Perhaps today, but what would your calculation have been for the previous five years when CD rates were below 3%? In 2019 would you have made the argument that even though the bond rate was higher than the CD rate you were not going to pay it off?

“ most folks no longer itemize deductions after the Tax Cuts and Jobs Act of 2017, …”
But this all goes away in 2025. All of the individual tax provisions of the 2017 Tax Cuts and Jobs Act (TCJA) expire at the end of 2025. Among the changes: Individual income tax rates will revert to their 2017 levels. The standard deduction will be cut roughly in half, the personal exemption will return while the child tax credit (CTC) will be cut.

Time to put on your old Boy Scout hat and Be Prepared!

NOT A REALTOR is the first thing Village sales people are Sales agents with a real estate license and their principal is the builder not the buyer. You can only buy new homes from the builder here in The Villages.

Control
 

The control issue is tight. Keep in mind they own the closing bank in most cases (Citizens First). The previously owned homes will eventually remove the grip from the market they have. If used homes are cheaper than new homes per square footage the developer has less choices in sales pricing. Once real estate modernizes here with flat rate sales, prices will depreciate further. The Villages won’t have the skimming business through their real estate staff with large bonus percentages per sale.

That said, home prices are moving downward. Interest rates, financial pressures, and primary investment group withdrawals are causing liquidation in the current market here. Then there is the real beast in any retirement community that eventually will come, disinterested heirs who just want liquidations.

I hate debt, but I never considered paying off the bond because I don't look at it as personal debt. Paying off the bond just reduces the net sales value of the house.

Anyone who thinks a $400,00 home with no Bond is worth paying the same price as a $400,000 home with a $30,000 Bond, is smokin' really good stuff.

A Bond is simply a mortgage with another name. An outstanding liability and lien, with an obtuse name that people don't seem to understand. The only real world difference from a mortgage, is the loan is assumable and (& to my knowledge) can't be "called".

To those who argue it doesn't change the "appraised value" of a home ... no kidding! When a home is appraised, the value/price doesn't change, based on the amount of the outstanding mortgage. The house is the house. The mortgages or liens, are an irrelevant part of the process.

The decision to pay off a Bond, is no different than the decision to pay off a mortgage. The exact same criteria apply, unless you need to borrow money to do it and loan to value ratio are an issue for your bank.

To those who suggest that "buyers don't care", you're simply wrong. It's not that anyone doesn't care, it's that a % of buyers are idiots and don't understand. Anyone with a modicum of common sense knows that $400,000 + $30,000 = $430,000 and that's more than $400,000.

Bond Correlations
 

Most agree bonds correlate positively with newer structures which have newer roofs, newer ACs, newer everything. Renovation costs are greatly diminished..

There lies the trade-off. Eventually all needs replaced. The higher bond also means a longer shelf life for replacement of most things. It really is a wash.

The real bonus is being able to buy a new house with the bond already paid off. If the said house is older, there is no gain. Amortization equates with shelf life.

Even go the step further and discuss ...remodeling a “No Bond” home with a newer kitchen, carpet change, roof replacement, water heater swap and changing old style aluminum clad windows out. If those costs are factored in, a “No Bond” home actually costs much more than a newer bonded home..

Those idiot buyers are a good reason to not pay off the bond.

Ahhh ... I see!

So you're buying a "Home Warranty" for $40,000? Great deal, go for it!

Not trying to be a jerk here, but you're not getting it. A "Bond" has nothing to do with the house or structure. It is attached to the land. It is a land cost. It was for the purchase of that portion of the infrastructure, attributable to that lot of land.

If you need any further proof of that, find out what happens to the Bond, if the house is destroyed. It doesn't change. The Bond is still attached to the land. If you or your insurance company pays to re-build the home, the Bond remains unchanged and unaffected.

Not trying to be a jerk here,
🤷🏼

Vegas just set the over/under on this post to 225 threads.
I just bet my bond balance on the over.

Also if not constructed to the current wind mitigation standards, add $1-2K per year in insurance cost - and probably even more in the future.

