To pay the bond or not to pay the bond

[shcisamax]

We were going to pay off the bond but there seems to be a difference of opinion. We just thought why finance the bond at 6%. A few people have mentioned that when selling, new owners do not care. They care about the price of the house but for some reason do not think about the taxes/bond. Thoughts?

[momesu]

Well being selfish and looking to buy sometime next year.....I say pay the bond. I will be looking for resale home with low or no bond. Others may not car but to me a large bond just raises the price of the house in an invisible but financially draining way, Like I say though that is a selfish thought on my part. :icon_wink:

Suzanne

[natickdan]

The bond issue is one that many of us have thought about and after learning about the number of times a Villager may move, either within the Villages or somewhere else, we decided not to pay off our bond.

If we thought, with some certainty, that we would stay in our current home, we would pay off our bond. Our challenge is that we just don't know if at some point in the future, we'll want to find another home in TV. Although selling a home with no bond is an asset, many pre-owned homes on the market have a bond.

The decision you may make may or may not be the correct one for someone else. Look at all of your options.... Best of luck!

[BostonCelt]

Well being selfish and looking to buy sometime next year.....I say pay the bond. I will be looking for resale home with low or no bond. Others may not car but to me a large bond just raises the price of the house in an invisible but financially draining way, Like I say though that is a selfish thought on my part. :icon_wink:

Suzanne

Still, crunch all the numbers. Don't be surprised to find "no/low bond" homes priced higher than "bond" comps, to the point the lower priced home plus the bond is a better deal than the higher priced "no bond" home....

[Jim 9922]

No ifs or buts, the outstanding balance of the bond should be considered in the price of the home. Anyone who ignores this fact deserves to overpay for the home. Some sellers with bond balances will try to refute it as an additional cost. If you get one of these owners and your offer based on consideration of a bond balance is refused, go on to the next one. There are plenty of homes on the market.
Many Villages Properties sales people downplay the bond issue when selling new (especially a few years ago) but seem to "fess up" when selling used. Almost all independent agents tell it like it is.:boxing2:

[Barefoot]

We were going to pay off the bond but there seems to be a difference of opinion. We just thought why finance the bond at 6%. A few people have mentioned that when selling, new owners do not care. They care about the price of the house but for some reason do not think about the taxes/bond. Thoughts?

It's really weird. For some reason, a lot of people don't seem to consider the bond as an addition to the purchase price of a home. We paid off the bond on our last home in TV, a CYV. When we sold it was an insignificant plus. We now have a bond and I would not pay it off, unless we were 100% positive we would never move again.

[Ohiogirl]

but not until we owned for about 4 years. Also, the interest rate on our bond (built 2006) was over 7%, if I'm recalling correctly. I think the annual cost for our originally approx $9600 bond (for villas in District 6), was about $700 on our annual tax bill.

The district (6) may since have refinanced it, not sure how that works.

We read all the posts and considered it carefully, but after owning it for 4 years, using it for vacations, and moving down for good, we are sure we are not moving in the foreseeable future. We love our location and our villa, and unless we inherit megabucks from a long lost relative, we are not anticipating any huge financial windfalls that would change our minds.

For us, it's all about lowering our fixed monthly/yearly expenses so we can do pretty much what we want in retirement and not worry about money. We also paid off our mortgage. It is very freeing for someone like me who frets about these things. I sleep better (sometimes :).

Also, for some reason, I didn't have a problem with taking money out of savings to pay off the bond, whereas I do have a problem with taking $ out for living expenses in retirement, even though that's what I saved it for. But that could just be me, and it's something I am working on to get over - you can't take it with you!

[brostholder]

The bond issue is one that many of us have thought about and after learning about the number of times a Villager may move, either within the Villages or somewhere else, we decided not to pay off our bond.

If we thought, with some certainty, that we would stay in our current home, we would pay off our bond. Our challenge is that we just don't know if at some point in the future, we'll want to find another home in TV. Although selling a home with no bond is an asset, many pre-owned homes on the market have a bond.

