Paying off a Mello Roos

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Mrsmarketingguy

New member
Hi everyone! New to Irvine so forgive my ignorance, but I was under the impression that mello roos could be paid off in a lump sum as it is basically a loan taken by the builder and passed to the homeowner. I've found a lot of information on paying it off in San Diego and people have said it is really time consuming and hard to get ahold of the tax assessor office as they charge to calculate what you owe and also don't like people paying it off because they cannot make money off interest and in some cases the homeowner is exempt from renewal. But I have not found any information on doing this in Irvine.

So my question is does anyone know if there is a stipulation in Irvine that voids this payoff or has anyone been able to pay it off? I imagine if people could do this a lot of people would have done it already... especially in Irvine.

Here are some links for clarification if I am confusing:
http://www.bubbleinfo.com/2012/04/04/paying-off-mello-roos/
https://www.trulia.com/voices/Home_Buying/can_I_pay_off_mello_roos_-139003
http://www.city-data.com/forum/san-diego/1541939-paying-off-mello-roos-early.html

*not sure how reliable these are ....
 
We paid off the AD Bond on our last house. We weren't allowed to pay off the mello bond. We were required to pay the ENTIRE bond off IN escrow. Wait a day after escrow and it was a no go.

 
If it's your forever home, you pay significantly less by paying it off early (well we did anyway........... maybe it's not that big a diff now with interest rates lower?????).

If they renew it (which they can) they can't make someone pay who paid it off.
 
I remember Pavilion Park/Beacon Park/Parasol Park paperwork had some payoff option.. anyone care to comment?
 
Ready2Downsize said:
Since mello goes up 2% a year now, not sure u can still do it. We paid off the mello on our last house. We weren't allowed to pay off the AD bond (not sure that is the exact name). We were required to pay the ENTIRE bond off IN escrow. Wait a day after escrow and it was a no go.

Thats really good to know. Then I will be sure to pursue this option BEFORE escrow. And also good to know AD certain bonds cannot be paid off. But I wonder if all CFD bonds are allowed to be paid off. Because the CFD for Eastwood village is about $1700/yr and I imagine we could just add the $20k and not have to deal with all the interest. I also wonder who I have to ask to get this done....

ps9 said:
I remember Pavilion Park/Beacon Park/Parasol Park paperwork had some payoff option.. anyone care to comment?

I asked the sales office in Beacon Park and she just responded "no, why would you want to do that?"
Considering that the home in question was about $50k under our budget I felt it was reasonable to add that as and expense on the home pre escrow especially. Maybe great park neighborhoods are all AD bonds possibly??

but yes , if anyone has heard of the payoff option please share !
 
it's not financially sound , imo, to pay that off.  If you are financing you are better off paying a bigger down payment or points to lower your payment.  I've never been given that option, maybe cause I look dirt poor.
 
There are some people who pay a big down payment or completely cash and just want lower payments down the road. Obviously that is someone who doesn't need the money now.

It used to make a bigger difference than now when rates were higher as the payoff amount depends on how much interest would be paid over the life of the bond.

If it's not your forever home, it's not likely to be of any benefit at all.
 
Ms marketing - just call the related phone numbers for your MR bonds. They will tell you whether any of the bonds can be paid off. They will tell you the related interest rates as well. Once you know the interest rate you can back into the approximate principal amount. If you want to move forward with actually paying it off they will charge you a couple hundred to calculate the payoff.

I called about my two bonds. One I could payoff, the other one I could not.
 
Mrsmarketingguy said:
Ready2Downsize said:
Since mello goes up 2% a year now, not sure u can still do it. We paid off the mello on our last house. We weren't allowed to pay off the AD bond (not sure that is the exact name). We were required to pay the ENTIRE bond off IN escrow. Wait a day after escrow and it was a no go.

Thats really good to know. Then I will be sure to pursue this option BEFORE escrow. And also good to know AD bonds cannot be paid off. But I wonder if all CFD bonds are allowed to be paid off. Because the CFD for Eastwood village is about $1700/yr and I imagine we could just add the $20k and not have to deal with all the interest. I also wonder who I have to ask to get this done....

ps9 said:
I remember Pavilion Park/Beacon Park/Parasol Park paperwork had some payoff option.. anyone care to comment?

