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5 min read Mar 28, 2023

Average Mortgage Payment: Everything You Need to Know

Buying a home is a big investment, and for most people, taking out a mortgage is a necessary part of the process. One of the most important things to understand about a mortgage is the average payment.

This figure can give you a sense of what to expect when you take out a loan, as well as help you compare different mortgage options. In this post, we’ll explore what the average mortgage payment is, how it varies across the United States, and what factors contribute to the cost of a mortgage payment.

What Is The Average Mortgage Payment?

The average mortgage payment is the amount of money a homeowner pays each month to their lender.

The average mortgage cost can vary widely depending on several factors. This includes:

  • size of the mortgage loan,
  • the interest rate,
  • the length of the loan term, and
  • any additional costs or fees.

Understanding Median Vs. Average Mortgage Payment

The median mortgage payment is the payment that falls exactly in the middle of all mortgage payments. This means that half of all mortgage payments are higher than the median, and half are lower.

In contrast, the average mortgage payment is calculated by adding up all mortgage payments and dividing by the total number of payments. The average payment can be influenced by extremely high or low payments, which may skew the overall figure.

Average Monthly Mortgage Payment

According to the latest data from the US Census Bureau, the average monthly mortgage payment in the United States was $1,487 in 2022. This figure includes principal and interest payments, as well as property taxes and homeowner’s insurance.

However, it does not include private mortgage insurance, which is often required for borrowers who make a down payment of less than 20%.

Of course, the average monthly mortgage payment can vary widely depending on factors. These include the size of the loan, the interest rate, and the length of the loan.

For example, a 15-year fixed-rate mortgage will typically have a higher monthly payment than a 30-year fixed-rate mortgage with the same principal amount. In addition, mortgages with higher interest rates will also have higher monthly payments.

Average Monthly Mortgage Payment by State

The national average monthly mortgage payment is useful as a benchmark. However, it’s important to remember that mortgage costs vary depending on the location. For example, in states like Hawaii and California, the average monthly mortgage payment is significantly higher than the national average.

According to data from US Census Bureau, as of early 2021, the average monthly mortgage payment in Hawaii was $1,939, while in California, it was $1,939. In contrast, states like West Virginia and Arkansas have much lower average monthly mortgage payments, $1,071 and $1,219, respectively.

Costs Included in Payment

When calculating your monthly mortgage payment, it’s important to understand what costs are included. The most common components of a mortgage payment include:

  • Principal: This is the amount of money you borrow to purchase your home. Your monthly payment will include a portion of the principal, which reduces the amount you owe over time.
  • Interest: This is the amount the lender charges you for borrowing money. Your monthly payment will include a portion of the interest, which is calculated based on your interest rate and the amount you owe.
  • Property taxes: This is a tax assessed by your local government based on the value of your property. Your lender may require you to escrow your property taxes. This means they will collect the tax payment as part of your monthly mortgage payment and then pay it to the government on your behalf.
  • Homeowner’s insurance: This is insurance that protects your home and personal belongings against damage or loss. Your lender may require you to purchase homeowner’s insurance and escrow the payment as part of your monthly mortgage payment.
  • Private mortgage insurance (PMI): It is applicable when you make a down payment of less than 20% of the purchase price. PMI protects the lender in case you default on your loan, and is usually calculated as a percentage of the loan amount. PMI is an additional cost that is included in your monthly mortgage payment.

Bottom Line

As you can see, there are many factors that contribute to the cost of a mortgage payment. The average monthly payment can vary widely depending on location and loan terms. When shopping for a mortgage, it’s important to compare different options to find the best fit.

Use online mortgage calculators to estimate your monthly payment based on factors like your income, credit score, and the size of your down payment. You can also work with a mortgage lender to get pre-approved for a loan. This will give you a better sense of your budget and help you make a more competitive offer.

In conclusion, understanding the average mortgage payment is an important part of the home-buying process. By doing your research and comparing different options, you can find a mortgage. Whether you’re a first-time homebuyer or a seasoned homeowner, stay informed and up-to-date on the latest housing market trends.

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