bond questions.
 

How is the bond on our house paid? What is the impact if we pay it off this summer?

The bond is paid with your property taxes. If you pay it off and sell your house, you will have to eat the value of the bond. Your house will not sell for a higher price than one where the bond is not paid off. However, you will save the interest you would have paid every year on the bond. An alternative is to take out a home equity loan to pay off the bond. The interest on that loan will be tax deductible if you itemize. Currently your bond payment including the interest that is included in your property taxes, is not tax deductible.

Thanks, LaceyLady. Very clear and helpful.

Say what?
 

[QUOTE=laceylady;649681] If you pay it off and sell your house, you will have to eat the value of the bond. Your house will not sell for a higher price than one where the bond is not paid off.

I have to totally disagree with this information above and I am certain it cannot be proven. If you want to pay 7% interest and an annual fee on over $21K which is nearly $1,500 plus a very small amount on the principal for 30 years it your call.

http://www.districtgov.org/departmen...bond_info.aspx

http://www.districtgov.org/PDFView/P...20121129000801

HI
At 2.65% interest over 15 years - versus ?? 5% - 6% for 20 years, we figure we pay $400/ less per year and 5 less years. If we sell in 15 years, it will be a marketable
'good buy" for the next person. We're paying ours off.

Agree with Laceylady...I dont know what Keepingitreal is talking about.
If you pay the bond off say within the first few years of ownership and then for whatever reason have to sell shortly after you paid the bond off,you will not, in most cases, recoup the cost of the Bond in the sale of the house.

To someone new to TV buying a house, it is bery difficult for them to rationalize why one house is priced at $300k and the other..identical house identical type of lot, is priced at $320k (bond paid)......which one do you think will sell quicker?

Keeping It Real is speaking as a 'frog'--he plans to stay in that particular huse until he croaks. In that case it makes sense to pay off the bond or refinance it to a lesser interest rate.

I usually don't stay in one home very long. So for us, paying off the bond doesn't make sense. If we are still here in seven years (my usual time for a house) and planning to stay, we will pay off or re-fi the bond.

[quote=KeepingItReal;649698]I totally agree, it's about $3 a day to pay it off,

keep the cash in play or for a rainy day.


Not to get off topic there is controversy about it being tax deductible.

We didn't.

Lot of funerals at St. Timothys.

As someone that plans to be moving to The Villages on the next year or two, I frequently look at the listings for pre-owned homes for sale. I always looks the ones that say "low bond" or "bond paid" first. I think the decision is a personal one and you have to weigh the high interest and no tax benefit of paying the bond off over time, against low interest tax deduction of a home equity loan, against how long you expect to be in the house. No one answer fits everyone.

One couple we met on one of our visits to TV were telling us that the husband was really struggling with wanting to pay their bond.
After he consulted with a close friend, the friend told him that, "the only person who will be happy that the bond is paid is your wifes next husband".
They did not pay their bond off and neither will we when we get there!

:agree:

I look for the same on pre-owned homes. "low bond" or "bond paid"

Ditto this. When I was looking at houses last month, I didn't even click the link on houses that didn't say "bond paid".
You may not recoup it in price, but you sure will get more looks and offers.

That makes a lot of sense. You may not recoup all the bond but you will recoup some for sure, and will get more looks, hence better chance of selling. Not all houses sell equally as quickly or even at all, despite what some on this forum will try to tell you.

And that bond payment each year adds up quickly, but the bond balance does not drop proportionally. For example, our house, purchased 7 years ago, had a bond balance of almost $16K. Adding up the yearly bond payments, which are NOT legally deductible on taxes, we would have spent $8600 and yet the bond balance would only have dropped $1700. We paid ours off, and I'm glad we did.

There isn't a right or wrong.

If you absolutely think that there is no way you will EVER, EVER, move again in the forseeable future, pay it off.

But if you think you might want a bigger house, a smaller house, and especially a bigger garage. don't.

AND houses are easy to sell here IF

They are well presented.

Priced right,

Belong to non smokers.

and are perfectly clean.

They are much easier to sell here than anywhere else in this country.

So easy that many people sell them without a realtor.:boom:

BUT...if you are a bloom where you are planted person.......THEN

Pay off the bond.:ho:Especially if you are a "youngun".

Exactly. We aren't "debt and interest" people, especially when you look at those figures of paying $8600 to gain $1700. Some people are comfortable with those kind of numbers, I'm not.

BTW: Bond interest rates are starting to be refinanced by the VCCD. These bonds were callable after 10 years and the process has started.... .homeowners in these districts will start to see lower bonds due in the November tax bill. I know District 4 starts refinanceing in May of this year with others to start shortly afterwards.

We were not comfortable with those numbers either. Our accountant advised it just didn't make financial sense to blow all that money on interest, particularly since it isn't tax deductible, and at the time was a higher rate of interest than what we could make on our savings.

we chose not to have the bond in our mortgage payment. Instead we are paying our property taxes and insurance separately.

Did we do the right thing?

