Eugene Oregon Real Estate Blog

Good Monday Morning!

Look at what could be a good buy during the Holiday Season.  It's somewhat suprising, but homes may be the best buy out there right now.  Here is an article from Realtor.com that explains why!

Forget television sets and video games, the best thing to buy during the holiday season may be a home.

A new analysis from Attom Data Solutions, a provider of real-estate data, found that December is the best month of the year to buy a home when it comes to getting a relatively good price. During the last month of the year, homes only sold for 1.2% more than their estimated market value on average. Comparatively, June, when homes sell for roughly a 7% premium, is the most expensive time to buy.

To produce the report, Attom analyzed more than 23 million single-family home and condo-unit sales over the past six years. Attom limited the analysis to days with at least 10,000 sales. Altogether, 362 days met that threshold — exceptions were Jan. 1, July 4, Nov. 11 and Dec. 25.

There were only three days of the year where homes actually sold for a discount relative to estimated market values. All three of these days are in December: Dec. 4, Dec. 26 and Dec. 31.

“Closing on a home purchase the day after Christmas or on New Year’s Eve can be one of the most financially beneficial holiday-season gifts you can get,” Todd Teta, chief product officer with Attom Data Solutions, said in the report. “While lots of folks are shopping the day-after Christmas sales or getting ready to ring in the New Year, our data shows that buyers and investors are buying homes on those days at a discount.”

Of these, the day after Christmas was the best time to purchase — on that day, homes sold at a 0.3% discount.

At a local level, though, other months can be better than December. For instance, homes sell for over a 7% discount compared with the national average in January in Ohio, while the same is true of Michigan homes in February.

Happy New Year!!

THIS WEEKS HOT HOME LISTING!

93048 Templeton Rd  

Price: $750,000    Beds: 4    Baths: 3    Sq Ft: 3035

Quiet And Private House on 20.59 secluded acres with gorgeous valley and mountain views. 15+ acres second growth Fir with significant market value and 2+ acres of pasture. Gorgeous custom interior with hardwood floors, vault ceilings, views. 4 bay s...View this property >> 

AND HERE'S YOUR MONDAY MORNING COFFEE!!

Good Monday Morning!

Is Winter the best time to purchase a home.  This article from "Realtor.com" will give the answer to this question. 

Forget television sets and video games, the best thing to buy during the holiday season may be a home.

A new analysis from Attom Data Solutions, a provider of real-estate data, found that December is the best month of the year to buy a home when it comes to getting a relatively good price. During the last month of the year, homes only sold for 1.2% more than their estimated market value on average. Comparatively, June, when homes sell for roughly a 7% premium, is the most expensive time to buy.

To produce the report, Attom analyzed more than 23 million single-family home and condo-unit sales over the past six years. Attom limited the analysis to days with at least 10,000 sales. Altogether, 362 days met that threshold — exceptions were Jan. 1, July 4, Nov. 11 and Dec. 25.

There were only three days of the year where homes actually sold for a discount relative to estimated market values. All three of these days are in December: Dec. 4, Dec. 26 and Dec. 31.

“Closing on a home purchase the day after Christmas or on New Year’s Eve can be one of the most financially beneficial holiday-season gifts you can get,” Todd Teta, chief product officer with Attom Data Solutions, said in the report. “While lots of folks are shopping the day-after Christmas sales or getting ready to ring in the New Year, our data shows that buyers and investors are buying homes on those days at a discount.”

Of these, the day after Christmas was the best time to purchase — on that day, homes sold at a 0.3% discount.

At a local level, though, other months can be better than December. For instance, homes sell for over a 7% discount compared with the national average in January in Ohio, while the same is true of Michigan homes in February.

Happy Holidays!!

Have An Awesome Week!

THIS WEEKS HOT HOME LISTING!

3220 Tilden St  

Price: $385,000    Beds: 3    Baths: 2    Sq Ft: 1894

Updated home in a quiet Santa Clara neighborhood. Newer roof, vinyl windows,hardwood flooring and granite in the kitchen & bathroom. Kitchen w/ eating area leads to a cozy family room w/ gas fireplace & sliding door to the backyard. Separate living...View this property >> 

AND HERE'S YOUR MONDAY MORNING COFFEE!!

