Bond Payoff

[GeorgeT]

Just wondering how many are planning on paying their bond off this month.
If I pay it off now I'll be even in 11 years. If I continue making annual payments I'll be paying for another 23 years and an additional 11K. The interest rate is 6%. I'm opting to pay it off and save the $500 interest payment every year.

[aljetmet]

Just wondering how many are planning on paying their bond off this month.
If I pay it off now I'll be even in 11 years. If I continue making annual payments I'll be paying for another 23 years and an additional 11K. The interest rate is 6%. I'm opting to pay it off and save the $500 interest payment every year.

I would pay it off. You're not making 6% in the bank...

[Bill-n-Brillo]

George, t answer your question - we're not paying ours off. Our interest rate is a bit lower (5.375, I believe) but still - given our mindset that we might not be keeping our Patio Villa for the long term, we'll just continue to pay the annual bond payment til we decide on a different "life plan".

Bill :)

[Ohiogirl]

We paid ours off last summer, after 4 years of owning, and making the decision we did not expect to sell, even if something happened to one of us (you just never know). We had spent enough time there, even though we were renting it out, to know that our CYV in our present location was right for us.

There are numerous threads somewhere about what is best - I think the consensus that it depends on the individual situation. Your home's value is somewhat increased by having a paid-off bond, but probably not as much as the bond payoff. I would say to make sure you are where you want to be, at least for the next several years.

[diskman]

George, t answer your question - we're not paying ours off. Our interest rate is a bit lower (5.375, I believe) but still - given our mindset that we might not be keeping our Patio Villa for the long term, we'll just continue to pay the annual bond payment til we decide on a different "life plan".

Bill :)
Thinking of a larger house or not liking the villages?:undecided:

[Bill-n-Brillo]

Thinking of a larger house or not liking the villages?:undecided:

Uh-oh.....my bad. I shoulda 'splained my earlier comment a bit better. Sorry.

"Larger house" would probably be the 'different life plan' direction should we ever decide to become frogs/spend a lot more time in TV. In the meantime, our Patio Villa suits us just fine while we're snowflakes.

We LOVE TV and can't wait to get back down there in a couple of months!!! Sandy's counting the weeks right now - she'll switch over to counting it down in days in about another month............... :a20:

Bill :)

[Carla B]

A Bond Story: Fees on Top of Interest

We went to the customer service center on Wedgewood to pay off the bond by the deadline. I took something to read as I imagined there'd be a line of people waiting to do the same, kinda like the wait to get new IDs. Wrong! We were the only customers in the whole center to do anything!

I had run an amortization schedule at the stated interest rate of 5.375%...it didn't match the yearly payment, so we asked why? In response, the lady brought out a HUGE 6" thick binder that contains all the amortization schedules for all the units in all the districts. She found our unit's schedule and pointed out that there is a administrative fee collected by the VCDD. In our case it was $84 per year, so our interest rate was really 5.81%, instead of 5.375%.

I wasn't thrilled about paying off the bond, but the other party to the deed insisted because he hates to owe money. .:22yikes:

[kofficer]

and while we are on this subject, as I am going to be looking at resale homes, if a bond is paid off, it is an incentive for me to look at that house, but, will the houses appraise for that additional amount if you are looking at getting a mortgage?? Just something I have been wanting an answer to.

Lee and Richard in Tampa

[GeorgeT]

and while we are on this subject, as I am going to be looking at resale homes, if a bond is paid off, it is an incentive for me to look at that house, but, will the houses appraise for that additional amount if you are looking at getting a mortgage?? Just something I have been wanting an answer to.

Lee and Richard in Tampa

The bond has nothing to do with the appraisal. The appraisal is based on the value property.

[kentucky blue]

The bond has nothing to do with the appraisal. The appraisal is based on the value property.

That's why i've decided to take the money that i was going to use to payoff my bond, and increase my holdings in IBM stock. If i decide that this is the home i want for the long term,next July i'll look at the bond issue again. I can then decide to use my huge profits in IBM(got to think positive):thumbup: and payoff the bond or do a home equity loan so i can deduct the interest payments.If you are going to sell your home in the near future you will never recapture the bond payoff, since homes ARE valued on the appraisal alone, and NOT the appraisal plus the paid off bond.

[2newyorkers]

Once we decided we would not move from out current house in TV we decided to pay off our bond. At that time we were both still working. Now we have more money for play in retirement.

[rjm1cc]

Does anyone know who owns (issues) the bonds? Bank, the county etc.?

[aljetmet]

That's why i've decided to take the money that i was going to use to payoff my bond, and increase my holdings in IBM stock. If i decide that this is the home i want for the long term,next July i'll look at the bond issue again. I can then decide to use my huge profits in IBM(got to think positive):thumbup: and payoff the bond or do a home equity loan so i can deduct the interest payments.If you are going to sell your home in the near future you will never recapture the bond payoff, since homes ARE valued on the appraisal alone, and NOT the appraisal plus the paid off bond.

