Home Mortgages in the United States

Approximately 66% of the residential properties in the United States are owner occupied. They represent about US$7,000 billion in value. In fact, housing is the single biggest investment in the dream of a family; i.e. owning a home. Mortgage payment is the biggest monthly liability of a typical American household.

Typical homebuyer borrows up to 85 to 90% of the purchase price of a home. A typical mortgage has a 30-year term. Because of the mobility of the US employment market and the continued needs of American families to move to larger and more modern homes in more attractive suburbs and neighborhoods, many of these mortgages are closed way before the end of 30 years. California Home Financing Association 1996 statistics on the characteristics of homebuyers and sellers in California (Tables 1 and 2) indicate that the average number of years of owning a home is approximately 8 years. As the homeowner moves to another home, he/she closes the old mortgage, pays off the loan and applies for a new home mortgage. In addition, as interest rates have continued to decline in the past two years many homeowners have refinanced their homes more than once (sometimes once every 6 months to a year.)