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Real Estate
Reply to "How much house can we afford? what would the monthly mortgage payments look like?"
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[quote=Anonymous]There is no formula, in part because rates change by amount. In the DC area, the cheapest rates are on mortgages less than $417,000. These are called conforming mortgages. The next cheapest rates are for mortgages between $417,000 and $625,500, called jumbo conforming mortgages. Above $625,500, you will need a pure jumbo mortgage. As of right now, for a 30-year fixed, I believe you can get 3.75% or less for a conforming mortgage, 3.75% or 3.875% for a jumbo conforming, and 4.125% or higher for a pure jumbo, if the borrower(s) have credit scores of 760 or higher. If your credit is less than that, the rates will increase. There is no exact relationship between loan and mortgage amounts because of (i) the higher rates as loan amounts get higher; (ii) principal increases as you borrow more; and (iii) property taxes and insurance usually go up with more expensive houses. (DC assesses property taxes at .000875 per dollar of assessed value. So a $1m house will have taxes of $8,750 per year (minus the homestead exemption). For a $600K, $700K, and $800k house, I think the following is a good general approximation (assuming a 3.875% interest rate): House price: $600,000 Loan Amount: $480,000 Property Taxes: $5,500 Insurance: $750 Principal + Interest + Taxes + Insurance = $2778 House Price: $700,000 Loan Amount: $560,000 Property Taxes: $6,300 Insurance: $850 PITI = $3,229 House price: $800,000 Loan Amount: $625,500 (to stay as a jumbo conforming) Property Taxes: $7,200 Insurance: $950 PITI = $3,621 You can lower your payment if you get an ARM, but that imposes risks of the rate increasing in the future. [/quote]
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