We paid our bond off after the first year.

We knew we loved it here and love our house so we paid it off.

We are in our 60’s, live in our houses 15-17 years and have no plans to ever move.

Why pay DOUBLE for the bond over time. We also hate any debt.

We just paid off our bond last year. We have owned our home for 6 yrs. and do not intend to sell. We paid it off after we refinanced to a 15 yr. mortgage. The interest on the bond was the tie breaker to pay it off.

Most of the info offered on this issue is either, dead wrong, self serving(realtors) , misguided or otherwise questionable . The biggest issues in the decision are: what is the interest rate on the bond that you are inheriting, whether you have excess cash, or low performing assets, where might you find an absolute guilt edged investment that will guarantee complete safety at a rate equal to or higher that the bond interest rate. If you don't understand the computations in order to make the right decision for your situation find someone that you trust who does . Easy to make an expensive mistake in this situation.

It is a pretty simple financial decision. I was able to get mortgage money at 3% so I got a mortgage with enough to pay off the bond as my investments were/are paying off at double to triple that interest rate. Use others money to make money.

Bond is so high now. When we bought it was only $3,500 so we paid it off at closing. Still in same house 19 years later and glad we paid it off. Friends just bought with a $30,000 bond. Don't think I'd pay that off. You can earn more than the 6 percent charged by investing the money wisely.

There is not correct answer (as you can tell).
This topic "comes up every year".
Lots of opinions (same every year), with no right answer.
Personal preference.
:coolsmiley:

If you friends just bought, they aren’t paying 6%. Less than 4% in districts 12 and 13. I only found two districts that had an interest rate of 6% or more. If I remember right they were 9 and 10.

There is no advantage to carry any type of debt.

The whole bond concept is almost a scam on buyers.
The cost to build any house, including all the infrastructure, should be the purchase price.

The bond simply allows a lower original selling price helping the builder appear to be offering a better deal to unsuspecting buyers.

Would you consider buying a new car for a great deal, but with the engine and transmission on a separate 10 year payment plan, plus interest?

Nonsense to your claim of "almost a scam". Everything is upfront and spelled out, if people care to look and listen. You can use your financing for the house and use their (The Villages) financing for the bond (infrastructure), or pay cash for the house and finance the bond using their financing, or finance the bond with your own financing, or pay cash for both. Nobody is forcing anyone to buy here or use their financing for the bond. Your car comparison is a strawman argument.

I believe he was trying to state that by not paying off the bond then you are choosing to pay interest that cannot be deducted on your Federal taxes (it is not an ad valorem tax) and if you are at the start of the 30 year amortization of the bond then you are paying down relatively small amounts of the principle.

I agree. The realtors downplay the bond, they say its like property taxes, you’re paying for infrastructure.
I also wonder if buyers of a resale, don’t always know the details of the bond, until they fall in love with a place.
As a buyer, the first question I ask the realtor is “what’s the bond”. Two identical houses, I’m going for the one bond free.
Agree, you may not get back 100% of the bond balance paid (just like you don’t get 100% of the cost of the pool or new kitchen) when you sell.

Like credit card bad debt. Paid mine off 1st year. I hate to owe money.

That is the problem. You don't get back 100 percent of the bond balance paid. That is why you can't view a bond the same way that you view a mortgage loan. When you pay off a mortgage, you always get back 100 percent of the amount you pay off in terms of your total investment return.

Only difference is if you think you might sell in the next few years you can pass that credit card debt on to the next owner.

If you plan to stay long term then definitely pay it off now rather than paying interest.

That don't make much since to me, I'm not a big on investments, but 6% is a lot of interest considering under 3% is the norm.

Very few people are paying 6%. Do the research, it isn’t that hard.

Or you could lose you’re ?

Over 10 CDDs with over 40 different amortization schedules each... sure, not really that hard but I sure don't have the time or inclination to calculate 400+ interest rates.

For mine, the pure interest rate seems to be 5%. However, that isn't all I pay. When I add in the Admin fee I get an effective interest rate of 5.5%. Still not quite 6% unless you round but since the Admin fee is the same every year, the effective interest rate will increase a small amount every year.

What calculate? The interest rate is stated right there on the schedule. Plus all the of CDDs that are over 29 years old are paid off. Get real.😀

We bought our house four years ago and were told our interest rate was 6%. We paid the bond off after two years.

The bond is financed and is the same as any other loan. If you're making more money, net, in some investment, why would you use that money to pay off the bond "loan?"

Again, Personal Preference.

As I understand it the interest a homeowner pays on the bond is not tax deductible. Most investment income other than municipal bond interest is taxable either at regular income or capital gain rates; municipal bond interest may be subject to tax if one pays AMT. If bond interest is 5% one needs to net 5% after taxes just to pay the bond interest. One would likely need to securely earn at least 10% before taxes to make it worthwhile IMHO which might be pretty difficult to accomplish.

Paying off a bond at 6% is also a guaranteed rate of return of 6%

Yes indeed if one remains in the home. If one then sells the home with a paid off bond it remains an open question as to whether the full amount of the bond payoff can be recovered in the sales price. Some say yes; others say no.