Bond Issue
 

Have you really sat down and figured out what that bond is actually costing you, If you don't pay it right away.It won't put a smile on your face that's for sure. at 6.96 % interest
That $21,000 will cost you :bigbow: over $50,000.

:bigbow:

The answer may be they do not expect to outlive the life of the bond.

Anything with interest I payoff ASAP better off in my pocket not theirs

Since I don't live in The Villages yet and am still learning all the ins and outs about how everything works, couldn't you just refinance the loan at a better rate or are you locked into that rate? I know if I had a rate like that with today's available cheap money I would be finding a way to pay it off.

Check your property taxes. The bond is paid as an ad valorum with your taxes. It is not part of your financed mortgage payment. There is no interest on it.

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:shocked:

There is interest on the bond! Let's take a look - > https://www.districtgov.org/departme...Unit%20192.pdf

Not only interest, but an administrative fee.

The bond is not going to be refinanced as it was taken out by the Morse family's corporation(s)/CDD's to finance the building of the infrastructure. There is no incentive for refinancing as the bond holders are making money and there is no municipality that would benefit from the refinance as it is the homeowners paying it, not the CDD.

I make more on my investments than I pay in interest and the admin fee. Therefore I let the investments continue to earn more and I pay the bond costs. FYI, I bought a pre-owned house, so about 5 years of the bond had already been paid.

Paid ours off after about 4 years, since we could NOT deduct the interest.

On our CYV the bond is $14,000 and we pay $1100 a year and so far in 8 years the bond has gone down about $200 a year. So we don't go in the hole until after 13 years. I would be glad to have the problem of living 30 years to the end of my bond, that would make me 91. I guess it's good to have wishful thinking.

Actually there is. Ours is 4.94% w/20yrs left.

Think of the bond as a second mortgage that is automatically assumed by a new buyer.

If you pay it off in the first few years of ownership and you decide to sell/move, you would need to add what would be the remaining balance to your selling price to be even. That would mean you would have to sell for x dollars more than someone selling that did not pay off the bond, a tougher sell. Since most Villagers move a few times, this is a real consideration.

Also, I think if you are earning near or more than the bond interest on your investments, it makes little since to give up that liquidity to feel debt free.

Also, since it is tax time, remember that if you pay early you get to take the early pay discount on the bond too.

!!!

So many totally erroneous posts on this issue . Readers beware on this one

The term "ad valorem" means "based on the value of your house". The bond is not based on the value of your house, so it appears on the "non-ad valorem" section of your tax bill. You can look up your amortization schedule on "districtgov.org". The payments include interest and an annual administration fee. If you itemize tax deductions, non of the "non-ad valorem" payments are tax deductible if your house is your primary home.

Paid ours off right after we bought the house in 2009!

Ditto, paid ours off after bought in 2011--I was taught ," interest makes rich people rich," while it keeps poor people poor"--Benjamin Franklin raved about the benefits of compound interest--learned this in elementary school

Yep. This issue, deed restrictions, etc. This is a place for discussion, not information.

When stating "facts" posters should be sure that they are , in fact, "facts" . Otherwise readers , especially newbies are misled and may make costly wrong moves. Opinions ?

I get the most satisfaction when I look at my bottom line. I believe one has the option to manage debt to enhance the bottom line....earning more scenario is what guides my actions.

So for me the answer is simple....my satisfaction has all to do with whatever allows me to earn and accumulate more each year.

I paid mine off when I bought my used home. I look at this like credit card debt, bad debt. Interest with no tax write-off.

Not all debt has to be "bad debt".

One example; If one has sufficient funds to pay of the 3 or 4 percent interest rate home mortgage ........do not pay off the mortgage....instead invest the same amount where one can earn 6% and better. Hence allowing a 3 or more percent interest earned each year......by keeping the mortgage.

Not a matter of right or wrong or good or bad....just a very personal and to each his own comfort choice.

Homes in Lake County never had bonds and district #1 north of 466, bonds are paid off. District #2 bonds will be paid off soon.

A tip for people looking to buy a pre-owned home.

Another view- Paying off the bond is essentially an absolute guarantee of a reduction in expense equal to the interest cost. Other than USgovt debt, I know of no other absolute guaranteed return. Regardless of the claims of the issuers.

I'm curious - where do you invest that earns 6% and better?

My first home purchase in TV was a pre-owned Patio Villa. I was going to pay off the bond but my villages sales agent advised me not to pay it off because of the very same reason you stated. Sure enough, two years later I bought a courtyard villa and sold the patio villa. If I had paid off the bond I would have to add that to the sale price of the home. It would have made it a very expensive Patio Villa.

Makes you wonder if by adding the bond to the cost of the house makes it overpriced? If the bond was added to the home price where it would be deductible, would they sell better?

You pay property tax on the market value of the house. The market value is influenced by the price of the house you sell/buy it for. If the bond is paid off and it is added to the price if the house then the buyer will be paying for it in property tax. Same goes for furniture, if you increase the cost of the house because the furniture is included, or renovations etc.

A person had mentioned that they get 6%, I have a big investment in Gabelli Utility Trust (GUT) it pays close 8% and the dividends are based on 12 month payments, but a really big benefit is it you reinvest dividends, you get a 5% market price discount--close to 13% (total)--have this stock over 25 years--double your investment close to every 7 years

By the way I just got some more stock today @ $7.16 vs $7.54 mkt price--its been working for me

That would be an excellent choice with significantly better return than paying off the mortgage with the same money....if one is so inclined to do so....

Right, Wrong or Indifferent............I've looked at some Utility Stocks as a bond investment because of their dividend history. Sometimes not a lot of price growth, just good payment history.


GUT has a good track record...........and yes, 6% is do'able.

Thanks. :thumbup:

You are incorrect in this statement, the bods for districts 3 thru 8 were reissued in 2013-2104 to take advantage of lower interest rates. The homeowners still owing on the original bonds benefited by the lower rates by a lower annual payment on the reissued bonds.

Other than paying for the work provided by the Developer, the developer is basically out of the loop on the bonds that are issued and receives no benefit for either the interest or administrative fees that are charged.

Most folks don’t look at their amortization schedule. It should also be noted that the interest rate your bond varies depending on when it was issued. Our first villa, built in 2012, carries an interest rate of 6.125%. That’s huge. This is amortized—not simple interest.

Anyone know who keeps the admin fee? Might be the bond underwriter, but I don’t know.

More incorrect info by unknowledgeable posters. Rampant on this thread. Thanks Goldwingnut for "facts"

An existing bond is considered part of the total consideration for the property. Any appraisal indicating otherwise is erroneous.

:) https://www.districtgov.org/departme...financeFAQ.pdf page 3 says:

 Why am I paying administration fees with the bond?
The administration fees are charged to cover the expenses related to record keeping and
administrative costs.

There is a phone number listed on the bottom of the page and the heading on the page says "VCDD Finance". You could call and ask. :ho:

I was going to ask the same thing, most likely at some risk.