Good Monday Morning!

We now have the Real Estate market numbers for Lane County home sales in the month of November 2019.  The trend for fewer homes on the market continues and inventories are even lower than for this same time last year.  Home prices continue to climb as the numbers of available homes for purchase slides.  This is just a continuation of the same trend we have seen for several years. Here are the numbers.

There were 261 new listings, 33.6% fewer than in November 2018 (393) and 38.4% fewer than last month in October 2019 (424).

Pending sales (326) decreased 7.1% from November 2018 (351) and fell 17.3% from last month October 2019 when 394 offers were accepted.

Closed sales (348) decreased 5.9% from November 2018 (370) and fell 14.9% from the 409 closings recorded last month in October 2019.

Inventory and Market Time

Inventory decreased slightly to 1.7 months in November. Total market time increased to 52 days.

Year to Date Summary

Comparing the first eleven months of 2019 to the same period in 2018, new listings (5,526) have decreased 10.2%, pending sales (4,626) have decreased 6.6%, and closed sales (4,535) have decreased 6.5%.

Average and Median Sale Prices

Comparing 2019 to 2018 through November, the average sale price has increased 5.3% from $308,800 to $325,200. In the same comparison, the median sale price has increased 4.8% from $281,500 to $295,000. 

Have An Awesome Week!

THIS WEEKS HOT HOME LISTING!

Lot 2501 E 49th Ave  

Price: $125,000    Beds: 0    Baths: 0    Sq Ft: 4356

Level Lot. Few trees. Ready to build. Utilities available at street.......View this property >> 

AND HERE'S YOUR MONDAY MORNING COFFEE!!

Good Monday Morning!

Winter is upon us and we are in the midst of the Hoiliday Season again!  For our local Real Estate market in the Eugene and Springfield area, this means that there are typically fewer homes on the market for sale and also fewer people in the market to purchase a home.  Believe it or not, this opens up opportunity for home buyers who want to find a home, because there is less competition for the homes that are out there.  This year, with low mortgage interest rates, the timing is perfect right now to buy a home. The same is true for sellers.  Less competiition can mean a shorter time period to sell and a higher sales price.  So, just because it is the Holiday season, if you are wanting to purchase a home or sell a home, don't shy away from this time of year.

Video Link: http://eugeneoregonhomesforsale.com/video/This-Month-in-Real-Estate-December-2019

Have An Awesome Week!

THIS WEEKS HOT HOME LISTING!

93048 Templeton Rd  

Price: $750,000    Beds: 4    Baths: 3    Sq Ft: 3035

Quiet And Private House on 20.59 secluded acres with gorgeous valley and mountain views. 15+ acres second growth Fir with significant market value and 2+ acres of pasture. Gorgeous custom interior with hardwood floors, vault ceilings, views. 4 bay s...View this property >> 

AND HERE'S YOUR MONDAY MORNING COFFEE!!

Good Monday Morning,

There are some changes coming in the mortgage world with Fannie Mae and Freddie Mac announcing that they are raising the level of where they will loan money to home buyers.  The following article gives details on the new changes coming our way.

Fannie Mae and Freddie Mac will let mortgage borrowers nationwide take out home loans over $500,000 in 2020.

The Federal Housing Finance Agency announced Tuesday that it will increase the limit on conforming loans, meaning mortgages that adhere to the standards imposed by Fannie Mae and Freddie Mac to a maximum of $510,400 nationwide. In high-cost areas, the maximum loan limit for mortgages acquired by Fannie Mae and Freddie Mac will be $765,600.

On a local level, the loan limits were set higher in all but 43 counties across the country, the FHFA reported. The FHFA published a full list of the loan limits for each county nationwide for borrowers to reference.

By law, conforming loan limits must be adjusted to reflect changes in home prices across the U.S. The FHFA noted that its data show home prices had increased on average 5.38% between the third quarters of 2018 and 2019. Therefore, the loan limits increased by that percentage. In high-cost areas, the law allows loan limits to be set 50% higher than the baseline level nationally. Special provisions also establish different loan limit calculations for Alaska, Hawaii, Guam and the U.S. Virgin Islands.