The decision you may make may or may not be the correct one for someone else. Look at all of your options.... Best of luck!
My wife and I made the same decision. We decided that we would live in our CYV for a few years. If we decide that we like it after that time, then we will stay and pay the bond off. If we decide we need a bigger place, then we will move and start the evaluation process all over again. Our neighborhood is only two years old, but already some of my neighbors are "upsizing".

[JoeC1947]

My bond was only 11K so it was a no brainer for me. I don't plan on moving anytime soon so I paid it off right away. Think about it and make you're own decision. What's right for me may not be right for you. I come from the old school that says to retire without debt. A bond is debt that you can't write off.

[Happinow]

I agree with Ohio girl. We will pay off out mortgage and bond for the piece of mind. The less outstanding the better, at least for us. If anything were to happen to us the house goes to my daughter and she could have the house free and clear. Also, you can't take it with you so I say spend it! Leave yourself a nice cushion but live your life.

[shcisamax]

We're done. Paying the bond.

[Carla B]

When we were deliberating whether to pay off the bond we discovered that the VCDD was charging a fee of $85 per year on top of the interest just to administer the bond. So that sealed the deal.

[Bill-n-Brillo]

The "pay the bond off" or not decision is mostly a personal one, kinda like whether or not to have a mortgage (if that is a viable scenario for the homeowner). A financial case can be made to paying the bond off but as has been stated by some, the tendency is for many people to just overlook the amount of the bond associated with buying a home in TV. So that adds to the complexity of what to do.

Bottom line to us has been to do whatever makes us sleep better at night! :icon_wink:

Bill :)

[aljetmet]

The OP mentioned paying off with 6% money. That's kind of high.
New mortgages are under 4 and I'm sure a heloc is less also.
I'm going to pay off the bond when we buy.

Also regarding when selling, it's how you market your home. If you have no bond, your agent has to play it up in a big way. Well that's what I'm going to add to my will for my kids to read...

[edwardt6]

The Bond is just something you get to buy the builder didn't pay for most builders pay for the streets up front

[Schaumburger]

Well being selfish and looking to buy sometime next year.....I say pay the bond. I will be looking for resale home with low or no bond. Others may not car but to me a large bond just raises the price of the house in an invisible but financially draining way, Like I say though that is a selfish thought on my part. :icon_wink:

Suzanne

Just a wannabee...but I agree with you Suzanne. If I were to buy in TV today, I would be looking at resales with low or no bond. Don't want to lay awake at night worrying about $. Just my 2 cents.

[shcisamax]

We decided. Paying bond.

[Villages PL]

We were going to pay off the bond but there seems to be a difference of opinion. We just thought why finance the bond at 6%. A few people have mentioned that when selling, new owners do not care. They care about the price of the house but for some reason do not think about the taxes/bond. Thoughts?

Many of us do think about the bond. In my case, when I found out about the bond, I told the owner it was too much...a deal breaker. When she offered to subtract the bond amount from her asking price (which was already a fair price), I gave her a deposit on the house. I paid cash for the house and immediately paid off the bond. That was over six years ago and I'm glad I did what I did.

No mortage payements, no bond payments, no credit card payments and no car payments: What a great feeling it is to be debt free!!!!

:)

[Don Dukes]

Another stupid question. What is a bond and does everyone have to pay it? Is this a Florida thing?

[Schaumburger]

Another stupid question. What is a bond and does everyone have to pay it? Is this a Florida thing?

I'm a wannabee, so a TV resident can explain it better than me or please correct me, but here is my stab at it.

A bond is a sum of money added on to new TV homes being built or were built in Sumter and Marion Counties. The homes in Lake County have no bond. I believe the bond is to pay for the infrastructure (roads, sewers, etc.) in the newer areas -- someone correct me if I'm wrong.

The bond payment is paid once a year at the same time you pay your property taxes in Sumter and Marion Counties. The bond is designed to be paid off in 30 years, although I believe you can pay it off faster than 30 years as some people appear to have done.