Hear, hear! I totally agree. The reality is the cost of the house plus the balance on the bond is what one is paying for the house. Psychologically it may not feel that way which is why one may be better off not paying off the bond if he is not going to remain in the house long, then sell it.

I am not an expert on the TV bond. But, the correct answer is... it depends! Some of the considerations are unique to the person(s) and their situation.

Generalizations, though they may have some truth to them, may be too simplistic.

There could be simple financial reasons to do it... that fall under the heading of "you are very confident it will cost you less money"... crunched the numbers and are sure you intend to stay.

I also can think of a number of other absolutely valid reasons why I might choose to pay the debt up front instead of payments with interest in the future for other reasons.

One might be a situation where it is my primary home and I have the money today, but might be "less able" or strained to meet my obligation of debt in payments in the future. Possibly because some future unexpected crisis might occurred later that could turn into a personal financial crisis.

I won't elaborate further.

In addition, contrary to some earlier posts, it is not at all certain that you will not recover the bond payoff when you sell your house. In fact, I think most buyers (but not all, I agree, and I can't prove this) are smart enough to figure in the amount of the bond when making a choice between two houses-- one bonded and the other not. However, it is absolutely certain that if you don't pay off your bond, you are paying interest at a much higher rate than you would if you took out a larger mortgage on the house and paid off the bond.

Do the Math
 

Don't remember telling anyone what I was speaking as so I am not sure how anyone would know that information, but I assure you I am not speaking as a frog .

If you stay in your house 10-12 years you will have paid out enough $$ to have paid off the entire bond up front. You would save the remaining 18-20 yearly payments.

Even if you stay 7 years you will have paid out over 60% of what if would have taken to pay off the bond initially and you will still owe 91% of the original bond or 23 more yearly payments which you must try to pass on to the next buyer

Since you haven't saved anything and have paid the same $$ out towards the bond now, your 7-8 year old house will have a hugh bond still to be paid while the other home will be a bond paid home. Now which house do we think will sell faster? Both owners paid out almost the same $$ for the bond even if you only stay 7-8 years.

This will be even more of an issue with the new homes right now having a so much larger bond initially than homes did a few years ago. When new homes today are 7-8 years old if paid anually their bond balance amounts will still be 91% of the original bond amount which will be a big factor for homes that old.. close to $18,000.00

Do the math.....then do whatever is right for you, no two people are the same and everyone wants to think they made the right decision. Don't forget to add the annual fee you also pay each year of over $107.00 which doesn't go to the bond or interest.

http://www.districtgov.org/departmen...Unit%20175.pdf

To me, it's a personal decision for each individual to make - pay the bond off or not. It's not purely math to some - there are those who feel they won't see an equivalent amount of money back if they were to sell within a few years of paying off their bond while others feel they will.

Do whatever makes you sleep well at night.

JMHO!

Bill :)

Paying the bond off is a matter of preference and expectation for each individual. For us, as long as the Federal Reserve is depressing interest rates, the bond rate of 6.99% creates a rather large margin. So, we paid our's off several weeks ago. To each his or her own.

It was a difficult decision for us also so we decided to purchase a municipal bond ETF that pays 6% with the $20K I was going to use to pay my bond. In my mind, it's a compromise since I can cash-in at any time if I need the money. (The 6% from the ETF almost covers the interest on my bond.)

Financially, there are many reasons why you should pay off the bond - among them, over time you will pay at least double the bond when you add in the interest. And I agree that most people are smart enough to realize that the REAL price of a home is the sum of the purchase price and the bond and factor that into the selling/buying prices of pre-owneds. But, some people have trouble coming with the extra money lump sum, so for them they may prefer to spread out the payments even though they are paying so much more. And if you really are buying a home and expecting to sell it within a couple of years, by all means don't pay off the bond. However, contrary to the real estate boom years when people were buying, selling and flipping homes, I expect the majority of buyers don't turn around and sell so quickly. As KeepingItREal pointed out, even at 7 years you are still ahead by paying off the bond, and 7 years comes up pretty quickly here. As Lark7 said, paying it off is a matter of expectation and preference for each homeowner.

We are buying a home in Gilchrist and saw somewhere else on a different forum that if there is no bond your property taxes are less??? Also that the tax rate is 1.5 - 2% of the home cost. Is that with homestead exemption status?

Thank You for your replies!

No. Although bond payments due are shown on the tax bill there is no connection between them. The county is acting as collector of the bond payments as well as taxes.

NOT about paying or not paying off bond
 

Is $21K the cost of the bond on typical new construction nowadays? Oh my.... In my part of TV (which is much of TV), bonds on secondary market homes usually range from $0 to $5,000. I cannot even imagine adding $21,000 to the price of my home! I probably couldn't even afford it!!! And besides, given the choice, I'd rather have more home in a more convenient location than take on a bond that can add 10% or more to the price of my home. Whew!