This is the fourth consecutive year that the conforming loan limit has increased. Between 2006 and 2016, the FHFA held loan limits at $417,000. When loan limits were increased for the first time in 2017, it sparked enthusiasm across the mortgage industry as lenders expected it could lead to more people seeking home loans, because the lower loan limit forced many people to get jumbo loans that don’t always offer competitive financing.

Higher loan limits aren’t necessarily something to celebrate though. Some market observers have argued that by allowing Fannie and Freddie to purchase larger loans, the FHFA is increasing the risk that they will go belly-up the next time there’s a market downturn.

And for consumers, the higher limits are an indication that while home price growth has slowed from its breakneck pace in recent year, prices are still heading higher. That’s exacerbating the affordability crisis occurring in many housing markets across the country, keeping thousands of would-be home buyers out of the market.

Have An Awesome Week!

THIS WEEKS HOT HOME LISTING!

93048 Templeton Rd  

Price: $750,000    Beds: 4    Baths: 3    Sq Ft: 3035

Quiet And Private House on 20.59 secluded acres with gorgeous valley and mountain views. 15+ acres second growth Fir with significant market value and 2+ acres of pasture. Gorgeous custom interior with hardwood floors, vault ceilings, views. 4 bay s...View this property >> 

AND HERE'S YOUR MONDAY MORNING COFFEE!!

Good Monday Morning!

One of the most improtant things you can do before you close on your new home is to do a final walk through of the home you are purchasing with your Real Estate Agent.  Most of the time it takes 4-6 weeks to close on a home and many things can happen to that home within that time period.  The following will give you insight as to why the final walk through before closing is so essential.

For homebuyers and sellers alike, the final walk-through can be one of the most significant steps in the real estate process. It may also be one of the most nerve-wracking.

The final walk-through typically takes place mere hours before the closing itself. It’s one last opportunity for the buyer, along with his or her agent, to inspect the home and make sure there aren’t any last-minute problems.

Hopefully, your final walk-through will be smooth sailing. Every now and again, though, issues do arise – and they can go as far as to derail the entire home sale.

Here are 10 of the most common final walk-through discoveries that can potentially throw a wrench into the transaction:

• The home isn't empty.
• The house is a mess.
• The negotiated repairs haven't been completed.
• Included personal property has gone missing.
• The lawn hasn't been cared for.
• The utilities have been shut off.
• The appliances aren't working.
• There's major damage to the walls.
• The HVAC systems aren't working.
• The home was damaged in the moving process.

The Home Isn’t Empty

Unless otherwise agreed upon, the sellers should be totally moved out of the house by the time of the final walk-through. Now, if they left behind a can of paint or a couple bags of trash, that’s probably not the end of the world. But if they left behind much more, the buyer may have to request they come by and clean up.

The House Is a Mess

The typical agreement is that the seller leave the property in broom-clean condition. This is a somewhat nebulous term, and it may mean different things to different people. The house doesn’t necessarily have to be spotless, but neither should it be a disaster area. Ideally, the house should appear move-in ready for the new homeowners.

The Negotiated Repairs Haven’t Been Completed

When buyer and seller negotiate on repairs or renovations, it’s expected that they all be finished by the time of the final walk-through. If the seller needs a little additional time due to unforeseen circumstances, this should be communicated to the buyer well in advance of the closing.

Included Personal Property Has Gone Missing

Did the seller take items they said they would leave for you? Light fixtures? Window treatments? A piece of furniture you wanted to buy along with the house? That’s definitely something that can stall the closing or lead to some tumult.

The Lawn Hasn’t Been Cared For

Generally speaking, real estate contracts stipulate that the seller will keep the lawn areas maintained until the date of closing. That doesn’t mean everything has to be perfectly manicured, but if the grass is five feet tall, or has died during the escrow period, that’s a problem.

The Utilities Have Been Shut Off

Typically, your real estate contract will stipulate that the utilities have to be on through the final walk-through. If you don’t have power or running water during the walk-through, that could technically be a breach of contract.

The Appliances Aren’t Working

For homebuyers, it’s important to use the final walk-through as an opportunity to test all the appliances included in the sale, confirming they work as intended. If something doesn’t work, you can ask the seller for a repair allowance.

