are paying and compare that to what interest rate you can earn. In our case we paid off the bond because we were not going to resell in the near future, the interest on our bond was very high over 7 percent and the fees were high. If the money is earning a better interest rate than what the bond costs than leave your money in the investment and pay the bond costs.

[rustyp]

Everyone that owns a house now and will sell it in the future will be selling a preowned home. My swag is at least twice as many preowned homes are sold per year here in TV Vs new - VLS plus MLS. Some % of these preowned buyers may have been savvy enough to request the sales agent to show me only:
1 pre owned homes
2 homes with no bond

Paying off the bond may have an edge that the normal sales data could not easily reveal.

[Cindy619]

I’m a younger retiree, and just closed two months ago on a new patio villa - need to hear from others - should I pay off the bond and just be done with it, or make the yearly payments? I know there is no “correct” answer to this question - I have the funds to pay it off, but would like to hear from others their thoughts, and what they have decided to do. As always, thanks for the support and great information I receive on this site! 😀

When we bought our new home in 2016, we wanted to pay the bond off simply to save on the interest. Our realtor suggested we wait at least a full year. Why? To make sure you like the neighborhood, the neighbors, any dogs, etc. We did... and then we paid it off!

[Papa_lecki]

When we bought our new home in 2016, we wanted to pay the bond off simply to save on the interest. Our realtor suggested we wait at least a full year. Why? To make sure you like the neighborhood, the neighbors, any dogs, etc. We did... and then we paid it off!

That’s what we did. Waited a year, wrote a check.
It wasn’t really a financial calculation, we owed $18,000, wrote the check and was done with it.

We passed on a few homes because the bond balance was high. I know those homes sold, but they would have sold faster if the bond balance was lower or $0.

[splashes]

If you are going to live there for 10 years or more, pay it off. If not sure do not pay it off You do not get your money on the payoff back when you sell.

[jagdl]

I’m a younger retiree, and just closed two months ago on a new patio villa - need to hear from others - should I pay off the bond and just be done with it, or make the yearly payments? I know there is no “correct” answer to this question - I have the funds to pay it off, but would like to hear from others their thoughts, and what they have decided to do. As always, thanks for the support and great information I receive on this site! 😀

As a new home owner you will constantly find things you like/dislike about your neighborhood, home, area, location of your favorite things. Many many people sell and buy another home. Bond paid is a good selling point, however, you cannot add that to the selling price. If the market is 200,000 you won't be able to sell for 240 just because you paid the bond. However, you can easily sell for 200,000 and transfer the bond.

We didn't believe it until we sold 2 homes before we found our perfect place. Transferred the bond each time. We made a small profit on each one but would have taken a loss had we had to raise the price to try to regain those funds.

[Jbellio]

I’m a younger retiree, and just closed two months ago on a new patio villa - need to hear from others - should I pay off the bond and just be done with it, or make the yearly payments? I know there is no “correct” answer to this question - I have the funds to pay it off, but would like to hear from others their thoughts, and what they have decided to do. As always, thanks for the support and great information I receive on this site! 😀

I would not pay off the bond... people tend to move a couple of times once they are in the villages so you may pay it off then move. If you sell your home I would imagine the competing properties in your area will have a bond on them so you would have a competitive edge on them but buyers are typically looking for a deal and may want to discount the amount you paid, which would be a lose to you.

[manaboutown]

“They” (the bond market) is NOT charging high interest rates. Municipal bond interest rates are among the lowest other than issuances of the U.S. Treasury.

Why would you choose to pay off a bond with a lower interest rate than you would pay to borrow the money to pay it off, and almost certainly less than what you would earn keeping your money in low risk investments like U.S. Treasury bonds, bills or notes?

Your answer to OP’s question is incorrect!

