Bond Payoff

[tjwarzel]

I received a letter the other day informing me that I could payoff my bond. I was wondering if anyone had any opinions pro or con on the subject.

[aljetmet]

I received a letter the other day informing me that I could payoff my bond. I was wondering if anyone had any opinions pro or con on the subject.

You are probably paying 7% on the bond. If we could have that as a guarantee return on my investments, I'd retire today. If you have idle funds that do not provide that return, as a strictly financial decision. I think it's a good idea. Cash flow is key. Now to get financing now might be more costly then you save. Also a heloc now is obviously lower but there is no guarantee what it will be so you need a fixed rate.

Some people believe that a paid off bond does not help to sell the house off.

I disagree. Buying a house is fianancial and what it costs in total is the key.

A little marketing goes a long way.

[784caroline]

Some people believe that a paid off bond does not help to sell the house off.

I disagree. Buying a house is fianancial and what it costs in total is the key.

A little marketing goes a long way.[/QUOTE]

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IMO you are partialy correct, but you are really not summarizing the concerns of people regarding a paid off bond.

A paid off bond would most definitely "help" sell a house. What the concern is ..you most likely will not recoup in full the amount of money you paid on the bond in the resale price of teh home. For ex, if you have 2 identical houses on a street one priced at $300,000 with a 20,000 bond yet to be paid off, and the other priced at 320,000 but the Bond is PAID in FULL. the lower priced house will get offers closer to its asking price while The house at $320K will get alot of offers but the offers will most likey be below $320 .......In essence you are discounting the total price of the house which is a good deal for the buyer and makes a quick sell for the seller.

Also remember a buyer can only get a loan for the appraised value of the house, and the appraisal would not include or consider the Bond paid. However, As long as the buyer has a downpayment that at least covers the bond plus XX% the buyer would get a loan that in essence now includes the former bond and be fully deductible.

[Pturner]

Hi TJ,

If you're planning to live in your current TV home for many years to come, paying off the high-interest debt would probably save you money. I believe the debate is whether you would recoup the full bond payment if you sell your house in a few years. I've never seen any stats on this.

Interest on the bond is not deductible, either for you or for a future buyer of your home.

[Jim 9922]

In most states the cost of the infrastructure is included in the orginal cost of the house and not deferred as a "Bond". The bond is a lein against the property and thus should be considered in the "price" being paid for the house. The sweet music The Villages sales reps sing make it sound different. Remember, if it walks like a duck, quacks like a duck, smells like a duck and looks like a duck it IS a duck! Most independent sales reps admit what the "Bond" really is. If you are selling a reduced bond home you should be sure that your agent views it in this light and argues the "total price" concept to potential buyers.
You are not very savy if you do not consider the outstanding bond as part of the purchase price of the home. Even less savy if you want to pay 7% non- tax-deductible interest for umpteen years; especially if you have the cash to pay it off or finance it as part of a 5% mortgage!

As an aside, homeowners in non-bonded communities and those who purchased $0 bond homes are overpaying property taxes if the assessor does not add the bond balance to the appraised value cost of the home. Just think of the tax dollars Marion and Sumter counties are losing from The Villages areas because of under assessments!:loco:

[GeorgeT]

Do the math. For instance if I pay off my bond now I'll be even in ten years. If I let it run out to the end I'll have paid more than double what I would Pay now.

It's really up to you.

I hear that some unscrupulous people write off the payment on their income tax return since it's included in your property tax bill. This is wrong.

[Challenger]

Do the math. For instance if I pay off my bond now I'll be even in ten years. If I let it run out to the end I'll have paid more than double what I would Pay now.

It's really up to you.

I hear that some unscrupulous people write off the payment on their income tax return since it's included in your property tax bill. This is wrong.

And illegal-

[Bill-n-Brillo]

The letter we got this week states our bond is at 5.375%. "Lucky us!" :) I believe we've got 26 more years left on it. :ohdear: That's not too bad a rate, though.

If I felt that we were going to keep this particular TV property long-term, we'd pay the bond off now - no question. That not being the case, our current thinking is that we'll just roll along for the next few years and pay the annual amount as we go.

It's never made sense to me that the prevailing (though not absolute) philosophy seems to be that a seller won't be able to recoup the amount of their paid off bond when the property is sold. It is illogical/counterintuitive/whatever - but it is what it is, at least for now. Maybe the mentality will change after the build-out is complete.

Or maybe Publishers Clearing House will stop by our place soon with the "Big Check"............. :1rotfl:

Bill :)

[Pturner]

The interest rates do vary from district to district, so it's another factor to consider. Homeowners in my district (District 4) who have not paid off their bond pay 4.817 percent annual interest on their outstanding bond balance. The District 4 Board of Supervisors refinanced the bonds in 2010 for the lower rate.

[ljones190]

6.375 % in District 8 St. Charles, I think we will pay it off this year!

[cherylncliff]

We have a house in Buttonwood and just got our letter about the bond. Listed rate was around 6%. After discussing with our financial planner, we decided to pay it off. The things that entered our decision- 1) We had the cash, 2)we can't get 6% on any reasonable investment, 3)We built the house to our specifications so we are planning to stay there for some time. This is a personal decision with many factors that could impact your decision. Good luck and welcome to the villages.

