As well, besides the 2% annual increases, it looked like they can extend out these CFD payments beyond the scheduled termination date. I liked the fact once you paid it off it forever releases you of ALL CFD obligations.
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ER mentioned a very important point. With PUSD engaging in what can only be described as simply very creative financing, it is quite likely that they’ll try to extend CFD obligations when the sh#$%$ hits the fan in a few years.
So the owner pays off part of the MR. But then needs to sell in less than a year. The lot is a deficient lot due to the view of the substation in the backyard.
I would have simply spent some money to plant in some mature trees that would block off the substation view.
MR pay off is for folks that are done with all of the necessary home improvements and they are in for the long haul. It is not for everybody.[/quote]
Absolutely OC Renter! That was one of the MAIN motivations for wanting to pay it off. I didn’t do it immediately after buying because I figured with the low interest rate environment maybe they would refinance at a lower rate. Which they did.
But interest rates are so low I figured they can’t get much lower and as well with all the shenanigans with the PUSD, I didn’t know if by the time these CFD’s come due they will just extend out the CFD further into the future. While I don’t think it’s likely, who the heck knows??!
I mean realistically, what would homeowners due if by 2045 (or whenever the last payment is due) all of a sudden they say it needs to get extended 5 more years… what recourse do homeowners have? If anyone knows that answer, please post. The legal paperwork for the CFD’s was so long and complex that I think even most lawyers would get confused by the technical jargon in it. It’s almost as if some lawyers sat around a room when drafting these CFD’s and said, “let’s make the wording so complex and difficult that no one will really be able to decipher the meaning…..”.
And I TOTALLY agree with you that it doesn’t make sense for everyone. Especially in a transitional town like San Diego where people seem to come and go all the time based on job losses, weak economy, etc. I’d only recommend it for people that know for sure they will stay in the area for the long-haul or at least for many many years.
In a hot housing market like now, I think you will ALWAYS be able to sell and get back all you prepaid and probably more. But in a recession or difficult housing market who is to say how difficult it might be to recover these pre payments. Especially from people that might not plan to stay in the house “forever”.
I already knew that this was our “forever” house. It’s plenty big even anticipating for having another child if we do.
But for people in a similar type situation, it seems like a no brainer to me to pay it off ahead of time and get rid of the obligation.
