weather icon Partly Cloudy

What are the advantages to shorter home loans?

Q: How much money can I save by getting a 15-year loan instead of a 30-year loan?

A: A lot. Your savings start with a lower interest rate. The average cost of a 15-year mortgage is more than three-quarters of a point less than the average cost of a 30-year mortgage. You’ll also save money because you’ll be cutting the term and amortization of the loan in half. Consider that on a $175,000 mortgage for 30 years at 3.99 percent, you’ll pay $125,000 in interest over the life of the loan. But with a 15-year mortgage at 3.10 percent, you’ll pay only $44,000 in interest.

Another advantage is that you’ll build equity in the house much faster. By year five of that 15-year loan, you’ll have paid off almost $40,000 of the principal and owe only $135,000. With a 30-year loan, you’ll have only paid $13,418 in principal and still owe $161,000.

Q: I can afford the larger monthly payment required for a 15-year mortgage loan, so I should definitely choose this program. Right?

A: Often but not always. The monthly payments on a 15-year loan can be almost 50 percent more. In the example above, the monthly principal and interest on a 30-year loan would be $834. For the 15-year loan, it would be $1,216. Even if you can afford to swing that bigger monthly payment there are potentially big opportunity costs and several key questions you should consider.

Since mortgage rates are so low, can you come out ahead by investing that $382 difference?

Do you rely on a mortgage interest tax deduction to offset other sources of income? At what age do you want to have your house paid for?

There’s no one-size-fits-all answer, it’s a factor of individual circumstances and preferences. One flexible option is to take the 30-year and make extra payments. In the example above, if you paid $150 extra with each mortgage payment, you’d pay $90,000 over the life of the loan and pay it off in 23 years.

That option would allow you to pay more on your mortgage in years when you think it’s beneficial and pay the minimum when you’d rather invest that money.

Don't miss the big stories. Like us on Facebook.
Homeowner says HOA towed his car illegally

Most CCRs list the powers and authority of the board of directors, one of which is to sign contracts on behalf of the association. Although you did not send me a copy of the covenants, it would be most unusual if the association board did not have the right to sign a contract with a towing company. The covenants would not list what contracts can or cannot be signed. The ability to tow a vehicle in 2018 was most likely legal.

Tips on selling your home in the fall

For sellers wanting to close before the holiday festivities begin, below are five tips from real estate company, Opendoor, to help sell homes faster.

Neighbor wants owner to clean up tenant’s trash

If the association does remove the trash, the unit owner can be assessed all of the expenses that were incurred by the association. It also can place a lien on the unit if the owner fails to reimburse the association. In addition, the association can begin a foreclosure action against the unit owner.

Loud garge noise disturbing neighbors

Try contacting the owner one more time and invite him to meet with you at the community so that he can witness the noise. Arrange for some maintenance technician to be present for their suggestion as to how to remedy the problem and the cost.

Grandfathered rentals in HOA protected by law

If your CCRs did not prohibit renting or leasing at the time you purchased your rental homes the association cannot prohibit the renting or leasing of homes.

Don’t park in the handicap spot

Yes, you were wrong. And, no the association does not by law have to provide you any notice for parking in a handicap spot per NRS 116.3102 (1s).

Southern Nevada Health District implements pool regulations

As you are already aware, the new Southern Nevada Health District regulations went into effect July 1. At first the cyanuric acid level (stabilized chlorine) regulation was going to stay the same at 100 ppm, meaning the body of water would have to be drained and refilled as it always has been.

Variety of homeownership programs available

In what’s being called a game-changer in increasing homeownership rates in Las Vegas, Bank of America has included Southern Nevada in a new loan program to provide free down payment assistance to homebuyers.

HOA board member must follow pet rule like everyone else

Your officers and directors are homeowners. They have the same obligations and the same responsibilities in complying with the governing documents of the association. In this case, the management company should be sending a violation letter to the vice president.