[batman911]

Difficult to find a reliable return on investment after taxes of 7% without taking on a lot of risk.

[rjm1cc]

Originally Posted by GeorgeT

I understand why holding onto a mortgage with a low interest rate but why classify a bond as an investment? Just wondering. Maybe I can learn something.

Debt is not normally an investment so I was not being completely serious. The reason I called it an investment is that you pay off the debt with dollars that are worth a little less each month (Inflation). The inflation is your income on your "investment". Lets say you have debt of 100,000 for 30 years. In today's dollars you might only pay 90,000 to pay off the debt. (yes plus interest) The point was that one of the variables to consider is the effect of inflation which could be substantial as energy, food and medical costs increase.

[new peeps]

One other idea to ponder. I think either way has pros & cons that has already been brought up. One other option you may want to consider is to live in the house for the first year to make sure you love the house, area and neighbors. Then if you are sure this is the final house pay off the bond on the second year. It will cost you a year of interest but give you some time to evaluate all of the other changes that you made in your life the previous year. This is what we done as when I ran my numbers my investments for the last three years was averaging under the interest rate charged for the bond. I had no regrets with the decision and actually smiled a little when I got my second yearly tax statement as it was lowered by about $1000.00 if my memory is correct. Now if I could get my investment back in gear I would really be happy.

[Pturner]

Just as added information, some of the CDD's have refinanced the bonds to lower interests rates. So the interest on your home bond might be lower than 7 percent. For example, I believe it is 4 percent on bonds still outstanding in District 8.

[2 Oldcrabs]

We will be make settlement in Dec on a new home in Sanibel. The bond is $20,259. The yearly amount is $1,713.56 for the next 30 years. That is $51,406.80 you pay out at the end of 30 years. You can not write the interest off on your Taxes. But if you pay off your bond and try to sell your house in the first few years you may not recover the bond cost. Live in the house a few years and then make the decision. You may want to do a Home equity loan if you think you can write the interest off on your Taxes. There are several factors to look at, future income, cash assets, (can you make more in the market), what you want to leave your heirs, life expectancy and the "sleep factor". Everyones situation is different