There’s Major Damage to the Walls

Did the seller remove a wall-mounted TV, a piece of artwork, or some kind of home automation technology? And if so, did it leave behind damage to the wall? This could be a big issue.

The HVAC Systems Aren’t Working

Buyers should test out both the heating and cooling capabilities of the home. See that they work satisfactorily. If not, that’s something for which you’ll likely want to negotiate repair costs or a price adjustment.

The Home Was Damaged in the Moving Process

If the sellers did any kind of damage to the home while they moved out, that’s something for you to take stock of. In some cases, it may be worthwhile for you to request a repair allowance.

These are some of the main items you’ll want to look out for if you’re a buyer going through your final walk-through. And if you’re in the process of selling a house, let these serve as words of caution. Make sure to avoid these common hurdles to the home closing.

Have An Awesome Week!

THIS WEEKS HOT HOME LISTING!

3220 Tilden St  

Price: $385,000    Beds: 3    Baths: 2    Sq Ft: 1894

Updated home in a quiet Santa Clara neighborhood. Newer roof, vinyl windows,hardwood flooring and granite in the kitchen & bathroom. Kitchen w/ eating area leads to a cozy family room w/ gas fireplace & sliding door to the backyard. Separate living...View this property >> 

AND HERE'S YOUR MONDAY MORNING COFFEE!!

Good Monday Morning!

October 2019 home sales number are in and it looks as if the market cooling off period is continuing.  October 2019 home sales were off from not only September of this year, but alo down from October of 2018.  As you will seehomes prices continue to creep up.  This trend could spell a continued slower housing market in the Eugene and Springfield area. Here are the number for Lane County homes sales of October 2019.

Lane County saw cooler activity this October. At 409, closings ended 2.9% short of October 2018 (421) and fell 4.7% from the 429 closings recorded last month in September 2019.

Pending sales, at 394, fell 13.4% short of October 2018 when 455 offers were accepted, and 6.2% short of September 2019 when 420 offers were accepted.

There were 424 new listings, ending 9.6% below the 469 new listings offered back in October 2018 and 4.9% below the 446 offered just last month in September 2019.

Inventory increased remained the same at 1.8 months in October. Total market time increased to 45 days.

Year to Date Summary

Activity is cooler so far in 2019 compared with 2018. Comparing the first ten months of each, pending sales (4,314) have decreased 6.4%, closed sales (4,178) have decreased 6.1%, and new listings (5,257) have decreased 8.6%.

Average and Median Sale Prices

Comparing 2019 to 2018 through October, the average sale price has increased 5.3% from $308,200 to $324,400. In the same comparison, the median sale price has increased 4.6% from $282,000 to $295,000.

Have An Awesome Week!

THIS WEEKS HOT HOME LISTING!

3220 Tilden St  

Price: $385,000    Beds: 3    Baths: 2    Sq Ft: 1894

Updated home in a quiet Santa Clara neighborhood. Newer roof, vinyl windows,hardwood flooring and granite in the kitchen & bathroom. Kitchen w/ eating area leads to a cozy family room w/ gas fireplace & sliding door to the backyard. Separate living...View this property >> 

AND HERE'S YOUR MONDAY MORNING COFFEE!!

Good Monday Morning!

The good news is that mortgage interest rates are down again.  The other news is that for most of the country, including the Eugene/Springfield area, home prices continue to climb and home inventories remain low.  For would be home buyers who have been frustrated in finding a home over the Summer months and early Fall, look for the number of homes on the market to increase slightly and for the competition to level off for the next few months.  There should be a very good window of opportunity to purchase a home between now and Spring. The following article is from Realtor.com and it talks about the recent decrease in mortgage rates.

Mortgage rates dropped in the past week after rising in six of the last nine weeks, including most of the month of October.

The 30-year fixed-rate mortgage averaged 3.69% during the week ending Nov. 7, down three basis points from the previous week, Freddie Mac reported Thursday.

The rate on the 30-year mortgage is over a full percentage point lower than it was at this same time a year ago, when rates averaged 4.94%.

