[EdFNJ]

/// never mind. Misread the post

[jebartle]

I can see that in your case this is not an option, but if home bought in lady lake, lake county, no bond, problem solved

[VApeople]

Originally Posted by RealJudy

Do you realize there is interest on the bond balance?

Of course, we all know that.

Like any loan, you pay interest on the balance of the loan.

[Laker14]

If the bond, or lack of a bond, really did not impact the selling price then two things would happen:
1. Realtors would not include "BOND PAID" in the description of the property they write up for flyers and internet listings, and..
2. Automobile dealers would include a "bond" (hey folks, it's not part of the price. It's a "bond") when selling cars. And people would pay it because "hey, I got a good price and the bond doesn't count".

[CoachKandSportsguy]

Market pricing -> Identical houses, one with bond one without bond, the market price will be the price the house based upon the house without the bond. ie, the bond is irrelevant to the sales price. ergo, you cannot add the price of the bond you paid off to the market price of the house, and be competitive, that's what the realtors are saying. However, that is not the correct way of looking at getting your money back from paying off the bond early.

The correct way is based upon the house price appreciation assuming a price increase of 3% a year, and the bond being 10% of the initial value of the house, the bond being paid off with the appreciation of the house is shown in the graphic attached.

So depending upon how long you want to live in your house, with your individual cash flow statements, paying off the bond is a better answer if you still have cash availability to do so now and you have no plans on moving, versus depending on investments which may or may not sustain that return in the future. With the huge price appreciation you probably already have the bond payoff returned in appreciation. So with appreciation, then you can also rationalize not paying off the bond, because you may lose capital appreciation on the source of the payoff, which is a valid point of view as well.

Either way, always remember that paying off the bond reduces fixed expenses, resulting in more free cash flow from SS and RMD in the future, as well as less risk of losing the capital returning the bond equivalent payment, through unanticipated events.

The future is always uncertain, sometimes more uncertain than at other times

finance guy

[MX rider]

Originally Posted by CoachKandSportsguy

Market pricing -> Identical houses, one with bond one without bond, the market price will be the price the house based upon the house without the bond. ie, the bond is irrelevant to the sales price. ergo, you cannot add the price of the bond you paid off to the market price of the house, and be competitive, that's what the realtors are saying. However, that is not the correct way of looking at getting your money back from paying off the bond early.

The correct way is based upon the house price appreciation assuming a price increase of 3% a year, and the bond being 10% of the initial value of the house, the bond being paid off with the appreciation of the house is shown in the graphic attached.

So depending upon how long you want to live in your house, with your individual cash flow statements, paying off the bond is a better answer if you still have cash availability to do so now and you have no plans on moving, versus depending on investments which may or may not sustain that return in the future. With the huge price appreciation you probably already have the bond payoff returned in appreciation. So with appreciation, then you can also rationalize not paying off the bond, because you may lose capital appreciation on the source of the payoff, which is a valid point of view as well.

Either way, always remember that paying off the bond reduces fixed expenses, resulting in more free cash flow from SS and RMD in the future, as well as less risk of losing the capital returning the bond equivalent payment, through unanticipated events.

The future is always uncertain, sometimes more uncertain than at other times

finance guy

Agree, I think bond or no bond does affect the price. We bought a 10 year old house in TV that has some bond left. Compared to similar houses we were looking at it was priced below them just about the amount of the bond. So for us it was pretty mush a wash.

[Topspinmo]

Originally Posted by Garywt

We have a mortgage so the bond is paid through our monthly mortgage payment. For us we don’t even know we are paying it.

But you are and the interest is why they (who ever collecting interest) don’t want you to pay it off.

[Topspinmo]

Originally Posted by jrref

I know there has been endless discussion concerning whether to pay off the Bond or not. But for example, if you have a $20,000 bond on a $700K house and you pay it off, when you go to sell it at some point i would think you could probably re-coupe the $20K because there is no bond to pay. At this price point you can easily add $20K to the price of the house assuming it will be one of the many selling points of the house. This assumes the $20K you are spending to pay off the bond isn't making much interest in the bank or whatever you may have it invested in these days.

For some the bond don’t matter, they like throwing money away. For some of use we don’t like paying extra and value or hard earned money we saved decades for. It’s personal choice.

