[ficoguy]

Correct. It’s is priced in to the sakes price. You can’t get $20k more for your house even if you paid off a $25k bond. If you can earn more than the interest on the bond then don’t pay it off

[Tomptomp]

If the bond payment were included in the purchase price of the house then the assessed taxes would be higher. Debt is debt. It doesn’t really matter who gets your money. By separating the two your not being taxed on the bond.

[mrf6969]

I believe The Villages separates the infrastructure cost solely to make the price of the home seem more attractive. Of course in reality when you buy a new home today at say $460,000. the real price of that home is $500,000 with the $40,000 bond added to it plus the interest on the bond.

[diva1]

Originally Posted by Stu from NYC

The problem with paying off the bond early is that if you decide to sell your home the prevailing wisdom you will not get more for your house since you have no bond.

I'm not so sure about that. Why do the realtors always advertise "No Bond" with the house they are selling? It is a desirable feature.

[DecaturFargo]

Poppycock. The developer foist their responsibility on the homeowner, and since they own Citizens First, for those who have loans with them. They're making 3, 4, 5% interest.

[RobertWR]

We paid our bond off. At 5.7% it's an expense that did not make sense. I believe our home is worth that amount more the day we decide to sell.

When looking at homes to buy 2 years ago we did look to see if the bond was paid or not. Our home is south of 466A.

It is an individual decision.

[Mohawksin]

Originally Posted by VApeople

No.

As I understand it, every new house comes with this debt.

New and as each time the home sells until the bond is paid off.

[NY2TV]

Mortgage interest rates are currently lower than the typical bond rates. Mortgage interest is tax deductible while bond interest is not. If you plan to take out a mortgage, I suggest you add amount of bond to the mortgage and pay off the bond.

[Cheese]

Since the average Villager moves two or more times remember that you get no credit for the paid off bond. So unless
you purchase a home with a paid bond, you'll owe another bond on the second and third home. Just something consider.

[merrymini]

I assume the bond interest is amortized like a home mortgage and, like a mortgage, over 20 or 30 years. Since the best of accounts, even on line, appear to pay only about .6 Percent these days, those bond payments, I think mine was close to 6 percent, can really bust the bank, your bank that is. People underestimate how much it costs them over the life of the loan because the yearly payments do not seem that big. Use an amortization calculator and you will see how much in interest you wind up paying. Ouch! We paid off our bond on purchase because we planned staying in the house long term.

[ts12755]

Buy a used home with no bond.

[Goldwingnut]

Originally Posted by jwonycr

There are two parts commonly called "bond" which come with your tax bill. There is bond maintenance, which pays for upkeep of the common areas in your CDD -- mowing, replanting of flowers, etc. This is non-deductible. Then there is the capital bond, which paid for the infrastructure early in the construction and development. Interest on the capital bond IS tax deductible (just as it would be if the developer had rolled the infrastructure cost into the price of your house) assuming you itemize. You can go to Village Community Development Districts and look up the amount of your bond and the interest rate you are paying.

The Maintenance Assessment IS NOT a Bond or a part of the development Bond that is listed on your tax bill. It is a separate assessment based on the operating and maintenance cost of the CDD you live in.

The Bond will go away when you pay it off, either as scheduled or early as you my choose, and not return. Most Bonds in The Villages have been reissued by their respective CDDs to take advantage of lower rates and saving the residents money. Once the bond is retired, as is the case in some of the norther CDDs, then they are gone for good. The CDD could issue a new bond if there is a dire need for a large some of capital to finance a project/improvement/repair/etc. but this has not happened in the residential CDDs. The commercial CDDs (SLCDD & VCCDD) have issued special purpose bonds, in 2016 the SLCDD issued $352M in bonds to purchase the amenities between 466 and 44. The residents are not responsible for these bonds.

The Bonds are not held by the developer or Citizens First Bank, they are sold on the open market to investors. They are highly rated because of the stability of the development and sell very quickly when offered.

The Maintenance Assessment will not go away and though they've been stable for the last 5 years (except CDD4) you can expect these to go up in the very near future in just about every CDD. The District Staff has done a lot of things over the last few years to lower cost and consolidate services that have helped reduce the impact of inflation and rising costs, however the cost increases have outpaced the reductions and savings achieved and either capital reserves will have to be used (very bad idea) or assessments will have to go up to balance the budgets.

The Maintenance Assessment is a tax we all pay to a governmental body for services rendered. The way it is calculated disqualifies it under IRS rules for claiming it as a tax on you 1040 so it is technically not a "tax". If it looks like a duck and it quacks like a duck...

The videos in this YouTube playlist
The Villages Information/Fees Videos - YouTube
explain the Bond, Maintenance Assessments, and Amenity Fees here in The Villages.

[Dilligas]

Originally Posted by KEVIN & JOSIE

I was reviewing new home bonds at 30K plus range and at interest rates between 3 and 5 percent. It feels like with your new home purchase you accept this bad debt. Can you explain another way of looking at it? Thanks

Read the several Goldwingnut replies. They are factual and non biased, and provide your answer completely.

[eyc234]

Originally Posted by merrymini

I assume the bond interest is amortized like a home mortgage and, like a mortgage, over 20 or 30 years. Since the best of accounts, even on line, appear to pay only about .6 Percent these days, those bond payments, I think mine was close to 6 percent, can really bust the bank, your bank that is. People underestimate how much it costs them over the life of the loan because the yearly payments do not seem that big. Use an amortization calculator and you will see how much in interest you wind up paying. Ouch! We paid off our bond on purchase because we planned staying in the house long term.

So true. If you do the math for the 30 years the bond can be paid out, the cost is nearly double the original price of the bond. The thought that you get to deduct it on your taxes has to be offset with your ability to itemize and your tax bracket. It does not make sense to pay a $1 in interest to get 25 cents back from the government. Interest is not something you want to pay. Very rarely do you come out ahead over life of a loan by paying interest. If we were ever to sell, which we will not, we would just add the bond price that would be outstanding at that point into the price of the house.

[Topspinmo]

Originally Posted by Stu from NYC

The problem with paying off the bond early is that if you decide to sell your home the prevailing wisdom you will not get more for your house since you have no bond.

But, if don’t pay it off you pay quadruple or more over the length of the bond. The bond holder does not want you to pay it off early just like any loan. The loan in the interest compounded. Resale house in more attractive with no bond. Who wants to pay off extra debt when you don’t have to.