2015 home in Lake County - Size 3/2 1600Sq ft 2023 figures
Maintenance $618.89
Bond $1569.22
Fire rescue $225.00
Total Non-Ad Valorem Assessments
Hope some real #s help

:agree:

:mademyday:

I love these bond threads because its easy to read who understands the concepts and different viewpoints, the buyer the seller and the real estate agent, and who doesn't. . its behavioral finance / economics for sure. . .

Chief considerations would be sunk costs (loss of existing yet functional home substructures), opportunity costs (time required to desired restoration) and capital risk(new warrantied home or apprehension on dated structural problems). It is possible the bond is in a way a warranty against an already 20 year old roof, new appliances lasting longer than the 10 year old ones you purchased without the bond and most importantly, a happy wife.

Actually, I think you missed the point.

No, he is not proposing to buy an extended warranty for $40K or anything like that. He is suggesting that the amount of bond remaining is an indication of the age of the home and the increasing probability of large maintenance bills. That is an interesting way to look at things and has some validity but isn't always the case.

Should I buy a new car at $60K or this ten year old car at $20K? Some would say that is a ridiculous question; why would I spend an extra $40K for a car?
"Well, the new car is less likely to have maintenance problems."
"So you're buying a warranty for $40K - go for it."

Of course, it isn't that simple with the bond. While a 30 year old home would no longer have a bond, not all homes without bonds are 30 years old. My home no longer has a bond payment yet it is not 30 years old. The 30 year old home is likely to require additional maintenance or updates. A home where the bond has been paid in advance would not. Using the size of the bond as an indication of upcoming maintenance is an interesting idea but seems too unreliable.

The remaining balance of a Bond has nothing to do with home maintenance or how old the building is. It's simply how much is left to pay off. There is no validity to any argument or statement, that suggests a Bond is related in any way, to the structure on the land.

The Bond is entirely unrelated to a building. It is a mortgage/lien/tax liability on the plot of land. Nothing more, nothing less.

When you buy a home The Villages, you are buying a structure, located on a plot of land, that may or not be free & clear.

If previous owners haven't haven't yet finished paying for the lot of land, the new buyer has to continue paying it off. They can elect to pay the Bond in a lump sum and own their property without that Lien attached to it or they can elect to continue paying off the Note/Lien + Interest + Fees.

It's a mortgage with a different name, folks. Nothing more, nothing less.

But don't take my word for it. Here, read about it from the experts:

Why CDDs? - FMSbonds.com

CDDs: Separating Fact From Fiction - FMSbonds.com

The remaining balance of a Bond has nothing to do with home maintenance or how old the building is. It's simply how much is left to pay off. There is no validity to any argument or statement, that suggests a Bond is related in any way, to the structure on the land.

The Bond is entirely unrelated to a building. It is a mortgage/lien/tax liability on the plot of land. Nothing more, nothing less.

When you buy a home The Villages, you are buying a structure, located on a plot of land, that may or not be free & clear.

If previous owners haven't haven't yet finished paying for the lot of land, the new buyer has to continue paying it off. They can elect to pay the Bond in a lump sum and own their property without that Lien attached to it or they can elect to continue paying off the Note/Lien + Interest + Fees.

It's a mortgage with a different name, folks. Nothing more, nothing less.

But don't take my word for it. Here, read about it from the experts:

Why CDDs? - FMSbonds.com

CDDs: Separating Fact From Fiction - FMSbonds.com

The question you are asking is better rephrased as,

“What’s the total balance left on the Bond on a particular home?”

At the start bonds can be hefty. $20-$40k

Over time that’s paid off just like your mortgage at whatever interest rate was assigned at the time.

No bond means it has been paid off and a zero balance remains.

It’s important to know the balance (if any) on the bond remaining in a home you are interested in. Otherwise you could be in for an unpleasant surprise of the total monthly mortgage/bond you have to fork.

Each home is unique in amount of their bond balance. Some owners accelerate bond payments or even pay it off early to make selling it easier.