I'm an adocate of payin off the bond. I ve indicated that numerous times.

I personally would not use investment money to pay off. But for those buying now and getting a mortgage, rolling the bond into the mortgage is IMHO a good idea.

[Another 65er]

I'm an adocate of payin off the bond. I ve indicated that numerous times.

I personally would not use investment money to pay off. But for those buying now and getting a mortgage, rolling the bond into the mortgage is IMHO a good idea.
I don't think that's possible. Let's take an example: a new designer home selling for $230,000. A 20% down payment (or $46,000) is necessary to qualify for a mortgage. Now the buyer now has a $184,000 mortgage. Let's say the bond is $20,000. The bond can't be added in to make a $204,000 mortgage because then the mortgage would be almost 89% of the home's value. The lender isn't going to have a greater loan to value than 80 to 100.

Perhaps I'm missing something.

[Bill-n-Brillo]

Maybe the buyer's got more than the 20% to put down......?????

Bill :)

[l2ridehd]

In your example, roll the 20K bond into the total price being paid now use the 20% down which would now be 50K instead of 46K and the bond interest is dropped to the 4.5% mortgage rate vs the current 6% plus rate. This only makes sense if you have the extra cash for the down payment and the mortgage interest is at least 1 to 2 % below the bond interest. If they are close to the same interest then there is little value in paying off the bond and rolling into your mortgage.

The better deal is to find a resale that already has the bond paid and your getting it for around 50 cents on the dollar.

[Another 65er]

In your example, roll the 20K bond into the total price being paid now use the 20% down which would now be 50K instead of 46K and the bond interest is dropped to the 4.5% mortgage rate vs the current 6% plus rate. This only makes sense if you have the extra cash for the down payment and the mortgage interest is at least 1 to 2 % below the bond interest. If they are close to the same interest then there is little value in paying off the bond and rolling into your mortgage.

The better deal is to find a resale that already has the bond paid and your getting it for around 50 cents on the dollar.

I don't believe that TV will allow the bond to be rolled into the total price. In your example, the buyer would have put 50M (I prefer the Latin word mille for thousand) down and would have a $180M mortgage and still have a $20M bond.

[aljetmet]

Maybe the buyer's got more than the 20% to put down......?????

Bill :)

:BigApplause:

[Taj44]

We ended up paying off our bond. If you have a $20K bond at 5.5% interest, you'll be paying a little over $20K in interest over the period of 30 years essentially doubling the amount of bond. Someone mentioned they'd break even after 11 years. Its suprising how fast the time goes by. We've been here 7 years and it seems like yesterday. It just makes me glad we're not paying all that extra interest. And a paid off bond is a selling point if you do decide to sell. With the glut of houses on the market, it may be the factor that induces a person to buy your home rather than a similiar house that still has the bond.

[l2ridehd]

Another 65er. The example used was a 230K (I prefer the US thousand to the Latin word mille) a 20K bond for a total of 250K. 20% down is 50K with a 200K mortgage. And yes Citizens will allow you to do that. So the example works and your not left with a 20K bond.

[Another 65er]

Another 65er. The example used was a 230K (I prefer the US thousand to the Latin word mille) a 20K bond for a total of 250K. 20% down is 50K with a 200K mortgage. And yes Citizens will allow you to do that. So the example works and your not left with a 20K bond.
And you know this how?

[Another 65er]

The more I think about this, the less likely I think that it is possible to fold the the bond amount into your mortgage. If that were the case, why wouldn't everyone with a mortgage have rolled it into their mortgage where the mortgage interest would be tax-deductible?

In the example we discussed, it was suggested that the $20,000 bond would be rolled into the $230,000 purchase price so that the mortgage provider would expect a $50,000 downpayment (20%). My home cost roughly $230,000 and we put down $46,000 and have a $184,000 mortgage. Neither my wife nor I asked if we could roll the bond into the mortgage and no one from TV(sales rep/loan officer, etc.) mentioned it either. I would have been happy to add $4,000 to the downpayment and had a $200,000 mortgage where all the interest would be deductible.

If those with mortgages out there have rolled their bond into their mortgage amount, first I say "congratulations" and second, I ask, "how did you do that?"

[l2ridehd]

I just asked when I did the application and somehow they did it. I have no idea why more don't do it. I did put more then 20% down, but not enough to cover 100% of the bond and still have 20% on the remainder. I think I did 25% at the time and also did a 15 year mortgage. So the bank was at the 100% bond paid with 20% down much sooner, probably within a couple years. However no matter how I was doing it I would ask the question. I have found that almost all mortgage terms are negotiable. Interest rate, terms, years, escrow, down payment, closing costs, they are all open to discussion and change. They are in the business of lending money and if you have solid credit, solid qualifications with assets to keep them whole, they will make adjustments to gain your business.

