Friday, March 15, 2019

Home Mortgage Cost


Home ownership is the key to the financial future of most families. Homes have a history of paying for themselves and providing family wealth and housing security.

Lenders have traditionally used 28% of disposable income to determine the maximum they would lend on a home mortgage. This requires that families make sure that their spending is less than their income.

The best deal for a “starter home” is a “fixer-upper” foreclosure loan assumption. The initial cost is often just paying back taxes.

The best mortgage loan is a 15 year loan. The monthly payment on a 15 year loan on a $150,000 house is $1,360 per month with a $10,000 down payment and $3700 in closing cost. This would require a net family income of $5,000 per month.

The next best mortgage loan is a 30 year loan with the freedom to prepay premium. The monthly payment on a 30 year loan on a $150,000 house is $997 per month with a $10,000 down payment and closing cost. This would require a net family income of $3500 per month

All 30 year mortgage loans should be refinanced at 15 years as soon as financially possible.

The average single family home price in the US is currently $287,600.

Norb Leahy, Dunwoody GA Tea Party Leader

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