[DAVES]

Originally Posted by cj1040

We sold a home up north for much more than our new home here and it had been paid off for many years. We could easily have paid cash for this house but with a mortgage of 2.75 percent we decided to invest our house money and we never plan to pay off either the bond or this house!!! We are in our 70s so the 30 year mortgage will last longer than we will !!!

I am far from an expert. I do like to believe I am a contrarian realist. The rules are set.
I will try to understand the rules and make the insanity work for me. Average age in the villages is 70. They cannot use reality to deny you a 30 year mortgage.

You can get a mortgage at about 3% and average long term stock market return is 7-8%
depending on who or what you choose to believe. I've done better than that over the past 15 years. Further insanity. Our mortgage bank directly told us we needed a letter from our brokerage that they would send us $$$$$ from our account every month.
Needed to raise our income to qualify for the mortgage. The broker directly told us they regularly get this request. They sent the letter to the bank and told us we could cancel it
with a phone call.

Aside, we have top credit scores. Further insanity. My wife is far better at accounting than I am. The money, of which I earned most of it, is in one pile. She pays the bills.
Her credit rating is or was slightly better than mine. Who is nuts? I've read that a sign of insanity is thinking the world is insane or is it thinking, expecting that the world is sane?

[Judy Vons]

We bought our home here last year at a low interest rate. Paying off a home makes no sense to us. We get a much better return on our investments; so the money needs to stay invested. We are also not paying off bond either. Why take $20000 out from investment accounts and pay a large amount of taxes on that money? Better to leave it in investments.

[M2inOR]

Here is one perspective and opinion.

We purchased a new home in Marsh Bend, 2019. Bond was $31,000 @4.33%

15year mortgage after 20% down and 2.875% interest rate.

Easy decision, as we have taxable savings and pension income, and untapped IRAs with many investments.

If we have too much income, we get penalized with IRMAA surcharges for our Medicare premiums. Ouch! As we got hit because of our 2019 income. We reduced our taxable income in 2020, and 2021 might be lower so those IRMAA surcharges may disappear next year.

Since our investments in taxable as well as tax-protected IRAs are returning much more that the bond and mortgage interest rates, we don't mind the monthly mortgage and yearly bond payments.

Remember, money taken out of your IRA is ordinary taxable income, unless you have a Roth. We don't. Selling investments from a taxable account also increases your income.

Our goal is to minimize taxable income each year, taking out only enough to live on, take vacations, and to pay our bills.

Many, many articles will educate you. Unfortunately, math is required.

Finally, if you have too much cash, no investments, then yes, use that cash to pay things off. Each family has unique circumstances that will guide your decision.

[dewilson58]

Originally Posted by M2inOR

Here is one perspective and opinion. We purchased a new home in Marsh Bend, 2019. Bond was $31,000 @4.33%.

Plus the Admin Fee which will get you over 5% effective, non-deductible which will get you over ~7%.

[OhioBuckeye]

We only paid our Bond annually & when we sold our home we made money on it. So my thinking is if you buy a preowned home you’ll still have a bond maybe, if they paid bond annually. Also the way I look at it the 18 to $20,000. bond you’ll have it added to the price of your home when you get ready to sell, & If you think you can sell it with the added bond & make an additional profit go for it. Just my opinion pay your bond annually!

[M2inOR]

Originally Posted by dewilson58

Plus the Admin Fee which will get you over 5% effective, non-deductible which will get you over ~7%.

Good point. And yes, I'm getting better than 7% return on my investments.

Life is complicated. Even more so when one fails to keep their math skills current.

[dewilson58]

Originally Posted by M2inOR

Good point. And yes, I'm getting better than 7% return on my investments.

Life is complicated. Even more so when one fails to keep their math skills current.

We live in interesting times.

[M2inOR]

Originally Posted by dewilson58

We live in interesting times.

An old Chinese saying that I started using after 9/11.

我們生活在有趣的時代
We live in interesting times

[eremite06]

Originally Posted by LuvtheVillages

With the increased standard deduction of $27,400, and today’s low interest rates, it doesn’t pay to itemize even with a mortgage.

That's why I paid off the bond.

[Burgy]

Check with your accountant whether he/she will put all or part of the bond and interest as a deduction like a house tax if you itemize. I think pretty common.

[retiredguy123]

Originally Posted by Burgy

Check with your accountant whether he/she will put all or part of the bond and interest as a deduction like a house tax if you itemize. I think pretty common.

Bond principal and interest payments on your primary residence are not tax deductible, even if you itemize.

[pgettinger01]

I think paying down or off the bond in todays dollars at a low interest rate is a waste. The dollar is worth less every year as the Federal and State debt increases.

[Tsalla Apopka]

all that matters is the interest rate! Pay off the one thing with the highest rate - whatever it is.

[CoachKandSportsguy]

Originally Posted by M2inOR

Our goal is to minimize taxable income each year, taking out only enough to live on, take vacations, and to pay our bills.

If you want to minimize your taxable income each year, you pay off the bond right now, because you are getting more on the investment income than you are deducting in tax deductible interest.

that's simple math.

So unless your investments are tax free, then paying off the bond minimizes your income more. . . if that is your truly stated goal.

finance guy

[Joeint]

Originally Posted by Northerner52

Newer bonds have lower interest rates. Realtors suggest not paying it off

Relators are who I consult for all my financial decisions. If they're not sure I check on Talk of The Villages.