“After a year-long slide, mortgage rates hit a cycle low in September 2019 and have risen in six out of the last nine weeks due to modestly better economic data and trade related optimism,” Sam Khater, Freddie Mac’s chief economist, said in the report. “The improvement in sentiment has been one of the main drivers behind the surge in equity prices and will provide a halo effect to consumer spending heading into the important holiday shopping season.”

The 15-year fixed-rate mortgage dropped six basis points to an average of 3.13%, according to Freddie Mac. The 5/1 adjustable-rate mortgage averaged 3.39%, falling four basis points from a week ago.

Mortgage rates generally track the direction of the 10-year Treasury note. The 10-year Treasury yield rebounded Thursday morning amid hopes that the U.S. and China had reached an agreement to end their trade dispute.

But would-be home buyers looking to take advantage of these low rates will face steep competition when it comes time to make an offer. A report last week from Realtor.com found that the U.S. housing market experienced a 6.9% decline in inventory year-over-year in October, thanks to a decrease of 98,000 listings. Low mortgage rates have stoked home-buying demand, which has dried up much of the inventory of homes up for sale.

“With dwindling supply, prices maintain their upward pressure, deepening the affordability challenges for first-time buyers,” realtor.com senior economist George Ratiu said.

Have An Awesome Week!

THIS WEEKS HOT HOME LISTING!

3915 Royal Ave  

Price: $345,000    Beds: 3    Baths: 2    Sq Ft: 1479

New Construction that backs up to an expansive Park. Open Living, Dining, & Kitchen. Master bedroom with walk-in closet. Carpet in all bedrooms. Home has vaulted ceilings, granite counters, high end cabinets and wood floors. This home includes an in...View this property >> 

AND HERE'S YOUR MONDAY MORNING COFFEE!!

Good Monday Morning!

Fall is here and Winter is quckly approaching.  With the changing weather in Winter, it is extremely important to safeguard your home from the harsh elements that come with this time of year.  Here are a few tips that may help you with your Winter time home prep.

Extreme winter weather can leave neighborhoods and communities without power or other public services for long periods of time, the U.S. Department of Homeland Security warns.

It's a smart idea to prepare your home for such winter weather emergencies as well as cold weather throughout the season that can cause minor issues to evolve into larger problems – with potential damage to your property or risk of personal injury.

Whether it’s for your primary residence or a second home you plan to leave vacant until spring, here are tips for winterizing your house:

• Clean out gutters and clear the roof.
• Insulate the attic.
• Have your heating system serviced.
• Prepare your plumbing.
• Call a chimney sweep.
• Check for drafts.
• Have a friend on call.

