When I financed the purchase of our new house in TV in 2014, the appraisal value and the bank financing value did not include the existing bond on the house.

What about your tax evaluation?

The assessed value on the Sumter County Property Appraiser site did not include the bond value.

We didn't know if we would sell the house so we wavered on whether or not to pay off the bond, but ultimately we did. Time flies - we've been in the house 13 years now, so I'm really happy we made the decision not to pay all that interest.

The bond does not add to the value. It is in fact a lien, superior even to a mortgage. The value is the value. My point is that If the appraised value is $100,000 and you contract at that price ,your total consideration with a $10,000 bond is $110,000. Any salesperson who does not clearly explain this is misleading the purchaser.

If house A is priced at $100,000 with a bond of $10,000 = total consideration(all in price)is $110,000. If no bond(bond has been paid), then any purchase price up to $109,999 is a better deal.

Stocks go up and down, but my bond debt will always be bad in my mind. That is just me. I was raised to never like any debt.

Sorry if this was answered before, for two identical homes, would one with no bond sell for a higher price?

A house is worth what ever price the market dictates and the buyer is willing to pay.
It is not influenced by whether there is a bond or not.
The bond of course does affect your proceeds.

To pay the bond off or not is a very personal decision based on many of life's factors/experiences.

As I usually say....to each his own without any attempt to express which is/may be right or wrong (as is done very often).

The anecdotal rumor is no. Not convinced, would like to see statistical "facts" Ten years ago when we bought new , the sales agent had no real knowledge of the Bond effect on total consideration.

Thanks for the replies.

Whats the rational for why the bond isn't factored into tax value of a home if it is a liability?

Obviously, the market value of a house represents what a potential buyer is willing to pay for it. The bond payments are part of the cost to own and live in the house. The bond is really no different from other costs of ownership, such as taxes, amenity fees, maintenance, utilities, insurance, etc. I'm not sure how other posters can say that their appraisal did not include the bond. How do they know whether the appraiser considered the bond in their appraisal? Don't they just give you a number? If anything, an unpaid bond would negatively affect the market or appraised value as compared to a similar house with no bond.

Everyone has different circumstances. Our bond in district 9 was over 7 percent. We were fortunate to have the funds and it made sense to pay it off at that interest rate. We also intended for this to be our home for the long run and so far, so good after 8 years.

I think it would depend on how financially savvy the buyers are. If they had narrowed down their choice to two homes that were quite equal, one had a bond remaining the other didn’t, it seems like you’d buy the one that did not have a bond.

That's true. But, many buyers are not "savvy". So, as a seller, if you have not paid off the bond, you can offer the house at a lower price and a non-savvy buyer will buy it. That is the advantage of keeping the bond.

Ideally, the real estate agent would explain that the house without a bond (and a higher price) would have lower annual costs than the house that still has a bond. Hopefully the buyers would be savvy enough to realize there is no free lunch.

But speaking of savvy, is the seller savvy enough to want to offer their house at a lower price to make up for the fact that they owe the bond? A lot of sellers see a house down the street offered at a certain price, and feel their house should be equally priced, irregardless of the bond. There lies the catch. I think some people have an inflated view of what their home is worth. Ultimately, the buyer needs to do some simple arithmetic, and I agree, some probably do not do so or are unable to make the best financial choice. Hopefully the real estate agent would help in that regard.

:agree:

Real estate sales people, in my experience , use this ignorance on the part of the buyer, to benefit their sales effort , sometimes one way and other times in the opposite way. Anyone who buys a home at a contract price of $250,000 with an existing bond of $15,000, is in fact paying $265000. Regardless of the spin of the salesperson.

Unfortunately, most salespersons will not clearly cover this point and in many cases do not understand the finance issues themselves. This is not a new phenomena , but has been going on for years.

That is how we think. Our first home was paid for here. This one is too. We can't imagine leaving it, but always poised for the next step. We didn't pay off our bond for that reason.

I have ALWAYS SAID that the bond amount should be ADDED to the asking price. That is the ONLY WAY to compare apples to apples when looking.

When we purchased a home, the bond was 100% paid off. As a prudent buyer, ALWAYS DISCOUNT THE OFFER by at least the amount of the bond (then additionally whatever you feel is prudent to make the offer remain attractive to the seller).

Be an educated buyer or be a sorry buyer - your choice.

Say I am a seller and selling my home for $300k with a $20k bond. You come in and offer $280k, in the current market your offer would be rejected without a counter offer. Prices on real estate are supply and demand. Right now the sellers rule and bonds are part of most home purchases. As a buyer you can request to see only homes with no bonds, but that could limit location and home type.

The most reasonable advice I have seen on bonds is to not pay them off right away in case you decide to move. If you pay it off and then move you will never get the bond value back in the sales price.

You are correct, if the buyer is emotional about the purchase. Plus, as you point out - It is a sellers market, so offers need to be thought out.

What I am saying is that buyers, when comparing homes for sale, they need to know the whole story about what they are buying. The bond can be a big part of that decision and they should not be blind to it.