The bonds The Villages issues are no longer munis. They cannot be munis as The Villages is not a governmental entity. Remember the big tiff with the IRS? Fortunately at that time interest rates were very low so taxable bonds were issued in exchange for the munis. In midst of IRS battle, Villages refunds tax-free bonds with taxable ones – Orlando Sentinel (https://www.orlandosentinel.com/news/lake/os-lk-lauren-ritchie-villages-bonds-taxable-20141128-column.html)

[retiredguy123]

The bonds The Villages issues are no longer munis. They cannot be munis as The Villages is not a governmental entity. Remember the big tiff with the IRS? Fortunately at that time interest rates were very low so taxable bonds were issued in exchange for the munis. In midst of IRS battle, Villages refunds tax-free bonds with taxable ones – Orlando Sentinel (https://www.orlandosentinel.com/news/lake/os-lk-lauren-ritchie-villages-bonds-taxable-20141128-column.html)
Correct. But, a local Government will sometimes approve funding of a private project using munis if it is for a public benefit. I remember a project in Georgia where the local Government approved the construction of a K-Mart store with tax free munis. A lot of people didn't like it, and there may have been some money changing hands under the table.

[conman5652@aol.com]

i have a new home and at the closeing we pay it off
Why? U won’t get it back in house resale and using time value of money you will be paying back less money value each year
Save the money in one fund and pay yearly. U make more and pay less over time

[Marmaduke]

Its hard for me to imagine that if there were two identical homes on the market and one was priced a little higher with no bond, that it would not be more desirable to a potential buyer than the one priced a little lower, yet with a bond.

Well, Imagine This:

There were several "Similar", but never "identical homes" when we bought our pre-existing home last March.

We used smart deductive reasoning when we chose the right home for us.

REMEMBER- what may be 'right' for us, May be 'off the grid' "wrong" for anyone else!

Here are some of the differences that played into our decision to buy the similar available home with the remaining bond.

Gorgeous home with curb appeal and thoughtfully "planned" landscaping, not an overgrown trainwreck of labor intensive shrubs to 'maintain'.
First impression was... this home is Pretty and well kept, unlike the others!

Fabulous...after-market wood floors, not vinyl laminate floors throughout NO carpeting.
Haven't had carpeting since the 1980's.

Top of the line Plantation Shutters throughout vs. Drapes, Valances or no window dressings.

After-market whole house water softener and filtration system.
Finished garage floor and driveway.

New roof, new HVAC, and water heater. Fresh paint and nice color selections- neutral -not aquamarine and pinks everywhere.

The Year built, SF, LAYOUT of the homes were the same. The Price was the same!


Most important to us were things like Location!!! The Village was VERY Important, neighborhood and neighbors.

The homes without the bonds were all 'turnkey'.

No offence, but we KNEW that the sellers tacked extra dollars on for their old mismatched furniture and junk that appeared alright at first glance, but was...awful upon more introspection, which would result in Work for us....call Goodwill and haul this junk away.

As we made our choice, we spoke to the neighbors, we rode and we walked the neighborhood.

We used logic and reasoning as well as emotion because we didn't want to move Four or FIVE times like so many Villagers do.

We believe that GOT it right the first time in every way.

We realize that things like neighbors change over time, but if you get the foundation correct, you've saved yourself a bundle in both time and money.

Granted, we have some remaining bond, but got a lot of bang for the buck, like granite vs formica.

Hope this helps you understand our logic.

Enjoy the newness, as we are... and God Willing hope to continue for a long time.

And realize that (TOTV) complainers of these 'repeated topics' should have bowed-out from reading this Blog 25 years ago, once they KNEW IT ALL.

FORGIVE him, he probably forgot when he was a young retiree who was eager for answers.
...or maybe he was always...
a Know it All.
Thank you to all the kind and thoughtful answers too!

[Pairadocs]

OP, if you have a financial advisor, ask them, if not as mentioned above look at potential savings versus potential investment gains. I have no idea what the current bond interest rate is, but be aware you cannot write this off on taxes. So IMHO, if you are paying a higher interest rate then you are making in the market it may be worth paying it off. If you do this, I would take the payment that you would be making on the bond, and invest that money.

