[Challenger]

Originally Posted by 784caroline

Most people after spending some time looking for Real Estate here in The Villages quickly realize what a Bond means and how it is to be paid. I think few people, if anyone, are being misled. However it does not change the fact that the initial cash outlay to buy a $200,000 house with a $15K bond is cheaper than a house costing $215K with no bond. Also when you are looking at comparable houses...the $215K house will appear more expensive because you will need more money to get in it and the $200 K house will most likely sell faster...UNLESS the $215K house seller agrees to a lower price thus negating the benefit of paying off his bond early.

Operative word = appears. In fact total initial obligation is the same. For those able to benefit from interest deducition paying off bond and including that amount in the mortage provides greater interest deduction and probably lesser overall financing costs depending on the rate of bond interest.

[JourneyOfLife]

I do not own in TV, but if I did, I would be inclined to pay off the bond.

Of course I am assuming I would be intending to stay put in the house for 10+ years.

[784caroline]

Originally Posted by Challenger

Operative word = appears. In fact total initial obligation is the same. For those able to benefit from interest deducition paying off bond and including that amount in the mortage provides greater interest deduction and probably lesser overall financing costs depending on the rate of bond interest.

You are talking Obligations I was talking Outlays. The amount of money needed (cash today - outlay) to actually buy the $200K house is less. However if you werre talking total obligations (that you incurr), the $200K house would actually cost you more in the long run because you would be paying all the interest on the bond whereas it would have already been paid if you bought at $215K. Even if you are deducting mortgage interest, the most you would be getting back is approx 28% (or less) of interest paid. BTW I read someplace a while back that approx 50% of the new homes sold here are paid for in Cash.

If mortgage money was tight (as it was 2008-2011), you may not get a bank (except Citizens) to finance the house mortage at 95% if it includes the bond for the appraisal has to come in at the right number compared to comparables in the area...alot of variables here.

Bottom line: there have always been and will be 2 sides to the story wether you should pay cash for the house and pay off the bond. Everyones financial situation is different as well as their comfort level in knowing their house is paid off (along with the bond), or they continue to carry a large mortgage. No one answer fits all situations.

[JourneyOfLife]

Originally Posted by 784caroline

You are talking Obligations I was talking Outlays. The amount of money needed (cash today - outlay) to actually buy the $200K house is less. However if you werre talking total obligations (that you incurr), the $200K house would actually cost you more in the long run because you would be paying all the interest on the bond whereas it would have already been paid if you bought at $215K. Even if you are deducting mortgage interest, the most you would be getting back is approx 28% (or less) of interest paid.
If mortgage money was tight (as it was 2008-2011), you may not get a bank (except Citizens) to finance the house mortage at 95% if it includes the bond for the appraisal has to come in at the right number compared to comparables in the area...alot of variables here.

Bottom line: there have always been and will be 2 sides to the story wether you should pay cash for the house and pay off the bond. Everyones financial situation is different as well as their comfort level in knowing their house is paid off (along with the bond), or they continue to carry a large mortgage. No one answer fits all situations.

The part you are missing is that mortgage companies and banks are going to consider a persons total debt obligation to be sure that the borrower can maintain the home and service the debt on the mortgage! Banks will consider the bond as credit debt that is essential to maintain the home (similar to property tax)!

IMO, if a buyer does not consider it... it is due to their ignorance on the matter. Matter of fact, they would be the only party involved in the transaction that would be ignorant of the issue.

IMO; If a buyer is ignorant of the issue, it is due to the Real Estate company and agent not informing the buyer of that unique aspect about TV!


Do real estate agencies and agents purposefully not inform buyers about the bond?

[TNLAKEPANDA]

Originally Posted by Bogie Shooter

Get your actual interest rate here:
Amortization Schedules - Sumter

Thanks for this link. It is good info. I was able to print my Schedule and see what my interest rate is.

As long as I can continue to beat 5% in the market I will hold the bond.

[kansasr]

When I looked at my amortization schedule, based upon a 6.125% interest rate, and saw that of my first year payment of $1093 only $213 was going towards the principal, it was an easy decision, given that I'm not planning on selling. On my $14,080 bond, I would have paid $15,686 in interest if I had maintained the annual bond payment!