Bond/refinance questions
 

Hello to everyone. I have a question. I apologize if this has been asked/answered previously but did not find it when I searched.

We think we are going to take advantage of the refinance option when we finally retire to TV fulltime. Currently, we have a home in KY and bought one of the model homes in St. Charles last year.

When we sell, we will realize enough profit to completely pay off our bond, and have money left over to refinance our mortgage down quite a bit. Has anyone paid off their bond and then refinanced their remaining profit off the mortgage?

We have been playing around with projections and started considering that as an option. Let me know if you think good or bad idea.

Thanks

Sounds like a good idea. I think the major consideration is whether you love your home and don't plan on selling it for several years if ever. Other posters have noted that is hard to recover the cost of the bond in a home selling price if you sell within a few years.

If you don't plan on selling my home then paying off the bond gives you a guaranteed 6 1/2 - 7 % return on your money. It todays environment, that return guaranteed is not possible.

I think once you have sold your home in Ky and have made a committment to move to TV full-time then it makes perfect sense to pay off the bond and refi the mortgage which should be less interest rate then the bond and will be fully tax deductible unlike the bond interest paid.

why not just pay down on the mortgage you have now...you save on refi and closing cost and the pay down should outway a lower interest rate

Really don't think there is a right answer to your question. You might consider which interest rate is higher and thus payoff the higher rate. My thought is that I would pay the mortgage down or off than the bond. If you ever sell your property your proceeds will be net of your mortgage. With the bond it is not...the buyer "assumes" the bond on the property and is not net of the proceeds. Same goes if you would refinace your house.

I agree with Coach. It would make sense to may the high-interest bond unless you think you will sell in a few years.

Many people in TV move a couple of times within TV. They either find they want a bigger or a smaller house, they like or don't like the direction the lanai faces, they want a bigger garage, want to expand a room that can't be expanded on their particular lot, find they frequently like to shop or golf or whatever closer to different part of TV or for any number of reasons.

With that in mind, another thought might be to bank the savings for at least a year or two to see if you think your first home here will be your last.

That said, I really don't think it's "wrong" to pay off the bond. Being able to sell your home bond free is a plus.

KYTeacher, did your St. Charles house have a bond of around $20,000? If so, you might have gotten a much better deal by buying a resale home with little or no bond. More house, much less or no bond, established community, no construction going on. Just saying.

Yes it did, we researched homes for approximately 4 years - going back and forth between new and resale. We even went through all the house plans and had different "favorites" each time we dropped in for a visit. Ultimately we decided on new - wanted a block/stucco, wanted a golf car garage, etc...and the Jasmine w/ a golf car garage was the one we chose.

We lucked up on a model home during our spring break in 2010 and knew this was the house we wanted - had everytihing we deemed important and to top it off, we were able to purchase one of the models that came furnished. Even though we are just able to come down for just a short trip each time, we have met many fine people in our neighborhood and know we made the right decision - the LAST move in our life will be the home in St. Charles!

Sounds as though you made a good choice. Welcome to The Villages. You cannot help but love it.

The St. Charles Social Club is a good organization to join when you move in here.

In general I would say pay off your mortgage as soon as you can. This would apply to all ages. However, as I do my financial planning for retirement I can see that a mortgage will make scene for me. The reason is I expect more growth from the assets I would sell to buy a home and inflation will actual reduce the value of the debt. Thus I can see a mortgage in retirement for some. You might be one.