Good advice ! We expected to stay in our home for many years, so paid off immediately when home was finished. But, the advice to CONTINUE to make the "payments" to yourself AFTER the bond is paid, is golden ! My very wise father taught me (before I left for college) that when my first used auto was paid for, I must continue to make the payments to ME. His views on management of personal finances has proved to be one of the most valuable things in my life. The rule of 8's, compounded interest, and even things like including furniture, appliances, even golf carts, in a HOME mortgage ! My dad always said if you want to buy furniture, or other items, in an existing house, buy them separate, NOT on a 15, 20, 30 year mortgage. Maybe we should teach these, and other considerations, in high school curriculum s ? Teach young people the true total cost of financing an auto for 7 years versus 3 or 5 ? Things like that ! Dad also had no bias concerning "financial advisors", but told us to never forget that NO ONE cares as much about your money as YOU DO. Always remembered that bit of wisdom too...LOL !

[maguiregail542@gmail.com]

We bought a patio villa 15 years ago and paid off the bond. The interest is to high.

[JMintzer]

But some some reason TV has had their highest sales year on record selling homes mostly in the vicinity to a turnpike, a quarry, or a prison.

It seems to be more of a concern to the other people in TV that don't live in those areas, not potential buyers.

No, the VLS home sales were pretty equally mixed new and used...

Add to those, re-sales on MLS, and I'd think there were more homes sold AWAY from those sites...

Also, if the only place you have new homes is by those places, and if someone wants a new home, you're kinda' boxed in, no?

That said, I don't care where anyone chooses to live. As long as they are happy, good for them!

[rustyp]

Well, Imagine This:

There were several "Similar", but never "identical homes" when we bought our pre-existing home last March.

We used smart deductive reasoning when we chose the right home for us.

REMEMBER- what may be 'right' for us, May be 'off the grid' "wrong" for anyone else!

Here are some of the differences that played into our decision to buy the similar available home with the remaining bond.

Gorgeous home with curb appeal and thoughtfully "planned" landscaping, not an overgrown trainwreck of labor intensive shrubs to 'maintain'.
First impression was... this home is Pretty and well kept, unlike the others!

Fabulous...after-market wood floors, not vinyl laminate floors throughout NO carpeting.
Haven't had carpeting since the 1980's.

Top of the line Plantation Shutters throughout vs. Drapes, Valances or no window dressings.

After-market whole house water softener and filtration system.
Finished garage floor and driveway.

New roof, new HVAC, and water heater. Fresh paint and nice color selections- neutral -not aquamarine and pinks everywhere.

The Year built, SF, LAYOUT of the homes were the same. The Price was the same!


Most important to us were things like Location!!! The Village was VERY Important, neighborhood and neighbors.

The homes without the bonds were all 'turnkey'.

No offence, but we KNEW that the sellers tacked extra dollars on for their old mismatched furniture and junk that appeared alright at first glance, but was...awful upon more introspection, which would result in Work for us....call Goodwill and haul this junk away.

As we made our choice, we spoke to the neighbors, we rode and we walked the neighborhood.

We used logic and reasoning as well as emotion because we didn't want to move Four or FIVE times like so many Villagers do.

We believe that GOT it right the first time in every way.

We realize that things like neighbors change over time, but if you get the foundation correct, you've saved yourself a bundle in both time and money.

Granted, we have some remaining bond, but got a lot of bang for the buck, like granite vs formica.

Hope this helps you understand our logic.

Enjoy the newness, as we are... and God Willing hope to continue for a long time.

And realize that (TOTV) complainers of these 'repeated topics' should have bowed-out from reading this Blog 25 years ago, once they KNEW IT ALL.

FORGIVE him, he probably forgot when he was a young retiree who was eager for answers.
...or maybe he was always...
a Know it All.
Thank you to all the kind and thoughtful answers too!

An excellent checklist to reference when looking to buy a preowned. Hard pressed to see concrete evidence from a sample size of one that the bond balance will or will not affect the selling price of a preowned. Could it simply be you found a motivated seller with a house that still had a bond balance ? My conclusion - do your homework. Good deals are out there. "Just curious" what color were the commodes?

[Bay Kid]

Bad debt. Like credit card debt. Paid mine off immediately.