So ssk

Let me type this more slowly this time: If the bond is not paid in full in advance then the remaining amount of the bond is directly related to the age of the home. One could say the numbers on a calendar have nothing to do with the age of a home, except that as the numbers get higher the home gets older. Likewise, the balance on the bond has nothing to do with the age of a home, except that as the balance gets lower the home gets older.

"It's a mortgage with a different name, folks. Nothing more, nothing less."
- Except the mortgage is directly related to the value of the home - the bond is not
- Except the mortgage on my home is likely different than the mortgage on my neighbor's - the bond is the same
- Except principal on the mortgage can be paid early - principal on the bond cannot
- Except the mortgage must be satisfied for the home to change hands - the bond does not
- Except I can refinance the mortgage to obtain a better rate - I have no ability to refinance the bond
- Except I can itemize interest paid on the mortgage - I cannot itemize interest paid on the bond

Perhaps you meant to say, "It's a mortgage with a different name... except when it isn't"

There are different ways to think about the bond and some are more correct than others.

The question you are asking is better rephrased as,

“What’s the total balance left on the Bond on a particular home?”

At the start bonds can be hefty. $20-$40k

Over time that’s paid off just like your mortgage at whatever interest rate was assigned at the time.

No bond means it has been paid off and a zero balance remains.

It’s important to know the balance (if any) on the bond remaining in a home you are interested in. Otherwise you could be in for an unpleasant surprise at the total monthly mortgage/bond you have to fork out.

Each home is unique in amount of their bond balance. Some owners accelerate bond payments or even pay it off early to make the home more attractive when selling it.

So ask

More like 20-80k now. Mine in lake Denham was ~48K

So they are the same thing only different? :)

Does a bond impact your credit score?

I don't believe you can accelerate bond payments. In other words, I don't believe you can make extra payments towards the principal. You can payoff the entire bond whenever you wish but there is a cutoff date to avoid the bond payment on your November tax bill.

Balance
 

So it all boils down to:

Be aware of increased maintenance and upgrade desires if you buy an older house. Those can way outweigh those bond prices on a brand new home.

Be aware of bond payments if you buy a newer house. They can exceed 40 K.

The commission driven salesman/realtors that solely uses the pitch, “There’s no bond” for their pitch can be naive of so many other factors that their light heads could carry them away.

I'm not sure it matters how fast or slow you type, if what you're typing is wrong.

The Bond is directly related to the value of your property. Not to the home, but to the lot.

Bonds are not the same for everyone. As for mortgages, you get to choose how much your mortgage is, as does your neighbor. It's not fixed by anyone but the mortgagor.

You absolutely can pre-pay the Bond.

As I've said, it differs from a Mortgage, in that it is "assumable". It does not have to be paid off to sell the property.

You absolutely can refinance your Bond, anytime you wish Call your bank and if you're credit worthy, you're good to go.

As for the deducting the interest? See above. If you opt to refinance your Bond with a 2nd Mortgage on your Primary Residence, that Interest now becomes Tax Deductible (with some limitations).

No, there are no different ways to look at a Bond. It is what it is. The Bond was a loan to the developer to build the infrastructure. When he was done and started building houses, he added up all his costs, split them between all the lots and a mechanism was set up for the buyer's to pay their share. This document explains it: VCDD Pay Off Bond.

The bottom line is the same. If you have a BOND, you do not own your land "free & clear". You have a loan against it that is transferable. It is a debt to the land, not the person. Essentially, the Town/Collector of Taxes/Bond Holder holds an interest in that land, as shown on your Tax Bill. It is different than taxes, as taxes accrue yearly and is not a fixed amount.


(If someone wants to nit pick and talk about the difference between the Note, the Mortgage, a Lien or any general encumbrances, I get it. But to simplify the discussion, I'm lumping them all in together as "mortgage".)

....

Very good point.

Nope. My neighbor's property appraises for more than mine but our bond amounts and bond payments are exactly the same (or were the same before I paid mine)

Nope. All the bonds in a particular "Unit" are exactly the same. I didn't get to choose how much my bond was and neither did my neighbors.