Bond Lookup Link
 

You can look up the bond for any property on this link below. I think you'll find most new designer home bonds are right at $20-21K (UNIT 175 is $21.5K UNIT 205 is $22K)but the villas are less and premier areas are more. Look it up by section or name. Your section and lot number are on your ID card and shown as a UL # right above the barcode.


Download My Amortization Schedule link.

Village Community Development Districts

Have you looked at your tax bill for the last four years?

For whats its worth, I think that most of us that have bought in the new areas were aware of the bond costs when we made the decision to buy new versus resale. We weighed alot of factors, and decided on new.

If you pay off your bond this week on your new Lily. And then in about a year decide that you wish you had a golf cart garage and a little more privacy in back and want to get away from the smoker who is on their lanai 22 ft from yours and put your house up for sale and another Lily owner who did not pay off their bond advertises their house for 23K less and sells it right away to a brand new person who just thinks your house is quite a bit higher in price.

You don't think you will ever sell your house in TV....but a lot of folks do.

Sorry, I guess I wasn't clear. Please understand that I was not questioning what motivates buyers in terms of what and where they decide to buy. Up until reading this thread I had no reason to keep current on the cost of bonds and was just shocked at that $21,000 figure (coupled with the realization that I could never afford a bond like that).

Each series of new homes(villa, cottage, designer,premier) has a different price for the fee of the infrastructure, probably based partially on the size of the lot. (i.e. THE BOND)

I don't know what the bond prices are on cottages and villas. I am thinking that close to 23K for a designer is correct and about 50K for a Premier. The price of the infrastructure...the roads, utilities, preparation of area for building, the rec centers and golf courses and pools in place before a home is built in the area is a separate charge here called the bond. Unlike any place that I have known before, the price of the infrastructure is not figured into the price of the home. It is separate and the interest rate is higher than most people find fair.

Now that COULD be the awful, unseen, cruel and dispicable developer is trying to make more money on the poor, unfortunate and innocent potential buyers, as some try to allude. (Some of them are thinly disguised MLS realtors who are annoyed that they can't sell new homes)

Or it may be a successful way of doing business.

It depends on how people like to read it.

And how people like to read things add so much spice to this forum and keeps us all from being bored.

I enjoy so much trying to figure out what folks are "up too".

I don't think you are up to anything, Twinklesweep. Prices do keep going up. Because they CAN and because the prices of materials go up, but mostly because they CAN. Not just here but everywhere. I think if you add the price of the bond to the price of the home you will have a clear picture of how much a new home sells for.

I am glad you live where the bond is lower.

To new readers.
There is a separate and significant charge on new homes and some resales called a bond. If you just add it to the cost of your house in your mind, it is easier to understand. In other areas it is figured into the cost of the home.

You cannot buy a new home and use a VA or FHA loan OR write any contingincies in a contract on a new home..

You will NOT be given your deposit back.

You can get bigger homes outside of The Villages for the same money.

NO ONE is going to pressure you to live here.

There is a lopsided political climate here.

There are a lot of oldish people walking around and a lot of idiot drivers.

The doctors may not be what you are used to.

At High season this place is CROWDED causing some traffic snafu's that no one has solved.

The Colony Plaza parking lot is so full on most days you would think someone is giving away money.

The grocery stores and restaurants near 466A are so crowded because a lot of danged fools ignored all of the above and bought here anyway.

This place is like my granddaughter...How could you not fall in love with such beauty and charm?????.

The whole bond issue almost turned us off to TV, we went pre-owned with a very low bond which we paid at closing We love our home/lot, are content here and sleep well.

To clarify, I assume you man: "but a lot of folks do and then purchase a different TV home"


If that is what you meant, I noticed a number of posts where people commented about it.

While I can understand reasons why it might happen, I would hope to avoid it. At least, that would be the goal.

But for those that are unsure...

Does one have to pay the bond "in full at closing" or can they pay some payments with interest for a while and then pay it off the balance early (save on the future interest)?

boy howdy.

Can Be Paid Anually
 

But for those that are unsure...

Does one have to pay the bond "in full at closing" or can they pay some payments with interest for a while and then pay it off the balance early (save on the future interest)?[/QUOTE]

To answer your question at closing you will likely have to pay any interest due until the next bond annual assessment and possibly that year's payment but after that you can pay one payment a year which will be the interest, annual fee, and a small amount on the principal. The payment will be shown on your tax bill and will be paid as part of the overall bill which will also include the maintenance annual charge. The bond can be paid over 30 annual installments if a resident desires. The bond can be paid off later at anytime the owner desires. You can pick any address and go onto the Sumter County PVA site http://www.sumterpa.com/ do a search and look at the previous year's tax bill to see how it is laid out. Full time residents can get a $25K homestead exemption or $50K for a couple but you do have to apply for it and fill out appropriate forms.

Most buyers know they must consider the remaining bond balance and add it to the selling price to know how much they are actually paying for a property since the bond is a lien on the property until it is paid in full.

The annual bond payment amount can be found on this link:

Download My Amortization Schedule link.

Village Community Development Districts

http://www.districtgov.org/PDFView/P...20121129000801