[PugMom]

Originally Posted by Stu from NYC

Thanks so much for the info. Still learning our way around here and still quite a bit to learn.

ain't that the truth. this group offers such valuable info,--thx much to all the thoughtful members for sharing

[retiredguy123]

Originally Posted by Stu from NYC

Thank you so much for the insight and info.

Understand there is very little reason for the homeowner to pay off the bond early. I believe we were given the discount info when we moved in but do not remember. By any chance does anyone know?

It is very complicated. There is no discount for the principal amount of the bond. The interest is calculated against the loan on October 1 for an entire year in advance, but it is paid to the lender in two equal installments. For homeowners, if you pay off the bond by September 16, you will save a year of interest. If you pay off the bond after September 16, but before March 21 of the next year, you will save 50 percent of the annual interest. If you pay off the bond after March 21, you will still pay the entire annual interest amount. The bond also has an administration charge. If you pay off the bond by July 17, you will eliminate the administration fee for a year. There is no proration of the administration fee. You cannot make partial payments of the principal. I "think" I got that correct.

[bilcon]

If you are talking about paying off the bond early just call TV admin they will tell you the payoff amount.

[Bogie Shooter]

Full explanation here.
https://www.districtgov.org/departme...financeFAQ.pdf

[TSO/ISPF]

Originally Posted by retiredguy123

It is very complicated. There is no discount for the principal amount of the bond. The interest is calculated against the loan on October 1 for an entire year in advance, but it is paid to the lender in two equal installments. For homeowners, if you pay off the bond by September 16, you will save a year of interest. If you pay off the bond after September 16, but before March 21 of the next year, you will save 50 percent of the annual interest. If you pay off the bond after March 21, you will still pay the entire annual interest amount. The bond also has an administration charge. If you pay off the bond by July 17, you will eliminate the administration fee for a year. There is no proration of the administration fee. You cannot make partial payments of the principal. I "think" I got that correct.

If you are convinced you are going to stay in the home you have purchased for a few years I think paying the bond off makes sense. Our bond had a balance of 18K and had been paid down for 10 years. The interest and admin fee was just over 1200 dollars this year. I don't like paying interest if I don't have to and the fact that you can't make additional principal payments against the bond really forces you to pay a lot of interest for the life of the bond on the home. It depends on your circumstances financially I suppose. We are in district 8. You can look up the costs online.
IE: https://www.districtgov.org/departme...Unit%20159.pdf

[Bogie Shooter]

Originally Posted by Goldwingnut

The bond is collected by the county as allowed under Florida. There is a 4% discount given for early payment of the county tax bill, this decreases as you get closer to the actual tax due day. The county then charges the respective CDD a 2% service fee for collection of the funds and pays the balance to the issuing CDD, not the bond holders or the developer. The CDD then has a separate budget from its general fund/maintenance assessment budget for each bond series that has been issued. Form these separate budgets annual payments are made to the bond service companies to pay off the bonds and pay the bond holders, these payments include both that annual collections through the tax collector as well as any payments residents who have paid off their bonds early. Both the 4% and the 2% are calculated into the annual budgets of both the bonds and the maintenance assessments that are collected in this method.

The developer does not borrow the money to create the bonds. The developer presents the plans and proposed costs to the CDD board and once approved the CDD board works with one of several major financial institutions to issue the bonds for public sale. One the bonds are sold, and funds collected, the funds are transferred to the CDD issuing the bonds and held in a special construction account. As work progresses the developer invoices the CDD for work completed and is only then paid.

It is this bond process allowed under Florida law that has helped The Villages be so successful. Without the bonds the development costs would have to be carried by the developer and would be rolled into the cost of each home as is the case in almost every other development. They would not start seeing recovery of these funds until late into the development and sales process. In the case of CDD-13 phase 1 (Bradford, Chitty Chatty, and Hawkins) this bond is $90,120,000.

Because the developer does not have to carry these costs and the associated interest their money is freed to invest in other aspects of the development - the amenities such as pools, rec centers, golf courses, etc. Unlike other communities you won't hear during the sales pitch "over there will be the swimming pool and that will the green for the 4th hole next year when the golf course is built", instead you hear "THAT IS the neighborhood pool and THIS IS green for the 4th hole of the (fill in name) golf course..."

Some here like the bond, some dislike it, and most don't understand it. Bottom line is that you would pay the development costs no matter what, either separately in the bond or rolled into the cost of the home. Many communities advertise "No Bond" as a selling point but don't disclose the fact that these costs and their interest are included in the home cost, here in The Villages we have a bond with each new home and it obviously appears to be working quite well.

