Pay Off Bond or Pay Down Mortgage?

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  #91  
Old 04-16-2021, 11:51 AM
retiredguy123 retiredguy123 is offline
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Originally Posted by dkaufnelson View Post
You can no longer deduct the interest on your mortgage for your primary home. You can only deduct mortgage interest on rental homes now.
Not true
  #92  
Old 04-16-2021, 01:13 PM
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Quote:
Originally Posted by dkaufnelson View Post
You can no longer deduct the interest on your mortgage for your primary home. You can only deduct mortgage interest on rental homes now.
???

"The home mortgage interest deduction (HMID) allows itemizing homeowners to deduct mortgage interest paid on up to $750,000 worth of their loan principal.
The Tax Cuts and Jobs Act (TCJA) passed in 2017 reduced the maximum mortgage principal eligible for the deductible interest to $750,000 (from $1 million) for new loans.
The TCJA also nearly doubled standard deductions, making it unnecessary for many taxpayers to itemize.
As a result, most went on to forgo the use of the mortgage interest tax deduction entirely."

Calculating the Home Mortgage Interest Deduction (HMID)
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  #93  
Old 04-16-2021, 03:20 PM
valuemkt valuemkt is offline
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The question was either or.. If you have a mortgage, you probably have an escrow. The 1098 has one line for real estate taxes paid, which is the sum total of what the bank pays sumter county. The standard deduction is now around 25K. If you dont do your own taxes (or even if you do) you might want to look and see if you;re still itemizing. For most, the tax deductibility or either is probably moot. Even if you are "certain" you won;t be moving, my vote would be to pay down the mortgage. The remaining bond payable won;t generally affect your sales price, the lower mortgage payable will go into you or your heirs pocket .. and at 30K or less, the interest differential isn;t much more than a couple of beers at Cody;s. IMO

Last edited by valuemkt; 04-16-2021 at 03:21 PM. Reason: change purchase to sales
  #94  
Old 04-16-2021, 04:28 PM
Stu from NYC Stu from NYC is offline
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Originally Posted by valuemkt View Post
The question was either or.. If you have a mortgage, you probably have an escrow. The 1098 has one line for real estate taxes paid, which is the sum total of what the bank pays sumter county. The standard deduction is now around 25K. If you dont do your own taxes (or even if you do) you might want to look and see if you;re still itemizing. For most, the tax deductibility or either is probably moot. Even if you are "certain" you won;t be moving, my vote would be to pay down the mortgage. The remaining bond payable won;t generally affect your sales price, the lower mortgage payable will go into you or your heirs pocket .. and at 30K or less, the interest differential isn;t much more than a couple of beers at Cody;s. IMO
But you should also consider that pesky service charge paid annually. That will ultimately be the reason we pay off the bond one of these days.
  #95  
Old 04-16-2021, 07:08 PM
valuemkt valuemkt is offline
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pesky service charge ?? I think you folks are making a big deal out of nothing .. For many, the YEARLY admin fee is 40 or 50 dollars.. Even in the newer section, the highest ive seen is 130. Ten bucks a month and all this hullabaloo about the admin fee ? And thats with an interest rate of 4.33%.. Again, given the either or..i'll stick to the mortgage paydown, with the reduced monthly payment of perhaps a couple hundred bucks a month on a 15 year mortgage
  #96  
Old 04-17-2021, 06:53 AM
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I really hate owing money. Debt free for over 30 years.
  #97  
Old 04-17-2021, 09:34 AM
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Originally Posted by valuemkt View Post
pesky service charge ?? I think you folks are making a big deal out of nothing .. For many, the YEARLY admin fee is 40 or 50 dollars.. Even in the newer section, the highest ive seen is 130. Ten bucks a month and all this hullabaloo about the admin fee ? And thats with an interest rate of 4.33%.. Again, given the either or..i'll stick to the mortgage paydown, with the reduced monthly payment of perhaps a couple hundred bucks a month on a 15 year mortgage
I thought the majority of homes in TV are bought with cash. If most people don't have a mortgage any fee on top of the 5 1/2 % interest is too much. Paid mine off.
  #98  
Old 04-18-2021, 06:33 AM
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Originally Posted by valuemkt View Post
pesky service charge ?? I think you folks are making a big deal out of nothing ..
financial laziness. . . there are so many organizations which make 100% margin on such small transactions and just rake in the dough. .. or the wealthy. . .