[retiredguy123]

Bad debt. Like credit card debt. Paid mine off immediately.
The difference is that a bond is not a personal debt. When you sell the house, you have no obligation to pay it off.

[joelfmi]

For starts it best not to live in in a village with people being forced to pay for a bond to live there. There are areas in Florida where they don't have bond to be paid off by home buyers, that is were a lot of people are looking.

[Papa_lecki]

For starts it best not to live in in a village with people being forced to pay for a bond to live there. There are areas in Florida where they don't have bond to be paid off by home buyers, that is were a lot of people are looking.

You’re paying for the infrastructure one way or the other - bond, taxes. If the developer is paying for them, then you’re paying more for the house - the infrastructure doesn’t just get built from pixie dust.

[Altavia]

You’re paying for the infrastructure one way or the other - bond, taxes. If the developer is paying for them, then you’re paying more for the house - the infrastructure doesn’t just get built from pixie dust.

And there have been cases where other developers never built the amenities home buyers paid for.

Here, they are the first thing built in most Villages because of the bonds.

[dewilson58]

And there have been cases where other developers never built the amenities home buyers paid for.

Here, they are the first thing built in most Villages because of the bonds.

:oops::oops:

[OrangeBlossomBaby]

We don't make payments on our credit cards or annual insurance premiums or tax bills. We pay them in full, because we don't want to have to pay interest.

If we had a bond on our home and weren't mortgaging the home, we'd pay the bond off in full up front.

Not planning on ever having to do that though, and we didn't have to do that for our current home.

[Jayhawk]

Pay it off if you can. They may small a low-ish rate to carry it, but what they don't tell you is all the admin fees they tack on.

How much are the admin fees?

[petsetc]

How much are the admin fees?
WRT the admin fees, if you pay your "taxes" in November you get a 4% discount which includes the bond. Therefore most of the admin fees goes to make the bond payment whole.

[Challenger]

A few things to consider:

- What interest rate are you paying and what gains might you be able to make with that same money? If 2% interest but 5% gains then it would be to your benefit to keep the money.

- Some will say that having a balance on the bond will make the house less attractive when you go to sell. It wasn't even a consideration for us.

- How long will you be in the house? We plan to be in this house long enough that we would save money on interest by paying it off (the sum of our payments over the time we plan to be here would be greater than the payoff amount as of two years ago).

If you are making a good rate on your investments, have a low interest rate, plan to sell in a few years, and don't think having a balance will affect your sale then keep the bond.

If you are losing money on your investments, have a high interest rate, plan to be in the house for a while, or expect that the bond balance will affect the sale then pay it off.

We chose option A. As it turns out given what the markets did, it was a good choice.

Good assessment of the issues. !

If the bond interest rate is 6 per cent +/- and you have liquid funds, paying off may represent the equivalent of 6 percent guaranteed investment for about 20 years.

[dewilson58]

How much are the admin fees?

Depends on your District and unit number....................

Amortization Schedules - Sumter (https://www.districtgov.org/departments/Finance/amortization_sumter.aspx)

[Dotneko]

Our bond is 34,000. At 3.67%. Admin fee is $131 a year.
We will end up paying an additional $25,000 over 30 years.
One of the newer Villages south of 44 in Sumter County.
Roughly $2000 added to our yearly tax bill for bond servicing.
Built in 2021

Just to put some actual numbers out there.

[VApeople]

We bought our house in 2016 and our bond was $22K at 6% interest. We paid it off after 2 years.

[JP]

I think if you pay off the bond, you are not going to recover the bond money in a sale but you won't pay the bonds interest either. We figured we weren't going to move so we paid it off.

[Joan cole]

I’m a younger retirees, and just closed two months ago on a new patio villa - need to hear from others - should I pay off the bond and just be done with it, or make the yearly payments? I know there is no “correct” answer to this question - I have the funds to pay it off, but would like to hear from others their thoughts, and what they have decided to do. As always, thanks for the support and great information I receive on this site! 😀

If you plan on staying forever pay off the bond. Many people move a couple of times and it’s not worth paying off the bond if you do. A home is worth what it’s worth and you’ll never recover the cost if you sell.
My opinion.