I don't know how that sticky thing works.....but this explanation definitely should be added.

[retiredguy123]

Unfortunately, when you sell a house with a paid off bond, many potential buyers cannot differentiate between a house with a bond and a similar house without a bond. So, I believe that you will usually end up not being properly reimbursed for a paid off bond. It can also affect how much money the buyer can pay for the house if he/she needs to get a mortgage. I hate debt, but I have not paid off my bond because of this reality.

[Stu from NYC]

Originally Posted by retiredguy123

Unfortunately, when you sell a house with a paid off bond, many potential buyers cannot differentiate between a house with a bond and a similar house without a bond. So, I believe that you will usually end up not being properly reimbursed for a paid off bond. It can also affect how much money the buyer can pay for the house if he/she needs to get a mortgage. I hate debt, but I have not paid off my bond because of this reality.

I have heard that before. Since we are only here just over 5 months think we will hold off on paying off the bonds.

Besides favorite wife liked the house and now that we are here lets upgrade this and that.

[Goldwingnut]

Originally Posted by retiredguy123

Unfortunately, when you sell a house with a paid off bond, many potential buyers cannot differentiate between a house with a bond and a similar house without a bond. So, I believe that you will usually end up not being properly reimbursed for a paid off bond. It can also affect how much money the buyer can pay for the house if he/she needs to get a mortgage. I hate debt, but I have not paid off my bond because of this reality.

I'm with you on the debt issue. I gave myself 5-6 years in my current house to decide if I wanted to pay off my bond, I figured after that if I'm still here then I'm well rooted and not likely to move and paying the bond off. April was 6 years, May my bond was paid off. Dave Ramsey's voice rings in my head every day...Debt is Dumb, and Cash is King!

[Stu from NYC]

Originally Posted by Goldwingnut

I'm with you on the debt issue. I gave myself 5-6 years in my current house to decide if I wanted to pay off my bond, I figured after that if I'm still here then I'm well rooted and not likely to move and paying the bond off. April was 6 years, May my bond was paid off. Dave Ramsey's voice rings in my head every day...Debt is Dumb, and Cash is King!

Makes sense to me and do agree with almost all of Dave Ramsey's ideas.

Mortgage is ok in our younger years but not so good in retirement years.

[rmd2]

My bond when I moved in was $8K. I paid mine off when I closed. I have been here 9 years and I'm glad I paid off the bond when I bought. Don't like paying interest only for anything because in 9 years you would have paid off zero on the bond. You would have just paid the interest each year. If I had not done that the bond today would still be $8K

[champion6]

Originally Posted by rmd2

My bond when I moved in was $8K. I paid mine off when I closed. I have been here 9 years and I'm glad I paid off the bond when I bought. Don't like paying interest only for anything because in 9 years you would have paid off zero on the bond. You would have just paid the interest each year. If I had not done that the bond today would still be $8K

This is completely false.

[Stu from NYC]

Originally Posted by rmd2

My bond when I moved in was $8K. I paid mine off when I closed. I have been here 9 years and I'm glad I paid off the bond when I bought. Don't like paying interest only for anything because in 9 years you would have paid off zero on the bond. You would have just paid the interest each year. If I had not done that the bond today would still be $8K

Sorry but from what I have heard from others do not think it works this way

[TSO/ISPF]

Originally Posted by Stu from NYC

I have heard that before. Since we are only here just over 5 months think we will hold off on paying off the bonds.

Besides favorite wife liked the house and now that we are here lets upgrade this and that.

Is that something realtors like to tell people to get them to ignore the bond on a house?
I certainly would insist on making a point of it when selling a house that had the bond paid off, especially if the remaining bond was significant. If you look at the amortization tables for the newly refinanced bonds your still paying a LOT of interest in the early years of the bond just like a mortgage. Unlike mortgages, you can't make extra principal payments so you are really paying through the nose if your bond has a lot of years left to pay. IE: Ours were 2020 numbers district 8, residential unit 159:

Bond balance: $17,995.79

2021 payment due in 11/20:

$656.96 principal
$725.04 interest
$96.06 Admin fee
$1,478.06 Total due
$17,338.83 2021 Balance

[retiredguy123]

Originally Posted by rmd2

My bond when I moved in was $8K. I paid mine off when I closed. I have been here 9 years and I'm glad I paid off the bond when I bought. Don't like paying interest only for anything because in 9 years you would have paid off zero on the bond. You would have just paid the interest each year. If I had not done that the bond today would still be $8K

Not exactly. An $8,000 bond with an interest rate of 5 percent would have a balance due of about $6,700 after 9 years.