some of us don't have extra money to pay to someone else INSTEAD of having the beer.
  #99  
Old 04-19-2021, 11:05 AM
Dorebea Dorebea is offline
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The right decision for you will be whatever best fits your financial situation and goals. The suggestions to consider your cash flow status, interest rates on the mortgage and the bond, how long you plan to keep the house, your risk tolerance etc are excellent. Your stated goal is to minimize your monthly cash outflow so on the surface paying off the bond and eliminating that expense seems to be the way to go. Assuming a bond amount of $25k the annual assessment would be about $1472 which is about $123 ($1472 by 12). BUT, as noted there are multiple aspects to consider. I’d like to add one additional consideration I haven’t seen mentioned...

When / if you sell your house in the future you will need to pay off the outstanding balance on your mortgage, but you do not have to pay off the balance of the bond. That just gets carried forward to the new owners. Also, applying the $ to the mortgage leaves you with some ability to access that (via equity Line of Credit) should an emergency arise and / or increases your net profit from any future sale of the house ( sale price less outstanding mortgage balance). While you save the annual bond payment it will take about 17 years to break even on the full $25k ($25k / $1472).

Note: I do not currently own a house in The Villages but am considering it and have been researching this very question myself. Good luck!
  #100  
Old 04-19-2021, 11:52 AM
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If you are earning more from your capital, than you are paying out in loan interest, live with the interest payments.
When your not earning more, pay off your debts.
When you retire, cash in everything, put as much as you can into Interest + inflation cash bonds, or tax free interest funds.
No dramatic gains or losses.
Pay off everything, put your feet up, and have no investment worries.
Worked for us.
Been retired 26 years, and reckon we are good financialy for another10-15 years at same rate of depletion.
After that, if still here, will be to old to give a toss anyway!
Thanks to Covid, and minimal spending on travel etc. showing a good profit this year.
Will treat myself to an ice cream when weather warms up!
  #101  
Old 04-19-2021, 12:02 PM
Stu from NYC Stu from NYC is offline
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Quote:
Originally Posted by Two Bills View Post
If you are earning more from your capital, than you are paying out in loan interest, live with the interest payments.
When your not earning more, pay off your debts.
When you retire, cash in everything, put as much as you can into Interest + inflation cash bonds, or tax free interest funds.
No dramatic gains or losses.
Pay off everything, put your feet up, and have no investment worries.
Worked for us.
Been retired 26 years, and reckon we are good financialy for another10-15 years at same rate of depletion.
After that, if still here, will be to old to give a toss anyway!
Thanks to Covid, and minimal spending on travel etc. showing a good profit this year.
Will treat myself to an ice cream when weather warms up!
Agree with most of what you say but think you are a bit too conservative.

Think people need to put a percentage of their savings into equities. Would make it diversified and mutual funds with good long term performance that are no load.

Most people need to have their capital growing so as not to run out of money.
  #102  
Old 04-19-2021, 12:59 PM
Two Bills Two Bills is offline
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Originally Posted by Stu from NYC View Post
Agree with most of what you say but think you are a bit too conservative.

Think people need to put a percentage of their savings into equities. Would make it diversified and mutual funds with good long term performance that are no load.

Most people need to have their capital growing so as not to run out of money.
You are right. Very conservative.
As I say, it has worked for us over the years.
We were lucky to have a very good financial advisor when working, and really did well with investments in the crazy 90's!
  #103  
Old 04-19-2021, 01:13 PM
Stu from NYC Stu from NYC is offline
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Quote:
Originally Posted by Two Bills View Post
You are right. Very conservative.
As I say, it has worked for us over the years.
We were lucky to have a very good financial advisor when working, and really did well with investments in the crazy 90's!
Works for you is what is important.
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