[TerriScott]

Is there any way to assume the position of bond holder? Lets say I pay off my bond in 2015 and the regular schedule for the bond goes to 2040. Is there any way to give the schedule for my unit to any new buyers and for the years 2016 to 2040 have them pay me annually for the bond vs. the current setup??

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Also remember a buyer can only get a loan for the appraised value of the house, and the appraisal would not include or consider the Bond paid. However, As long as the buyer has a downpayment that at least covers the bond plus XX% the buyer would get a loan that in essence now includes the former bond and be fully deductible.[/QUOTE]

[buggyone]

[QUOTE=TerriScott;756445]Is there any way to assume the position of bond holder? Lets say I pay off my bond in 2015 and the regular schedule for the bond goes to 2040. Is there any way to give the schedule for my unit to any new buyers and for the years 2016 to 2040 have them pay me annually for the bond?"

:1rotfl::MOJE_whot::clap2::1rotfl:

[dewilson58]

Since the stock market delivers much more that 4%, 5%, 6%.......finance the bond and invest the $$$.

The question is, are you deducting the payments on your income tax return each year???:read:

[Golfingnut]

If you make more on your money where it is than the interest you pay on the bond, leave it there. If not, pay off the bond. It really is that simple.

[Bogie Shooter]

Since the stock market delivers much more that 4%, 5%, 6%.......finance the bond and invest the $$$.

The question is, are you deducting the payments on your income tax return each year???:read:

Bond payments are not tax deductable.

[HawkFan]

If you have enough equity in your home, you can take a home equity loan to pay off the bond. You can get a better interest rate and the interest is deductible.

[Golfingnut]

If you have enough equity in your home, you can take a home equity loan to pay off the bond. You can get a better interest rate and the interest is deductible.

Bingo. Even better alternative to pay off or not pay off. Thank you HawkFan.

[bonrich]

Paying off our bond has been a topic of discussion in our home many times. I would use our Home Equity line of credit at Prime plus 1/4 which is in place for another 10 years as long as we continue to own our Northern home. Also we are dependent on the Federal Reserve to continue to hold the interest rates at this low percentage. We also have read on occasion that Congress has talked about disallowing mortgage interest deductions which would hurt the new and existing homeowners.

But we also know that many upgrades, landscaping, etc, in our homes doesn't guarantee a 100% return of our costs if we decide to resell. They would "help" to sell the home and make it a bit different than the same models that are out there.
So, that is the conundrum.

[Cedwards38]

I see the bond as a purchase of the "lifestyle" rather than the purchase of the home, thus I don't get too concerned about recovering that amount if I were to resell my home. That's probably bad thinking from an economic standpoint, but its the way I see it.

[fb32162]

we don't really care whether paying the bond off or not impacts the sale of our house or if we recoup what we paid This is house #2 in TV for us and we don't plan on moving. Selling our house will be our kids problem and everything they get from it will ne a "profit" for them

[buggyone]

IF I had a bond on my house, I certainly would take a home equity loan and pay it off and would be able to deduct interest on the loan.

However, I bought a beautiful resale home that had no bond remaining which was a big contributing factor in buying it. The home also had every other thing we wanted plus some things we had not thought of before.

[mikempp]

The trouble with the argument of paying it off early for me is I don’t have enough deductions to itemize, they way I figure it I would save $156 a year on a $12,000 bond since the interest does me no good. I still haven't decided what to do.

[Lovey2]

...

[graciegirl]

We didn't pay off the bond on this house or on our first one. BECAUSE, you never know, it may be our previous house if we buy a third one. We did pay for both houses, but chose to let the bond ride, so that if we listed it to sell we would not have to include the paid off bond into the price of the house and make the price point more sellable.


We are very satisfied with our home, but ya never know what those people are gonna build next and we may just fall in love with a new floor plan.


I thought that when we bought our first house that it would be our here-'til-we-croak-FROG house but here we are in another one. We have downsized and know how to do that, we just might want to buy one of those sweet patio villas, or a beautiful ranch, or a new designer might catch our fancy. We ain't dead yet, and we may want another home here.


So for now the bond is not paid off on our home.

[OBXNana]

We paid it off as part of our closing last week. Over a 30 year period the bond will triple in cost. For us, it was down to dollars and cents. We aren't convinced it's tax deductible. Having gone through an IRS Audit we don't want to put it to the test.

There are no right or wrong answers to paying the bond off. Simply personal preference.

[Bogie Shooter]

We paid it off as part of our closing last week. Over a 30 year period the bond will triple in cost. For us, it was down to dollars and cents. We aren't convinced it's tax deductible. Having gone through an IRS Audit we don't want to put it to the test.

There are no right or wrong answers to paying the bond off. Simply personal preference.

It's not tax deductible.

[2BNTV]

I paid my bond off two weeks ago, as it only was a few hundred dollars.

I don't plan on moving, ever!!!!! I justed to get it over with and only pay the txes due, on this structure.

Since property values have increased dramatically, will the new taxes be proportionately higher?

Inquiring minds want to know........

[skyguy79]

I paid my bond off two weeks ago GREAT! Now you can start working on mine!

http://www.myfishingpictures.com/data/500/roflmao.gif

[pw1582002]

where do you pay the bond off is there an address

[REDCART]

3201 Wedgewood Lane, (CR466). M-F 8 am to 5 PM.

[Bogie Shooter]

where do you pay the bond off is there an address

Village Community Development Districts (http://www.districtgov.org/departments/finance/bond_info.aspx)