Buyers should NOT rush into any purchase (and it should not be driven by emotion). This is a BIG DECISION. I looked for more than 18 months and made a good purchase, even in a sellers market.

Be sure, as a buyer, that one is making a good decision for YOU. There are LOTS of homes for sale. The right one will come around in time.

Bottom line, they don’t want you to pay it off. They quadruple double the original cost. I’d you pay it off, they lose money and you have more money. No loan is in You’re best interest:1rotfl:

Who is the they that you are referring too. The developer does not own the bonds.

Bond Interest and Admin fees
 

The developer collects the interest and the administration fees on the bonds. Our interest on our bond (we live in Charlotte - unit 196) is $1,174.13 and the administration fee is $97.59. The actual bond payment is $354.78. That is highway robbery. How was this interest rate determined? We just bought our home in August you can bet I am paying off the bond before July to avoid having to pay any more interest to The Villages.

The interest on the bond over the 30 years is double the cost of the actual bond and the administrative fee is also costly. So if you have the money to pay off the bond I can't see not doing it.

The developer has no interest in the bond or the collection of the bond assessments. Their interest ended when the construction efforts ended and they were paid for their infrastructure work.

These bonds are managed by the respective CDDs, in your case CDD-9. The bond rates were established by the underwriters when the bonds were issued and it is just like a loan you take out on a car or your home. The P&I paid are determined by the amortization schedule, with the interest paid each year decreasing as the principal decreases each year. Check your mortgage amortization schedule if you have one and you will see it looks the same.

You are not paying interest to The Villages, you are paying it to the bond holders. You may actually have some of these bonds in your investment portfolio.

If you have specific questions about you bond contact the Finance Department at 352-753-0421.

Since you're new to The Villages I highly recommend you attend the Resident Academy. It is a 5 hour class held once per quarter and is free. Go to the districtgov.org to sign up. The class covers may of the areas that new residents, like yourself, do not understand about how and why the community runs as it does. It is time well spent.

Bond principal and interest goes to bond holders ,not to the developer. The bonds were sold to investors. Get your facts straight before passing erroneous info.

Your interest rate is just shy of 7%. This is nearly twice the current 30 year mortgage rate. The bond is amortized just like a 30 year mortgage so it is front loaded with interest. After 10 years, you will have paid a total of about $16K and about $3K of that will have gone to principal. The administrative fee alone is nearly $1K for those 10 years. Since none of this is an ad valorem tax, it is non deductible on your federal taxes. The future value of the money, if invested, notwithstanding, if you will be in your house 10 years it is probably worth paying off the bond because you will wind up paying the money one way or another. If you pay off the bond, take the annual savings and dollar cost average it back into equities.

How does inflation factor into this decision?

It doesn't, the bond rates are fixed.

It's easy to find out what your bond amortization is, and the interest rate on your bond. Go here and look up your village or villas: Bond Amortization Schedules

...

Read posts by TomC and Goldwingnut on this thread. Two posters who know what they are talking about.

So many posts by people who have no understanding of the transaction giving advice that could be financially damaging to those seeking understanding. Happens far too often on TOTV generally.

You are a real asset to this forum. :ho:

I appreciate the useful info posted. Using a bond to finance infrastructure is better that burying the cost into the home value as it's done in other jurisdictions.

Out here in Oregon, those system development costs are hidden in the selling price of a home, and stay with the home forever. New starter homes here in the Portland Metro area start at $400K, with yards that make TV yards seem big.

For my new home purchased in Marsh Bend, the bond was quite clear, and the amortization easy to understand. The interest rate on the bond seems fair, too. Nice to have the option to pay it off at any time.

Excellent post.
 

Originally Posted by Goldwingnut
The developer has no interest in the bond or the collection of the bond assessments. Their interest ended when the construction efforts ended and they were paid for their infrastructure work.

These bonds are managed by the respective CDDs, in your case CDD-9. The bond rates were established by the underwriters when the bonds were issued and it is just like a loan you take out on a car or your home. The P&I paid are determined by the amortization schedule, with the interest paid each year decreasing as the principal decreases each year. Check your mortgage amortization schedule if you have one and you will see it looks the same.

You are not paying interest to The Villages, you are paying it to the bond holders. You may actually have some of these bonds in your investment portfolio.

If you have specific questions about you bond contact the Finance Department at 352-753-0421.

Since you're new to The Villages I highly recommend you attend the Resident Academy. It is a 5 hour class held once per quarter and is free. Go to the districtgov.org to sign up. The class covers may of the areas that new residents, like yourself, do not understand about how and why the community runs as it does. It is time well spent.

Debt bad, Pay it off. You are getting ripped off. Only thing to consider is if you are planning to sell in a few years. Not us....done moving!
If you can't afford the total, get a home equity loan with a lower interest and pay it off. JMHO.

Yep, we figured that out the first time we got our taxes;paid it off immediately ane have enjoyed the savinging since 2010