• Clean Out Gutters and Clear the Roof
• Leaves, sticks and other bits of nature make their way onto your roof and into your gutters during the fall. But before the first heavy snowfall, be sure to clear debris from your roof and gutters to prevent a buildup of ice and snow that can get under shingles and cause leaks and water damage inside your house. 
• “If they don’t have their roof cleared off, that’s typically where stoppage and backup issues happen,” says Mike Gulla, senior director of underwriting and customer support for Hippo Insurance, based in Palo Alto, California.
• If the house is vacant: Clear as much debris as you can before you close up the house for the winter, but you may need to have a local friend or contractor finish the job when you’re away.
• Insulate the Attic
• Another way to reduce the chances that an ice dam will form is to insulate your attic floor. This helps keep the living areas of your house warmer, explains Anne Cope, chief engineer at the Insurance Institute for Business and Home Safety in Richburg, South Carolina.
• Cope recommends going up to your attic before the winter weather sets in to examine attic vents, check for leaks and get a look at the insulation. “If your insulation looks terrible, now is a great time of year to get that taken care of,” she says.
• If the house is vacant: Insulation will help you avoid hefty heating bills during the months that you’re not staying in the house. Good insulation that leads to lower heating and cooling bills can also be a plus when you sell your home!
• [See: The Best Time of Year for Every Home Improvement Project]
• Have Your Heating System Serviced
• 
  Have your heating and ventilation system checked for problems and cleaned before the weather gets too cold. If you wait until the first cold snap or snowstorm of the season, many service professionals will be overbooked.
• Beyond keeping you warm, a functioning HVAC during the coldest days of the year is key to avoiding frozen pipes, which can burst inside your walls and cause significant damage.
• If the house is vacant: It’s important to keep a vacant house at a temperature well above freezing; the standard is between 50 and 60 degrees Fahrenheit. 
• Having your HVAC system serviced before you leave for the season is also important so cold temperatures don’t cause a bigger issue like a burst pipe. “That’s typically the reason that someone has a frozen pipe – it’s not usually a faulty pipe but because the HVAC stops working. … If it’s 20 degrees outside and you have no heat in the house for a few days, you can expect the pipes to freeze,” Gulla says.
• Prepare Your Plumbing
• Ensure your plumbing is set up to withstand the cold, and consider utilizing sensors to let you know when there’s a problem.
• In Northern states where freezing temperatures are expected for a portion of the year, housing codes require insulation and for pipes to be properly protected from the cold. Places that don't see regular frost, however, won't always have a basement for plumbing to stay warmer or effective insulation to keep heat from escaping. As a result, a day or week of freezing temperatures in parts of North Carolina, Georgia and even Texas can cause a lot of damage, Cope says.
• If your plumbing runs through a crawl space, consider insulating the pipes or the crawl space itself. “It can be a do-it-yourself project, or it can be a hire-a-handyman project,” Cope says.
• Gulla recommends getting both water-leak and pipe-temperature sensors. The former will let you know if pressure inside the pipe suddenly decreases, indicating a burst pipe, while the latter will notify you of dangerously cold pipes so you can prevent a burst pipe.
• Additionally, automatic water shutoff valves are becoming more popular in homes. They stop the flow of water should a pipe freeze and burst to reduce the amount of damage to the home.
• If the house is vacant: Gulla stresses the importance of having sensors and a remote water shutoff valve option to prevent damage in the house before you can get there.
• Call a Chimney Sweep
• Whether you have a wood-burning or gas fireplace, make an appointment for your chimney to be inspected annually to see if cleaning or repairs are necessary, according to the Chimney Safety Institute of America. In wood-burning fireplaces, a professional will clean out creosote buildup, which comes from burning wood and can cause a fire hazard inside the chimney if it’s not cleaned. In any fireplace, it's important to clear animal nests that might be blocking the chimney and to check for issues in the masonry.
• Gulla warns that a blocked chimney “can also cause carbon monoxide to back up into the house, which can obviously be life-threatening to anyone in the house.”
• If the house is vacant: Be sure to close the chimney flue as well as any hearth doors. That way you’ll keep cold drafts from making your furnace work harder and prevent animals from entering through the chimney and getting into other parts of the house.
• [See: 7 Ways to Cut the Dry Air in Your Home This Winter]
• Check for Drafts
• As the weather cools, walk around the house and check for drafts or air leakage, particularly around windows and doors. Use caulk to seal cracks and weatherstripping to help insulate around door and window frames.
• If the house is vacant: Checking for drafts and leakage will help cut down on the work your furnace has to do by keeping cold air from coming in.
• Have a Friend on Call
• 
  If you go away for vacation or on a business trip, it's good to have a friend, relative or neighbor on call for your temporarily vacant house. Especially if a winter storm occurs while you're gone, you want someone to make sure your power stays on and even shovel the sidewalk to prevent slipping hazards.
• If the house is vacant: Your HVAC may be in perfect condition with everything insulated, but you still shouldn’t leave the house unchecked for the entire winter.
• “I wouldn’t want someone to think that a property can sit vacant for months at a time without someone coming to check on it. You wouldn’t do that with your car,” Cope says.

If you have friends or relatives nearby who can check on the house every few weeks, ask them to do so. Otherwise, hiring a local handyman to regularly check in can help ensure the heat continues to work, the power stays on and no critters manage to break their way into the living space. Even if you have security cameras and sensors, you need someone who can come by on short notice if an issue occurs.

Have An Awesome Week!

THIS WEEKS HOT HOME LISTING!

3201 Kentwood Dr  

Price: $369,900    Beds: 3    Baths: 2    Sq Ft: 1508

This is a light & bright, beautifully updated home in a convenient Ferry St. Bridge neighborhood. Open floor plan w/ vaulted ceilings, spacious kitchen w/ granite counters, new hickory wood flooring, fresh interior & exterior paint. New deck & fenci...View this property >> 

AND HERE'S YOUR MONDAY MORNING COFFEE!!

