[sabinfl]

S

Originally Posted by Road-Runner

After reading through hundred's of listings in the Villages over the last several years prior to buying, it seems like the bond is almost an afterthought compared to the listing price. Although "No Bond" is listed as a selling point I don't know that it registers with most buyers how much debt the average bond is on new homes until after they pick a home to buy.

With that in mind, would it be crazy to pay off the bond vs paying down the mortgage by an equivalent amount? We're still working and our house in Bradford will be a 2nd home for at least 2 more years. When we sell here we'll want to reduce our monthly costs to the minimum possible so planning on using all the proceeds from the sale to reduce our only remaining payment, the house.

Just curious if others have gone through the same decision process.

Thanks, Jim

I bought in Lady Lake: No bond here. I recently had my home on the market and that did not seem to make a difference!

[jonathanb]

Paying off the bond does not
Increase the value of your home. If you plan on staying there the break even point on the bond is usually 12-13 years. We usually move to a new home every 2-3 years so we do not pay the bond off.

[J1ceasar]

There's another interesting legal issue to consider about the mortgage and the house. That is if you get sued having a bond and a high mortgage means it is less money for people or businesses to attach. Just a thought. And as I'm sure someone has pointed out in the comments it's always better to have cash in the bank than to have it in your house has it's a lot harder to get a second mortgage loan when you are in trouble, as well as the fact that if you have the money invested the stock market seems to be going a lot better then 1/10 of 1% at a bank

[VillagerNut]

If you obtained your loan through citizens bank, they actually have a re-amortize program which is what the previous post was referring to at $175. You have to put a minimum of $10,000 toward the balance of your mortgage and they will re-amortize and not refinance the loan. So the total cost is $175 to get a lower monthly payment. The term and interest does not change.

[Road-Runner]

Originally Posted by VillagerNut

If you obtained your loan through citizens bank, they actually have a re-amortize program which is what the previous post was referring to at $175. You have to put a minimum of $10,000 toward the balance of your mortgage and they will re-amortize and not refinance the loan. So the total cost is $175 to get a lower monthly payment. The term and interest does not change.

We did and we definitely like that feature. It's one of the reasons we would consider paying down the mortgage to help with cash flow in retirement.

[irishwonone]

Originally Posted by dewilson58

FYI: The Villages is not getting your payments.

The Villages (Banks) are financing the Bond Payment. Recently read where they refinanced bond at lower rate through Villages bank. Villages are excellent at capitalizing on financial opportunities as most good businesses do.

[Stu from NYC]

Originally Posted by VillagerNut

If you obtained your loan through citizens bank, they actually have a re-amortize program which is what the previous post was referring to at $175. You have to put a minimum of $10,000 toward the balance of your mortgage and they will re-amortize and not refinance the loan. So the total cost is $175 to get a lower monthly payment. The term and interest does not change.

Since the actual cost of them doing this is all of about $ .25 wonder why they charge at all?

The probable answer is because they can.

[CoachKandSportsguy]

Originally Posted by VillagerNut

If you obtained your loan through citizens bank, they actually have a re-amortize program which is what the previous post was referring to at $175. You have to put a minimum of $10,000 toward the balance of your mortgage and they will re-amortize and not refinance the loan. So the total cost is $175 to get a lower monthly payment. The term and interest does not change.

Hmmm, cost versus cash flow. . . not quite the same

Cash required to perform the re-amortization, 10,175

Total cost to mortgage is $175 because the 10,000 goes to principle, but total cost to your checkbook, 10,175.

finance guy

[DAVES]

Originally Posted by dewilson58

We live in interesting times.

Times have always been interesting. I have an old book on bicycles. They predicted the end of proper female behavior now that they could peddle away from home. The scandal,
wearing pants not a dress to ride a bike. Another book about 1900 was pushing electric trucks. Carts and graphs showed clear if you do not buy an electric truck the cities people would be swimming in horse droppings in, hum was it seven years.

We have not invented insane panic.

[DAVES]

Originally Posted by J1ceasar

There's another interesting legal issue to consider about the mortgage and the house. That is if you get sued having a bond and a high mortgage means it is less money for people or businesses to attach. Just a thought. And as I'm sure someone has pointed out in the comments it's always better to have cash in the bank than to have it in your house has it's a lot harder to get a second mortgage loan when you are in trouble, as well as the fact that if you have the money invested the stock market seems to be going a lot better then 1/10 of 1% at a bank

Re: the stock market.
We tend to get lulled into believing the stock market only goes up and real estate only goes up. Reality is it is true except when it isn't.

As on 3/31/21 this has been the best year in 15-20 years in the stock market. The S&P is up 56.35% as a full year ending 3/31/21. We tend not to understand math. If, you invest 10,000 and it goes up 10% and down 10% the next year YOU ARE NOT EVEN.
10,000+10%=11,000 11,000-10%=9900 HUH WHERE DID MY 100 VANISH TO. Recovery
9900 needs to earn just under 2% just to get back to your original 10% to the 11,000 you had at the end of the first year it is almost 13%.

[DAVES]

Originally Posted by J1ceasar

There's another interesting legal issue to consider about the mortgage and the house. That is if you get sued having a bond and a high mortgage means it is less money for people or businesses to attach. Just a thought. And as I'm sure someone has pointed out in the comments it's always better to have cash in the bank than to have it in your house has it's a lot harder to get a second mortgage loan when you are in trouble, as well as the fact that if you have the money invested the stock market seems to be going a lot better then 1/10 of 1% at a bank

Re: getting sued
The sad reality. If, you have no money and or a negative net worth, you do not need to worry about being sued. Even if you are guilty. The attorney will advise the person suing there is nothing to take. If, you win you will get nothing.

In Florida, real estate laws prevent creditors from taking your home. Perhaps, a reason why OJ Simpson moved to Florida.

[DARFAP]

Mine is 5.2%

[stebooo]

Kind of an interesting trick that the developer plays on the price of the home. If they can take a lot of their startup cost and throw them into a bond it keeps the main price of the home down when in fact you're going to pay it whether you like it or not kind of a little cute trick. I don't have a bun so I don't have an issue in this fight but I understand that the interest rate is around 7% for the bond So unless you're making that kind of money and investments you pay off the bond. The villages does not promote that same concept they say oh just never mind nobody pays off the bond Well I guess that depends on interest rates and stock returns choices yours

[Sudokukid]

Point to consider: For the first years of home ownership the bond payment (included as an annual installment in your Real Estate Tax bill), goes mostly to interest and only a small amount to reducing the actual bond. The sooner you pay it off, the lower the amount of interest you will pay over the long haul.

[dkaufnelson]

You can no longer deduct the interest on your mortgage for your primary home. You can only deduct mortgage interest on rental homes now.