[Topspinmo]

Originally Posted by CoachKandSportsguy

Market pricing -> Identical houses, one with bond one without bond, the market price will be the price the house based upon the house without the bond. ie, the bond is irrelevant to the sales price. ergo, you cannot add the price of the bond you paid off to the market price of the house, and be competitive, that's what the realtors are saying. However, that is not the correct way of looking at getting your money back from paying off the bond early.

The correct way is based upon the house price appreciation assuming a price increase of 3% a year, and the bond being 10% of the initial value of the house, the bond being paid off with the appreciation of the house is shown in the graphic attached.

So depending upon how long you want to live in your house, with your individual cash flow statements, paying off the bond is a better answer if you still have cash availability to do so now and you have no plans on moving, versus depending on investments which may or may not sustain that return in the future. With the huge price appreciation you probably already have the bond payoff returned in appreciation. So with appreciation, then you can also rationalize not paying off the bond, because you may lose capital appreciation on the source of the payoff, which is a valid point of view as well.

Either way, always remember that paying off the bond reduces fixed expenses, resulting in more free cash flow from SS and RMD in the future, as well as less risk of losing the capital returning the bond equivalent payment, through unanticipated events.

The future is always uncertain, sometimes more uncertain than at other times

finance guy

I can ask what I want, that don’t mean someone will pay. Anything used only worth as much as someone will pay. The rest is just guidelines.

[Topspinmo]

Originally Posted by VApeople

Of course, we all know that.

Like any loan, you pay interest on the balance of the loan.

Some don’t mind paying it. I don’t like giving my money away.

[MX rider]

Originally Posted by Topspinmo

But you are and the interest is why they (who ever collecting interest) don’t want you to pay it off.

But if he got a good rate he's paying about 3% on that bond. If you have the cash, why not invest it? Over time you'll make more than 3%.

Same reason we got a mortgage instead of paying cash for our home. Borrowing for a mortgage is dirt cheap, although the rates are going to be creeping up due to the Fed.
In our case most of my money is in my 401k, so theres income taxes to be paid when I draw money out. I'd rather not get hit with that big tax bill.

All that said, there's no real right or wrong here. Everyone's situation is different.

[Topspinmo]

Originally Posted by MX rider

But if he got a good rate he's paying about 3% on that bond. If you have the cash, why not invest it? Over time you'll make more than 3%.

Same reason we got a mortgage instead of paying cash for our home. Borrowing for a mortgage is dirt cheap, although the rates are going to be creeping up due to the Fed.
In our case most of my money is in my 401k, so theres income taxes to be paid when I draw money out. I'd rather not get hit with that big tax bill.

All that said, there's no real right or wrong here. Everyone's situation is different.

Or I could loose it.

[MX rider]

Originally Posted by Topspinmo

Or I could loose it.

No argument here. Life's full of risks. The trick for all of us is to manage them.

[CoachKandSportsguy]

Originally Posted by Topspinmo

I can ask what I want, that don’t mean someone will pay. Anything used only worth as much as someone will pay. The rest is just guidelines.

Absolutely theory versus reality . . . . the question I was asking is about how does one get their money back if the bond is paid off early. Everyone is different, and setting the price above the market means that you are expecting/hoping that a buyer comes along who agrees with you.. . If you are the only house in the desirable neighbor, there is no comparable, therefore the probability increases of the sale.

There are two main issues affecting the pricing of a house relative to market:
the number of similar houses for sale
the motivation of the seller.

The higher motivated the seller, the lower the price. Time is costing him/her money he or she doesn't have.

The should you pay off the bond is a cash flow question. Can you afford the bond payment and the potential loss of the asset and income from it in a trade off against more free cash flow against income, mostly SS and RMD. Not paying off the bond when one can risks the future increases of the remaining cost of the life style increasing faster than income, and therefore reducing free cash flow in the future.

That is the counter point to its a fixed amount, and therefore will be covered by income inflation. What is not taken into consideration is that not all incomes and expenses inflate / deflate together at the same rate.

man, those down hill skiers are crazy!

[VApeople]

Originally Posted by Laker14

If the bond, or lack of a bond, really did not impact the selling price then Realtors would not include "BOND PAID" in the description of the property they write up for flyers and internet listings,

In my opinion, you are exactly right.