Last year I visited a new patio villa for sale (sales price was approx. $137,000) in the Village of Buttonwood. The bond on that patio villa was approximately $13,000. The bonds on more expensive homes are higher than that So if you see a pre-owned home for sale that lists "low bond balance", "bond paid off," or "no bond" that is a plus for some people (like me). When I went to open houses last year, and the listing said "low bond balance" or "bond not paid" I always asked how much the bond balance was, and how much the yearly bond payment was.

Hope that helps. The bond thing was a mystery to me at first as home bonds don't exist in the Chicago area.

[shcisamax]

I might be wrong but my realtor said the bond is not based on the house but rather the land.

[kfierle]

My understanding is that the bond is based on the density of the neighborhood. Designer neighborhoods would have a higher bond than a patio villa neighborhood. The fewer homes, the higher the bond. More homes, lower bond.

[shcisamax]

Yes. The more lots in the designated area, the lower the bond price to pay for that area's infrastructure. Designer has more lots to sell ...higher density...than in a premium area so the cost is lower.

[Ohiogirl]

Bond is not directly related to price or size of home, but density of lots in neighborhood. Last time I checked, patio and CYV neighborhoods had the same bond, designers and cottages had the same bond (higher than villas), and premier neighborhoods had a higher bond (larger lots).

But a previous poster said something about the interest rate being the same as your mortgage - I don't think that is true. The bond interest rate is set (I think) when the bond is set, prior to the first home being built in that district.

I do think that since rates in general have come down, that the newer bond interest rates are well below what they were when we bought in 2006, but probably a % or so higher than prevailing mortgage rates. I also think that maybe some of the higher bonds have been refinanced at lower rates than they were originally.

Someone who has bought recently can tell us what the bond is in their district (are we up to District 10? - Sanibel, Fernandina and maybe Charlotte.

[shcisamax]

I think when my husband was in TV last week, he checked at the bank and they said the bond was 6%. I think that was Wells Fargo.

[ljones190]

Bond is not directly related to price or size of home, but density of lots in neighborhood. Last time I checked, patio and CYV neighborhoods had the same bond, designers and cottages had the same bond (higher than villas), and premier neighborhoods had a higher bond (larger lots).

But a previous poster said something about the interest rate being the same as your mortgage - I don't think that is true. The bond interest rate is set (I think) when the bond is set, prior to the first home being built in that district.

I do think that since rates in general have come down, that the newer bond interest rates are well below what they were when we bought in 2006, but probably a % or so higher than prevailing mortgage rates. I also think that maybe some of the higher bonds have been refinanced at lower rates than they were originally.

Someone who has bought recently can tell us what the bond is in their district (are we up to District 10? - Sanibel, Fernandina and maybe Charlotte.

we bought in 2010 in St Charles, bond rate 6.375%, we plan to pay off in July 2012.

[Bogie Shooter]

This is from the "nuts and bolts" threads.
Bonds
The purpose of the bond is to recover the costs of the infrastructure (sewer, water, streets, electric, cable, etc.) in your section. The bond is calculated based on the cost of the infrastructure for that section divided by the number of houses in the section. The annual amount of the bond payoff will be part of your property tax bill. I am pretty sure that the bond is a 30 year bond at 7% interest. It is like a 30 year mortgage. The bonds are fairly high south of 466. The bond goes down very little each year as most of the payment goes to interest. Be very sure to cover the bond, bond payment, length of the bond interest rate and payoff options with your sales rep or realtor. If you are buying a pre-owned property, be sure to find out how much is left on the bond.

[Dirigo]

No mortage payements, no bond payments, no credit card payments and no car payments: What a great feeling it is to be debt free!!!! :)

Amen to that!

We bought a house with no bond. We paid $38K less for the house than the owners paid when it was new (house+bond). The paid-off bond was a bonus, but what we really liked was the extreme privacy; 100+ empty acres behind us, smack dab in the middle of TV, that will never be built upon.

Got a pretty nice golf cart and some furniture too. The house was hardly lived in but we have renovated it to our taste and liking.

No mortgage payments, no bond payments, no credit card payments, and no car payments. WE'RE DEBT FREE! We're already living in TV. The lovely Diane is retired and I will be retired mid-year. Dreams do come true if you work hard enough!

