15-Year-Loan Benefits

This is in response to Benny L. Kass’ discussion (“Cost Argues Against Shift to 15-Year Loan,” Sept. 29) on the shift from a 30-year loan to a 15-year loan, on a small condo, for a 45-year-old first-time home buyer.

One of the factors the questioner addressed was the approaching retirement age, with a 15-year, age 60, loan payoff.

While Kass may be “biased” against the 15-year loan as compared with the 30-year loan, this situation begs for the shorter one. Using Kass’ figures, $100,000 at 9%, a 15-year loan, principal and interest, will have a total outlay of $182,568.60; the 30-year loan a total outlay of $289,666.80: a raw saving of $107,098.20. The $2,000 to $3,000 refinancing “point” penalty is minor. The writer’s concern for making payments in retirement would clearly be alleviated with the shorter loan. Then there would be the “saved” monthly payment for a steady “income” in the retirement years.

Kass’ alternative uses for the $2,515.68 yearly savings on the difference between the 15 and 30 year loans are questionable. If it is a single person, there might be no children to spend it on or give to. Vacation? The writer makes no mention of such need. Stocks? I would rather put it on the principal. Pension? Possibly, but there is still that $107,098 over 15 years. That wouldn’t be bad, especially at compound interest.

Tax advantages? As my late father-in-law used to say: “You give me the money, I pay the taxes.” Or, as I say: I would rather pay the income tax on $107,098 saved than save the income tax on $107,098 that I spent that I didn’t need to.

LAWRENCE BERG

San Gabriel