[lincap]

I just asked when I did the application and somehow they did it. I have no idea why more don't do it. I did put more then 20% down, but not enough to cover 100% of the bond and still have 20% on the remainder. I think I did 25% at the time and also did a 15 year mortgage. So the bank was at the 100% bond paid with 20% down much sooner, probably within a couple years. However no matter how I was doing it I would ask the question. I have found that almost all mortgage terms are negotiable. Interest rate, terms, years, escrow, down payment, closing costs, they are all open to discussion and change. They are in the business of lending money and if you have solid credit, solid qualifications with assets to keep them whole, they will make adjustments to gain your business.

Often the reason for putting down at least 20% is to avoid PMI (private mortgage insurance). Depending on when your mortgage was done some lenders would consider less than 20% down without PMI. Possibly this is what was done in your case. I have been in the mortgage business 26 years and I have never heard of a "bond payment" being considered as part of the sales price of the house. However, as long as you accomplished what you wanted that is the most important thing. Also, I agree. It never hurts to ask for concessions.

[TomW]

IMHO: One would assume that paying the bond would enhance the value of the property by the amount of the paid bond. I don't think buyers view it that way. I didn't when I was searching for my TV home. If you are going to keep your home indefinitely (???) then it doesn't matter, but I believe that paying the bond is discounted in the sale more than the amount paid - in general. Also, one can make more than 6% in the market so there is a little "float" on the positive side if one is so inclined.

[l2ridehd]

IMHO: One would assume that paying the bond would enhance the value of the property by the amount of the paid bond. I don't think buyers view it that way. I didn't when I was searching for my TV home. If you are going to keep your home indefinitely (???) then it doesn't matter, but I believe that paying the bond is discounted in the sale more than the amount paid - in general. Also, one can make more than 6% in the market so there is a little "float" on the positive side if one is so inclined.

In general I agree. From tracking sales, a paid off bond is worth about 50% of the value when you sell. So I would not pay it off unless I was fairly confident that you were not moving. Yes you can make more then the 6%, however by doing it the way I did it is now tax deductible so actual return is better. Pro;s and Con's for each decision. My goal was to lower TCO when retired.

[kentucky blue]

In general I agree. From tracking sales, a paid off bond is worth about 50% of the value when you sell. So I would not pay it off unless I was fairly confident that you were not moving. Yes you can make more then the 6%, however by doing it the way I did it is now tax deductible so actual return is better. Pro;s and Con's for each decision. My goal was to lower TCO when retired.

Speaking about lowering your TCO, do you have any idea what % of Villagers pay cash for their homes?I'm waiting one more year, before i decide to go with a home equity loan and take the interest deduction or just pay the bond off.

[kofficer]

Another 65er. The example used was a 230K (I prefer the US thousand to the Latin word mille) a 20K bond for a total of 250K. 20% down is 50K with a 200K mortgage. And yes Citizens will allow you to do that. So the example works and your not left with a 20K bond.
Thank you for this. This is pretty much what I was trying to ask. We are planning on a larger down payment, i.e, $100-$120,00 to keep the mortgage down, so rolling in the bond is not out of the question, and could be less expensive. We'll just have to see where interest rates are when we have sold our house sometime early next year, we hope. Also makes a resale with a lower or no bond more interesting. We are going to be looking to get into something around $250,000 with a swim spa, or large spa, so we will be playing with our down anyway when we see how the numbers come out.

Does anyone know what the bonds are on the new area, for designers, and villas??

Thanks.

Lee

[Russ_Boston]

Does anyone know what the bonds are on the new area, for designers, and villas??

Thanks.

Lee

Mine was 23.5K in Buttonwood, designer section #164 - Jan 2011

[kofficer]

Thanks Russ, because my "realtor" keeps telling me $20,000, and I suspected that the newer areas have started moving upwards of that.

Lee

[De Lis]

What happens to TV when all the bonds are paid off? How will the quality of living remain the same?

[Russ_Boston]

What happens to TV when all the bonds are paid off? How will the quality of living remain the same?


The ongoing quality isn't related to the infrastructure bonds. Those are time of new home purchase to recapture road development etc. We will still pay monthly amenity fees as well as yearly maintenance fees.

[old moe]

The ongoing quality isn't related to the infrastructure bonds. Those are time of new home purchase to recapture road development etc. We will still pay monthly amenity fees as well as yearly maintenance fees.

And don't forget real estate property taxes paid annually. Where all of this usually comes from. Most land devolopers bill this expense into the price of the homes when first purchased.:cry:

[Russ_Boston]

And don't forget real estate property taxes paid annually. Where all of this usually comes from. Most land devolopers bill this expense into the price of the homes when first purchased.:cry:

I was referring more to the quality of life after bonds are paid since that is what the poster asked.

I would assume that property taxes are used by the county for road, schools etc. The amenity fees are used for TV quality of life costs.