93°F
Clear

# 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.
THE LATEST
Changes in law will affect how associations can tow vehicles

Senate Bill 212 was changed. It affects how associations can tow vehicles in the community. The existing law states that a vehicle may not be towed until 48 hours after affixing a notice to the vehicle that explains when it will be towed (with the exception of vehicles that are related to health, safety or welfare, i.e. parking in front of fire hydrants, etc.).

RESALE HOME SALES May 29-June 3

Editor’s note: Listings include the resale home’s parcel number. The address listed is the homebuyer’s mailing address and not the actual location of the resale home. About 90 percent of these addresses reflect the home purchase. Check the parcel number to make sure. Also, a few transactions do not reflect the market value of the homes. The information is provided by Accudata, a local research firm. For the complete listing, visit RJRealEstate.Vegas.

New Nevada laws that will affect HOAs

There were not too many laws passed in this last legislative session that affected our local homeowners associations. Here are some that did.

BHHS partners with Adwerx to offer Realtors new program

Berkshire Hathaway HomeServices Nevada Properties, in partnership with Adwerx Enterprises, has launched a new platform, called Brilliantly Simple to immediately advertise its real estate listings online. The platform automatically creates digital advertising programs for each home, including custom ads that are optimized for social media, apps and websites.

Homeowners have right to see HOA financial records

Per Nevada Revised Statute 116.31175 (1a), upon written request, you are entitled to receive financial statements from your association. Please send a formal specific request of what financial statements that you would like to receive.

High land costs affect developments

For all the job growth and expansion in the Las Vegas economy, a lack of land and its high cost is restricting growth in the valley, experts told the Southern Nevada real estate and development community.

Local home prices stuck at \$300,000

For the third straight month, the Greater Las Vegas Association of Realtors, GLVAR, reported that local home prices are hovering at \$300,000, while the number of homes on the market continues to increase.

Fair Housing Law requires accommodations for disabled

The Fair Housing Law requires accommodations for the disabled. Based upon your email, the homeowner would have a strong claim against the association if the homeowner was forced to remove the motor home, or if the association were to fine the homeowner because of the therapy equipment. Take the time to meet with this homeowner and see if there are any other viable alternatives.

HOA must deal with bully board member

The only way to keep bully board members in check is for the entire board to deal with the issue in executive session. Depending upon the gravity of the situation, legal counsel should be informed and invited to attend the executive session.

Federal law allows for service animals in HOA

The Fair Housing Act amendments of 1988 extended the protections of Title VIII of the Civil Rights Act of 1968. Associations must allow service dogs and emotional support animals, if necessary for a person with a disability.