I asked the sales office in Beacon Park and she just responded "no, why would you want to do that?"
Considering that the home in question was about $50k under our budget I felt it was reasonable to add that as and expense on the home pre escrow especially. Maybe great park neighborhoods are all AD bonds possibly??

but yes , if anyone has heard of the payoff option please share !

Actually I mixed up which we were allowed to pay off. We paid the AD bond off and the mello is still on our old house ($685 per year which is set to expire in a couple years).

When we sold it didn't seem to make that big a difference but maybe that's because the AD bonds were only $1700 per year (they were refinanced when rates came down).

We still came out ahead paying it off but that's because we kept our house so long. Most people don't live in the same house long enough to break even.
 
If you pay off your MR, will you get all your money back? Will potential buyers really pay above comps for the full cost of the MR?
 
qwerty said:
Ms marketing - just call the related phone numbers for your MR bonds. They will tell you whether any of the bonds can be paid off. They will tell you the related interest rates as well. Once you know the interest rate you can back into the approximate principal amount. If you want to move forward with actually paying it off they will charge you a couple hundred to calculate the payoff.

I called about my two bonds. One I could payoff, the other one I could not.

So the MR bonds can be dealt with anytime and does not necessarily need to be done before escrow? Because we will be buying a new construction home and sales offices don't seem to be too helpful on this subject right now so I think I might have to wait for my tax papers to come or something...

irvineshadow said:
it's not financially sound , imo, to pay that off.  If you are financing you are better off paying a bigger down payment or points to lower your payment.  I've never been given that option, maybe cause I look dirt poor.
Ready2Downsize said:
There are some people who pay a big down payment or completely cash and just want lower payments down the road. Obviously that is someone who doesn't need the money now.

It used to make a bigger difference than now when rates were higher as the payoff amount depends on how much interest would be paid over the life of the bond.

If it's not your forever home, it's not likely to be of any benefit at all.

It's not so much that I don't need the money because who doesn't need it :P . It's just that my mortgage rate is lower than the interest rate on most MR bonds I've so far read about (5% interest rate with a 2% increase/year). so it seemed like an attractive idea and we would look at it like part of the cost of the home.

Plus later on if we do rent it out, the MR adds $300 to the monthly bill, exactly the amount I forsee me losing on the property for a couple years. I'd rather pay an extra $20k now that I budgeted into the home than lose $300/month on rent for potentially the rest of my life (assuming all goes well that is... and they renew the bonds) but maybe I am being short-sighted and can do much more with 20k than pay off an AD tax...especially if the rates of the bond are not as bad as I think.

I agree that paying off a mello roos is not a good idea if you don't plan on staying long but I hope to keep the home at least for min. 15 years hopefully for the rest of my life. Just an idea I was tossing around. I'm not sure if Irvine MRs are the same as the other ones I've read about.

iacrenter said:
If you pay off your MR, will you get all your money back? Will potential buyers really pay above comps for the full cost of the MR?

From what I understand, its only worth it to pay off the MR if you stay long enough in the house to justify it. But when it comes to selling I think that being the house with no MR in a MR community makes it much more attractive and increases your potential pool of buyers, as many will not even consider a place with MR. Does not necessarily mean you will recoup the entire amount you paid.
 
You are correct, you can handle it after you close escrow, at least in my case I was. Sounds like R2D's experience was different. But mine is the much more recent experience (called several years ago)
 
qwerty said:
You are correct, you can handle it after you close escrow, at least in my case I was. Sounds like R2D's experience was different. But mine is the much more recent experience (called several years ago)

If you don't mind me asking qwerty, did it happen to be a new construction. Just because I've read some people's experiences on other forums and some say that pay in escrow, some after the home purchase and some even said through the builder or the real estate agent. I'm wonder if it has to do with how many homeowners the house has had or if its new or something. Like I read somewhere that you have the option to do it after escrow if you are the first homeowner. wondering if you can validate this as fact?
 
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