[ron32162]

Your also paying a carry over fee each year of around 60.00 no one tells you about plus the interest. pay it off anytime I did

[Jdasta]

Originally Posted by Toymeister

You do get a portion of a paid bond back much in the same way you get other home improvements back. Two homes, otherwise identical, will sell for different amounts for say an enclosed lanai. Two identical homes will not sell for the same if one has a paid bond.

The increased sale amount will not be comps + bond balance just as the enclosed lanai cost is not 'paid' .

I place the savings/ increased sale price at a point that the home must be kept in 7-10 years to break even.

Whether a bond is paid or not, has no bearing on the appraised value of your home. A bank will not finance a home for more than it is worth. So, don’t think you can automatically sell your home for more than its appraised value just because the bond is paid. The only criteria for paying off a bond is like others have said. Do you get a better return on your investments than the interest rate on your bond? Will you be in your home more less than 10 years? I you answer “yes” to both questions, then do not pay off the bond.

[biker1]

You can see the details of the bond on your home at the following website:

Bond Amortization Schedules

Originally Posted by Catalina36

I just recently purchased a home in TV. For me the Bond was paid off. Just curious, how much is a typical Bond amount when a new home is purchased. I know the Bond amount may vary depending on what year your home was built.
Thanks

[B-flat]

Our alternative was finding a resale with the bond paid off.

[pro200]

If you have cash laying around why not.
When they sell you house i think they trickus intp getting the bond.
there is a 100 fee along with he 30 year pay off.
I paid 20500 dollars or so two years ago saving the 5% interest that never goes away.

So brokers are linked to the morse crowd so it is great if the money they make off bonds
keeps going.

so when you sell your house if you do not give the buyer a 5% cost of the bond so i think if you are making money or have money pay it off.

i just sent mortage company 27,500 towards va 4.5 percent mortgage.
to save 200 dollars a month by getting a 2.25 mortgage made no sense.
if i pay 2000 over monthly rate it would be paid off in 10 years.
4000 a month paid off in 2 years.

Sorry i lost track of bond question. Pay it off lowering mortgage payments for me was 150 a month less if you have mortgage. on 20500 balance.

I am happy not to support the morses banks and thei:bigbowr wealth.

[J1ceasar]

You would think two identical homes one with the bond payoff and one without, the one paid off you would get more money. But unfortunately it's not like that you'll probably get a percentage more but not the full amount. It's like two homes one with a new roof and one with a 15-year-old roof. You won't get your full value for buying a new roof. Just like never getting money for the granite you put in

[biker1]

Yes. For my bond, the admin fee is about 0.4% initially with a bond interest rate of just over 5%. It, of course, steadily increases, as a percentage, with time.

Originally Posted by dewilson58

Don't forget the monthly admin fee.............that greatly impacts your effective interest rate. $$$

[Mrprez]

You don’t pay the interest up front. A portion of your payment goes to the bond amount each month.

[Sunflower33]

If you aren’t going to stay in your home and may sell and buy again I wouldn’t pay it off as it travels with your house. If you are in your last house until you die I would pay it off as it costs you a lot in interest as well as the bond. Just my opinion

[Mrprez]

Originally Posted by ron32162

Your also paying a carry over fee each year of around 60.00 no one tells you about plus the interest. pay it off anytime I did

You can find out everything you need to know about the bonds quite easily without having to be told anything. Do your homework.

[CoachKandSportsguy]

From a "finance" point of view, the sale of the house recouping an early bond payoff is a simple calculation, but the payoff is a cash flow decision. figure the bond percent of the home purchase price, say 10% and then estimate the annual increase in house pricing, compounding of course, so 5% increase per year, after two years, (1+increase%) ^ number of years = expected increase > 10% . you have recouped your bond pay off in the price of the house. 3% takes about 3 years, 2 % takes about 5 years. Asking real estate agents, whose goal is to sell houses without regard to a specific price level as the impact to them is minimal, may not get a "skin in the game" answer like you have all your "skin in the game"

So do the math, figure the cross over when the house price increase is greater than the house purchase plus bond.

But paying off the bond is a cash flow decision. Can you pay off the bond without impacting your income or your lifestyle significantly? Can you create a temporary saving account and put a fixed amount away each month to save without impacting your lifestyle?

No matter what, tax deductible or not, interest costs reduce your annual income, you can't get around it. Do the math, and if your tax bracket is 20%, you are still losing 80% of the interest in after tax cash flow.

Using the cash for investment income versus paying off the bond and interest has risks as well: the risk is that the income producing stream will continue as long as your bond is not paid off. 20 years ago, you could have 40K in treasuries and get a 5 % interest rate, and you would have thought that situation would be stable indefinately. The point is that there is risk in the income stream, uncertainty that the income stream will remain long enough. There is no uncertainty that the bond payment is due with interest.

So from a finance fiduciary point of view, the best answer is to always pay off the bond ASAP whenever your cash flow scenario can support the payoff. There is no "savings" from not paying if off if you can. There is no free lunch in finance, but there are mental accounting tricks which may convince you there are.

Mental Accounting - Biases & Heuristics | The Decision Lab

or google behavioral finance - mental accounting

Same question: which choice would you make: $10,000 today or $13,000 in a year from now?

Different question: which has the higher cold war ROI: a battleship or a spy?

sportsguy

[Topspinmo]

Originally Posted by eeroger

Not all bonds are 6%. District 8 refinanced their bond during the summer. I believe it is somewhere around 4%. Even with the tax increase, our total tax bill was $530 less this year than last year.

Aaa, the old refinancing scheme, start all over with high hardly no principle paying towards the loan.

[biker1]

I'm so sure about that. It is now amortized over 20 years. Wasn't the original bond amortized over 30 years?? If so, they essentially pick up at the same point in the bond lifetime but with a lower interest rate going forward.

Originally Posted by Topspinmo

Aaa, the old refinancing scheme, start all over with high hardly no principle paying towards the loan.

[Mrprez]

Not quite. In the beginning it is 1/3 to the bond and 2/3 to interest and admin fee. Amortized over 30 years.

[PugMom]

Originally Posted by Topspinmo

I’ve been debt free for 15 years. Cash is king. Interest is lame