Good Monday Morning!

With mortgage interest rates remaining very low, the 15 year home financing option can look very attractive.  The following is an article from "Realtor.Com" that will give you the benefits and drawbacks of both the 30 year mortgage and the 15 year mortgage.

MORTGAGES COME WITH many options, and one of them is your loan term: a 15-year versus 30-year mortgage. A 30-year mortgage can make your payments more affordable, but a 15-year mortgage is generally cheaper overall. As you're weighing your mortgage options, here are the most important things to know about 15- and 30-year mortgages. 

How a 15- vs. 30-Year Mortgage Works

A mortgage is a type of term loan, meaning the amount you borrow is repaid over a set period of time. You make principal and interest payments according to an amortization schedule that's set by the lender. Your monthly payment schedule may also include homeowners insurance and property taxes if those are escrowed into your payment. Private mortgage insurance is also added when applicable, usually when you buy a home with less than 20% down.

When you have a 15-year mortgage, the total amount you have to repay is spread out over 15 years, or 180 payments. If you choose a 30-year mortgage instead, you repay the loan over 30 years, or 360 payments.

What's Good About a 15-Year Mortgage

There are several good reasons to choose a 15-year over a 30-year mortgage.

Pay the home off more quickly.

"The monthly payments will be larger, allowing more money to go to the principal in a shorter amount of time," says Benjamin Ross, a real estate agent in Texas. Your loan balance disappears faster, which might be important to you if you envision a retirement that doesn't include mortgage debt. 

Lower interest rate.

Because you're paying your home loan off sooner with a 15-year term, your mortgage becomes less risky for the bank. That may translate to a lower interest rate compared with a 30-year loan. Depending on the overall interest rate environment, rates for a 15-year mortgage may be a half a percentage point or more lower than 30-year mortgage rates. 

Less interest total over the loan term.

A lower interest rate also benefits you in another way when adding up the total interest paid on the loan. Here's a simple side-by-side comparison of the total interest paid on a $300,000 mortgage. 

(Note: These calculations don't include PMI, homeowners insurance or property taxes escrowed into the mortgage.)

In this example, choosing a shorter loan term and qualifying for a lower interest rate results in a total interest savings of $119,621. That's a substantial amount of money you could keep in your pocket over time. 

Build equity faster.

Home equity represents the difference between what your home is worth and what you owe on the mortgage. When your monthly payment is larger because your loan term is shorter, you can build equity at a quicker pace because you're paying more of the loan principal down each month compared with what you would with a longer mortgage. 

15-Year Mortgage Drawbacks

What's great about 15-year mortgages versus 30-year mortgages is also what makes them less attractive for certain homebuyers: a larger monthly payment.

Going back to the previous example of a 15- vs. 30-year loan, the mortgage payment for the 15-year option is $704 higher. A $2,000-plus monthly mortgage payment may not be realistic for every budget. 

"A lot of people are more concerned with ensuring that their monthly payment is manageable than the total interest paid over the life of the loan," says Anthony Sherman, co-founder and CEO of Simplist, a digital mortgage marketplace. "Paying off your mortgage over a longer period of time can free up cash to do other important things, like investing, saving for college or retirement, and paying for renovations." 

Another reason to reconsider a shorter loan term is how long you plan to stay in the home. If you plan to move within the next five years, for example, then being able to build equity faster or get a lower interest rate on the loan may not be as important in your decision-making about which kind of mortgage to get.

Have An Awesome Week!

THIS WEEKS HOT HOME LISTING!

3220 Tilden St  

Price: $385,000    Beds: 3    Baths: 2    Sq Ft: 1894

Updated home in a quiet Santa Clara neighborhood. Newer roof, vinyl windows,hardwood flooring and granite in the kitchen & bathroom. Kitchen w/ eating area leads to a cozy family room w/ gas fireplace & sliding door to the backyard. Separate living...View this property >> 

AND HERE'S YOUR MONDAY MORNING COFFEE!!