Nope. You can pay the balance in full or you can pay the installment but what you CANNOT do is pay an extra $3,000 on the principal of the bond in order to lower the installment payments. I certainly CAN do that with my mortgage.

Yep. An example of how the bond is not just a mortgage.

Nope. You can pay the bond in full but you cannot refinance it. Sure, you can possibly take out a home equity loan or second mortgage to obtain the funds required to pay the balance of the bond. With a "true" refinance, the same collateral used for the original loan is used for the refinanced loan but that would not be the case with a "refinance" of the bond. I guess in a sense it is a form of refinance, but this changes the nature of the loan and the need for additional collateral makes it significantly different from a typical refinance.

Well.... *Maybe* you could deduct the interest from a 2nd mortgage (limitations apply) but that is not deducting the interest from the bond, it is deducting the interest from a separate loan which might be in the same amount as the bond balance.

I kind of agree here except you insist it is the same as a mortgage when it clearly is not.

And some people look at the tax bill and lump the county property tax, the school tax, the WMD tax, the fire assessment, the maintenance fee, and the bond together and refer to them as simply the "annual property tax." (see the argument over the 33% increase a few years ago) Just because they do that doesn't make it right. Just because you want to use the word "mortgage" doesn't make it the same as a mortgage.

Bond, James Bond
 

Sellers think that if they pay off the bond then their house should be worth 30k more than one that is not.
That makes sense….. kind of.
It you buy the home and move 2 years later you only paid 2 payments of the bond and will remarket your house a little less than one that potentially has their bond paid.
My experience is get the home that you want, in the area you want, with the sun exposure you want, so you can enjoy the lanai in the afternoon, pool, no pool but you could put one in, privacy, no kissing lanai’s, golf course but not right up on the cart path. Model 10 is so much more space.
I would never offer 30k more for a house that the bond is paid, but I would for the right home, with all the right things.

spurious correlation, a negative one, on the basis of time, that's all.

I look at my bond as $129 a month which is built into my escrow account with my mortgage. I don’t see it or feel it. I just pay my mortgage each month and the bank takes care of the rest. So in my case a paid bond would save you $129 a month.

Disinformation. A bond is debt on the property but it is NOT a mortgage.

Just stop paying it and see what happens.

Now I'm beginning to understand how The Villages has been able to convince 160,000 retired old people, to move to former swampland in the middle of no where.

It's amazing their marketing folks could convince so many people, that a $50,000 lien against their property, which will ultimately cost over $100,000 to pay off monthly, isn't real money.

....

As I understand it, they can foreclose on the property, but they cannot sue you for other assets that you own, like they can with a mortgage. That is because the bond is not a personal debt.

I'm not sure I buy the argument that if you buy a house that is old enough to have the bond paid off you are going to pay more for maintenance. It is quite possible that the house with the bond paid off has already gone through the stage of life when the HVAC, roof, and water heater, as well as the kitchen appliances, have been replaced.

Perhaps, more than once.

Also, it is not unusual for the home to have been modernized decoratively. More than once.

So what happens if you stop paying your bond?

Exactly but somebody is not comprehending well...

With a loan, the bank or other creditor takes title of the debtor's property,

You can't sell the home until paying the loan.

A mortgage impacts your score/credit history.

A bond is a debt against the property. But you can sell the property without paying the bond, because it is against the property and carrys over with the sale.

A bond has no impact on your credit history.

It is pretty hard to specifically not pay the bond. If you have a mortgage, your mortgage payment includes funds to escrow for county and school property taxes, bond payment, CDD maintenance fee, and the fire fee. These are all items on your November tax bill that your mortgage company pays for you from escrow. Are you planning on reducing your mortgage payment by the amount of the bond payment and then tell your mortgage company to reduce your November tax bill payment by that amount? If you don't have a mortgage, you receive the November tax bill and are responsible for paying it yourself. Are you going to reduce how much you pay by the bond payment? Essentially, if you don't make your full mortgage payment then you will be hearing from your mortgage company. If you don't make the full November tax bill then you will be hearing from the County. Eventually, you won't be living in the house.

So you like paying interest. Most of us don’t.