8/3/2023 0 Comments House finance calculator![]() Conforming Mortgage LimitsĪs of 2023 the FHFA set the conforming loan limit for single unit homes across the continental United States to $726,200, with a ceiling of 150% that amount in areas where median home values are higher. Typically about 35% of home buyers who use financing put at least 20% down. This insurance is rolled into the cost of the monthly home loan payments & helps insure the lender will be paid in the event of a borrower default. Homeowners who put less than 20% down on a conventional loan also have to pay for property mortgage insurance ( PMI) until the loan balance falls below 80% of the home's value. Home buyers who have a strong down payment are typically offered lower interest rates. 20-year mortgages tend to be priced at roughly 0.25% to 0.5% lower than 30-year mortgages. ![]() The following table lists historical average annual mortgage rates for conforming 30-year mortgages. You can use the following calculators to compare 20 year mortgages side-by-side against 10-year, 15-year and 30-year options. The above calculations presume a 20% down payment on a $250,000 home & a closing cost of $3,700 which is rolled into the loan. Please note the above used interest rates were relevant on the day of publication, but interest rates change daily & depend both on the individual borrower as well as broader market conditions. The following table shows loan balances on a $200,000 home loan after 5, 10, 15 & 20 years for loans on the same home. Those who build equity faster will have greater certainty in their lives & won't be anywhere near as worried about what happens if they lose their job 20 years from today. Few people know what the world will be like in 20 years, so perhaps it doesn't make sense to finance the largest purchase of their lives across 30 years. The rise of globalism, monopoly technology platforms, distributed software with zero marginal cost & artificial intelligence are likely to create massive & ongoing waves of structural unemployment.
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