[kentucky blue]

Amen to that!

We bought a house with no bond. We paid $38K less for the house than the owners paid when it was new (house+bond).

If you are planning on living in your home forever,pay off the bond.If at anytime you plan on selling ,DON'T,you will never recoup the cost of the bond payment,.....................................NEVER .

[eweissenbach]

When looking at homes we simply add the price of the home and the amount of the bond to come up with the selling price. Most people don't pay off the bond as they cannot really add that to the selling price when, and if, they sell. The bond is problematic in that it does not add to the home value, it carries a higher interest rate than a mortgage, and if you pay it off you cannot generally recoup it when you sell, so it is actially worse than if it were a part of the sales price. I have heard people claim it is no problem, as they pay it as part of their taxes and don't really notice it. Well, I gotta tell you, I would notice an additional $2000 or so when I pay my tax bill. I have also had TV sales people try to convince me that it really should not be added to the price of the home when considering the gross price because it is paid with the taxes and not a big deal. That is an insult to my intelligence. I understand exactly why the bond is a part of the new home purchase, as it allows the developer to finance the infrastructure while keeping the price of the home reasonable, but to think it is anything other than an additonal cost of the purchase is irresponsible.

[aljetmet]

When looking at homes we simply add the price of the home and the amount of the bond to come up with the selling price. Most people don't pay off the bond as they cannot really add that to the selling price when, and if, they sell. The bond is problematic in that it does not add to the home value, it carries a higher interest rate than a mortgage, and if you pay it off you cannot generally recoup it when you sell, so it is actially worse than if it were a part of the sales price. I have heard people claim it is no problem, as they pay it as part of their taxes and don't really notice it. Well, I gotta tell you, I would notice an additional $2000 or so when I pay my tax bill. I have also had TV sales people try to convince me that it really should not be added to the price of the home when considering the gross price because it is paid with the taxes and not a big deal. That is an insult to my intelligence. I understand exactly why the bond is a part of the new home purchase, as it allows the developer to finance the infrastructure while keeping the price of the home reasonable, but to think it is anything other than an additonal cost of the purchase is irresponsible.

Very well said coach! :bigbow: :popcorn:

[Bosoxfan]

If you are planning on living in your home forever,pay off the bond.If at anytime you plan on selling ,DON'T,you will never recoup the cost of the bond payment,.....................................NEVER .
That's exactly how we feel.We don't ever plan on moving again so as soon as we can we will be paying off the bond!

[Challenger]

Determining the best course in various scenarios would make a good article for some financial reporter(or Doctoral Candidate). We see a lot of anecdotal references to the fact that there is no effect on the ultimate price of the unit. I find this to be illogical and I doubt that a scientific study would support these comments in all cases. The issue of interest rates on the bond have an effect. Most folks do not have consistent investment returns and at 6-7%, it might be better to pay the bond off ever with borrowed funds. The cumulative effect of interest costs, inability to use the mortgage interest deduction. and the present value of money would all be relavent to the final result and IMHO may provide different optimal answers based on the facts of each case. :duck:

[jsw14]

We bought a pre-owned home in TV last May. It had a low bond. We where told that No Bond can go higher then 7%. We paid our bond off in Oct. 2011. Happy campers in Springdale.......

[mak44070]

Here's a link to the Amortization Schedule of the bonds in Marion and Sumter counties:

Village Community Development Districts (http://www.districtgov.org/departments/Finance/amortization.aspx)

The bond interest rate is hand-written on the schedule.

[obxgal]

Thanks for the link mak44070.

Our orginal bond was $13220.37.
With the interst of 5.357% plus the administration fees of $28954.40 added
that would be a grand total of $42174.77 over the 30 years.

According to those figures I'm happy we paid ours off.

[kentucky blue]

Thanks for the link mak44070.

Our orginal bond was $13220.37.
With the interst of 5.357% plus the administration fees of $28954.40 added
that would be a grand total of $42174.77 over the 30 years.

According to those figures I'm happy we paid ours off.

