Curious about the monthly expense for a $700,000 mortgage? Let’s explore and calculate what your monthly payment might look like.
Monthly Payment for a $700,000 Mortgage
At a 8.00% fixed interest rate, your monthly mortgage payment for a 30-year loan would be $5,133, and for a 15-year loan with 7% fixed interest rate, it cost around $6,400 per month.
Calculating the monthly payments you’ll be making on your mortgage will depend on various factors, including credit score, total debt, your financial information, and the interest rate you incur.
When you apply for a mortgage, a lender analyzes your eligibility and repayment schedule based on the criteria listed above. Lenders also calculate your interest based on the factors mentioned above, which they later add to the repayment amount and finalize your monthly payments.
For instance, you find a home priced at $875,000. Assuming that you put down 20% upfront ($175,000), you will still need to pay $700,000 more, which you decide to mortgage.
If your provider gives a $700,000 mortgage spanning 30-years fixed with 8% interest, you’ll have to pay $5,133 per month.
On the other hand, if you go for a 15-year mortgage with 7% interest, you’d be paying over $6,400 monthly.
While the monthly amount in the 15-year term is 25.68% higher, you’ll be done within half the time. The money you save can be used to make investments or for something else.
How Much Interest is Paid on a $700,000 Mortgage
Determining the interest incurred on your 700,000 mortgage will depend on the interest rate and loan terms.
Considering a scenario where a $700K mortgage at 7% spans over 30 years, you’ll incur over $1,147,880 in total interest. On the other hand, if you get a $700K mortgage with a 15-year term, you’ll incur approximately $452,180 over the loan duration.
Seeing as the 15-year term allows you to save half a million in interest; it ultimately proves that going with shorter loan terms is a better choice.
While your monthly payments might feel a little inconvenient, you won’t have to pay another fifteen years for your mortgage, making it a better-suited choice.
How to Get a $700,000 Mortgage
To determine your eligibility for a $700K mortgage, you must conform to the income and credit requirements set forth by the chosen lenders. Lenders generally determine your creditworthiness and consider your ability to make due on the monthly payments.
While the credit score requirement for getting $700K is 680, every provider will have different requirements. For instance, USDA-approved loans require a 640 credit score, whereas your FHA and VA loans might get accepted for a 580 credit score.
As a general rule, financial experts agree that your monthly income shouldn’t exceed more than 28% of your monthly income.
So, you must earn at least $200,000 annually to be able to comfortably afford monthly payments towards a 15-year $700K mortgage.
Where to Get a $700,000 Mortgage?
Although $700K is a huge number when it comes to mortgages, it still falls under the limits as prescribed by financial experts in the respective domain. Considering that you have a good credit score, getting $700K to buy your home shouldn’t be too difficult.
There are various providers for getting a $700K mortgage to buy your home. Ideally, you can contact the following providers for a mortgage:
- Credit Unions
- Online Lenders
When searching for a loan provider, it’s always best to explore your options. Every provider will offer a varying set of pros and cons. For instance, banks are a go-to option for many, considering that they offer lenient monthly payments. On the other hand, they also require their customers to put up with strict standards.
Similarly, Credit Unions also offer lenient terms but limit their services to customers having memberships. Credit Unions will also require you to be compliant with other commitments, which vary depending on by Credit Union.
Ultimately, it’s best to go with a provider that offers the most preferred terms. Go for a provider that offers favorable terms and sets monthly payments according to your flexibility.
While $700,000 might seem like a sizable amount for a mortgage, the impact of inflation over 30 years can significantly reduce its real value.
Your monthly rate will be $4,600 and to comfortably manage a mortgage of this magnitude, you should have an income of around $200,000 or more.
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Hi, I’m Ashley a freelance writer who’s passionate about personal finance. Ever since I was young, I’ve been fascinated by the power of money and how it can shape our lives. I’ve spent years learning everything I can about budgeting, saving, investing and retirement planning. So if you are looking for tips, advice, or just a little bit of inspiration to help you on your financial journey, you have come to the right place. I am always here to help, and I am excited to share my passion for personal finance with you.