Mortgages & Mortgage Refinancing
Buying your own home is one of the most important purchases that most people will ever make, both in terms of the financial significance of the purchase and its personal significance for you and your family. It usually involves taking out a home loan or mortgage, which will probably be the single largest debt that you will ever incur. Choosing the right mortgage can therefore be just as important as choosing the right house and it is essential to ensure that you are financially prepared to take on such a substantial debt.
The United States has one of the most active markets for mortgages in the world. About 70 percent of native born Americans own their own homes, with 67.6 percent of naturalized citizens and 34.9 percent of non-citizens in the US being homeowners. About 70 percent of owner occupied homes in the United States are currently mortgaged.
In 2008, mortgages in the US amounted to 1618 billion dollars of debt, of which 765 billion dollars was from refinance mortgage. This is in comparison to a total mortgage debt of 459 billion dollars in 1990. Mortgage delinquency rates in the US in 2008 were seven percent.
At the end of 2010, about 13,947,310 million dollars of mortgage debt was outstanding in the USA. Median monthly repayments for mortgages in the US are estimated at 878 dollars, with a median interest rate of 6 percent. Half of the mortgage payers in the country have outstanding principals of more than 106,909 dollars.
The median term of primary mortgages in the USA is 30 years. About half of the mortgage payers in the US obtained their primary mortgage after 2004 and the median number of years remaining on mortgages in the US is 23.
The median purchase or construction cost for owner occupied homes in the US was 107,500 dollars, with the median value of these types of properties currently being 170,000 dollars. The median ration of property values to the current income of the homeowner is 2.8. This means that the average homeowner owns a property that is worth 2.8 times as much as their current annual income. Half of the homeowners in the US have properties that are worth more than 2.8 times their yearly income. However, half of the property owners who are repaying mortgages on their homes still owe more than 63 percent of the property's current value.
Mortgages are most commonly associated with the purchase of new property, but it is also possible to refinance an existing mortgage, or to take out a second mortgage in order to release the equity from your home. These other options can enable homeowners to fid the best way to manage their personal finances. Refinancing a mortgage can be a way of obtaining a lower rate of interest, for example, which can reduce the amount that needs to be repaid and slow the speed at which the debt is growing. Releasing equity from a property can also be important for your personal finances since it can make it possible to conduct home improvements, to make retirement plans or to start up a new business.
About 22.6 percent of those homeowners in the USA who have mortgages have a second mortgage or a home equity loan, and 0.4 percent of homeowners with mortgages actually have both, which means that as well as having a home equity loan, they are currently repaying two mortgages.
The usdta.org website provides information on other aspects of personal finance in the USA, which you may wish to explore in order to learn more about the other types of debts that Americans are repaying, in addition to their mortgages.