Since the average person lives in their home 5 to 7 years, the 30 year interest totals would not be a part of the equation.Anybody would payoff the bond if they felt they would be there that long.You made the right decision for yourself if your planning on keeping your home for the long term,if not ,that 5.357% interest rate and administration fees will feel like a real bargain.

[BostonCelt]

Here's a link to the Amortization Schedule of the bonds in Marion and Sumter counties:

Village Community Development Districts (http://www.districtgov.org/departments/Finance/amortization.aspx)

The bond interest rate is hand-written on the schedule.

Nice job. Thanks.

For a new Charlotte, Unit 179...$18,600.73...30 yrs totalling $46,642.29...interest rate penciled in at 6.8475%...

Sorta like buying a used Honda with a 30 yr car loan at 6.8+%....without the Honda.

Sorta...

[buggyone]

When I bought my home in Glenbrook about 2 and a half years ago, I first looked at a newer one in Caroline. It was $100,000 more and had a $20,000 bond. The one I bought had everything we wanted (plus more) was $100K less and had a $2,000 bond. No brainer.

I have looked at Premiers that have a $50,000 bond on them. No thanks to adding $50K to the price of the home.

Buy a resale with very low or no bond. You will come out ahead every time.

[2BNTV]

When looking at homes we simply add the price of the home and the amount of the bond to come up with the selling price. Most people don't pay off the bond as they cannot really add that to the selling price when, and if, they sell. The bond is problematic in that it does not add to the home value, it carries a higher interest rate than a mortgage, and if you pay it off you cannot generally recoup it when you sell, so it is actially worse than if it were a part of the sales price. I have heard people claim it is no problem, as they pay it as part of their taxes and don't really notice it. Well, I gotta tell you, I would notice an additional $2000 or so when I pay my tax bill. I have also had TV sales people try to convince me that it really should not be added to the price of the home when considering the gross price because it is paid with the taxes and not a big deal. That is an insult to my intelligence. I understand exactly why the bond is a part of the new home purchase, as it allows the developer to finance the infrastructure while keeping the price of the home reasonable, but to think it is anything other than an additonal cost of the purchase is irresponsible.

:agree:

No matter how it is painted, a bond is still money coming from the buyers pocket.

It's like the old commercial for the Framm oil filter:

You can pay me now or pay me later.

[ljones190]

:agree:

No matter how it is painted, a bond is still money coming from the buyers pocket.

It's like the old commercial for the Framm oil filter:

You can pay me now or pay me later.

Good line, except living in NJ my taxes are $6,000 yearly(no bonds), In TV my taxes and bond are $4,000 dollars yearly, when I pay off my bond and declare Florida as my primary residence my taxes and bond maintenance fee will be less then $2,500 per year. I'll take TV anytime over NJ! I look at the bond as a glass half full not a glass half empty, at least you have some options in TV.

[2BNTV]

Good line, except living in NJ my taxes are $6,000 yearly(no bonds), In TV my taxes and bond are $4,000 dollars yearly, when I pay off my bond and declare Florida as my primary residence my taxes and bond maintenance fee will be less then $2,500 per year. I'll take TV anytime over NJ! I look at the bond as a glass half full not a glass half empty, at least you have some options in TV.

I agree that taxes are much less in TV than in the northeast as I am in CT. I will paying a lot less in taxes when I move to TV. I plan on buying a pre-owned with little or no bond. The amount of what one pays is not what I was trying to state.

My point is that if one has a bond, it has to be paid whether one pays it all at once or over a 30 year period. Whether one wants to include the bond in the sale of their home and or taxes.

It's up to each individual to decide what is best for themselves.

[daca55]

My thought on paying the bond off is to only do it if you plan on being in the home for greater than 10 years. If you can't say that is where you will be in 10 years then I wouldn't use savings to pay it off. I just bought a brand new villa and I have a $10,000 bond which is misleading if you figure the interest they charge. When I was looking at resale homes I will admit I looked to see if the bond was paid or that it had been paid down substancially. I think when you look at a new home your mind set is that it goes with buying a new home. I just wish the interest was deductible on my 1040.:mad: