Bond

[Paul B]

I will be selling my home up north soon. Is it smart or not to pay off the bond on our Villages home? Half had said no and half have said yes. Thanks

[dewilson58]

I will be selling my home up north soon. Is it smart or not to pay off the bond on our Villages home? Half had said no and half have said yes. Thanks


From 10,000 feet (detailed people will start to reply):
Personal preference. The bond is financing for you. Check your rate of interest. 4%, 5%, 6%???? Can you leave your bond and invest the funds and make more money?? Some people take out Equity Lines with lower interest rates and finance it.

Keep in mind, if you just make the monthly payments, by the time you finish....you paid the bond twice.

Some people just pay it off, no worry about monthly payments and sleep better.

Good Luck

:posting:

[JB in TV]

I will be selling my home up north soon. Is it smart or not to pay off the bond on our Villages home? Half had said no and half have said yes. Thanks

Paul, with all due respect, and I mean this totaly sincerely, what do you expect to hear here? I bet 50% will say yes, pay it off...

[CraigC]

I will be selling my home up north soon. Is it smart or not to pay off the bond on our Villages home? Half had said no and half have said yes. Thanks

Paul,

Like others said, there is no real answer, but my thought on this is the following. The interest rate on my bond is a little over 6%. There is no way that I can reliably get that kind of return in the current economy, so keeping the bond will cost me vs paying it off. On the other hand, if we paid it off and don't stay in the house long term we will lose even more money. I decided to give it one to two years before we pay it, just to make certain that we are happy in our home.

[Bogie Shooter]

And the answer is........................................

[Lovey2]

Wow! We are in the same dilemma and go back and forth on it. I say pay it off and be done with it. My husband says if we move in a few years we'll never recoup it. Maybe like CraigC said we should give it a few years till we settle in and have a better idea of what we may ultimately do a far as moving goes. Crazy issue....

[Bogie Shooter]

I will be selling my home up north soon. Is it smart or not to pay off the bond on our Villages home? Half had said no and half have said yes. Thanks

More opinions here;
https://www.talkofthevillages.com/forums/villages-florida-general-discussion-73/bond-payoff-38570/

[Sanbo]

I say...Pay it off. I would not want to be paying over 6% interest on the bond amount.

[Bogie Shooter]

I say...Pay it off. I would not want to be paying over 6% interest on the bond amount.

Is your rate really 6%? I'm in district 6 and my rate is 4.94%.

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

[laceylady]

District 9--rate is 6.96%. Paid the bond off last week. They told me it would be 2021 before they could refi this bond at a lower rate.

[JB in TV]

KeepingItReal, this is not a whole lot different than the way a home loan is handled...You always pay more interest at first, and end up paying much more than the original loan amount if taken to term. Some folks either can't pay it off up front, or choose not to in order to save some cash reserves. Not everyone has an extra $20k...

Granted, many here have paid cash for their homes, but not everyone.

[patfla06]

Paul,

Like others said, there is no real answer, but my thought on this is the following. The interest rate on my bond is a little over 6%. There is no way that I can reliably get that kind of return in the current economy, so keeping the bond will cost me vs paying it off. On the other hand, if we paid it off and don't stay in the house long term we will lose even more money. I decided to give it one to two years before we pay it, just to make certain that we are happy in our home.

Ditto!

[tmdkjam]

It's a personal decision, but you should consider how long you expect to stay in the home here. If you think you are here to stay, and you can afford to pay it off, that would be best. If you think you might move in a couple years, it is probably best to not pay it off since most believe that you will not recoup what you would have paid.

[murray607]

When are the bond bills sent out? Same time as the Tax Bills?

[Wendy]

The bond bill is included in your tax bill. If you have been in your home less than a year, you will only pay taxes on land this year....along with your bond payment.

[graciegirl]

Pay it off right now if you are absolutely sure you will not sell your home in the forseeable future.

We are in our second home. We didn't pay the bond off the first new one and haven't paid it on this new one either.

We think it is easier to sell with the apparently lower price without the bond being figured in.

We might just want to move again inside The Villages. Who knows. We ain't dead yet.

There is NO valid reason to do it or not to do it. Just people's opinions.

And we do so love to debate on this forum. Even slam, degrade and spit. We are all convinced we are right. We are old and stubborn.

[mickey100]

On the other hand, if we paid it off and don't stay in the house long term we will lose even more money.


Think this is one of those myths that most likely isn't true and would be different on every sale. First thing most buyers look for on pre-owned homes is the remaining bond balance. If you stay more than a year or two you'll loose all the interest you have paid for sure and the new buyer will still owe almost the entire bond amount which will be an even heavier cloud over a home sale as the home gets older especially when compared to those with the bond paid. Even after paying yearly payments for 12 years and then if you do sell the home, the bond balance will still be $17,343.96 of the $21,510.17 original bond amount for Unit 175 homes. This remaining bond balance on a 12 year old home will cause you to have to lower your price to cover the bond liability compared to homes with the bond paid. Forgot to mention in those 12 years you would have paid out more $$ in yearly payments than the entire original bond.

Not trying to convince anyone to do anything one way or the other, guess the yearly $107.91 administrative fee on top of a nearly 7% interest rate was what convinced me. Bond interest is paid forward which means you are paying future interest on the bonds that hasn't been paid out and it is not tax deductible.

Everyone needs to follow their own best plan on this and do what's best best for their situation. Good luck..

Well thought out post. That was our reasoning in paying off our bond. Bad enough to pay a $20,00 bond or whatever they are charging nowadays, but to end up paying 2 or 3 times the original bond amount is not a nice feeling. We also figured that if we do decide to sell for some reason, having the bond paid would be an inducement for potential buyers.

[murray607]

The bond bill is included in your tax bill. If you have been in your home less than a year, you will only pay taxes on land this year....along with your bond payment.

Thanks. I will get my wife to check our tax bill which she says arrived a couple days ago, as I am working away from home until next week.

And yes, we took possession of our patio villa in March 2013.

Our interest rate is 5.707%

[Paul B]

Thanks for info

[l2ridehd]

This is a personal and also a financial decision. If you are sure you will stay in your home 5 years or more then pay it off. You will recoup about 50% of the value when you sell. The best way to pay it off if you can't come up with the money is to use home equity. This way you move from not having tax deductible to tax deductible interest. In the math I have done, 5 years seems to be the break even considering the high interest rate, not being tax deductible and recoup % on selling and that the first few years are almost all interest.

Check your own personal situation, but about 5 years worked for me using my bond interest rate, amount I would pay over the next 5 years, (from 2009 as that's when I did mine), ROI I could make on the money if I kept it, and assuming a 50% value if I sold. I paid mine off in 2009 and we are still in the same house, (although we are looking), so by next year I will be about even.