For homeowners, a home is an investment, and most people will use a mortgage to finance that investment.
If you have a mortgage, your home equity increases as you pay the former off, and as your home’s value increases. This can be advantageous if you plan on staying in your house and want to utilize a home equity loan to make improvements.
LendEDU sought to reveal which U.S. cities give homeowners with mortgages the best return on investment. To do this, we analyzed both home value and expense (monthly mortgage & utilities costs) data for over 25,000 American cities.
Each city was ranked according to LendEDU’s “Home Value-Investment Indicator (HVII),” and a high HVII meant a better ranking. HVII is an original scoring method created specifically for homeowners with a mortgage and is meant to replicate return on investment.
To calculate HVII, we divided a city’s median home value by the same city’s median monthly home cost.
The places recognized below give homeowners the most financial leverage due to their high home values relative to their low homeownership costs and would be great landing spots for any future homeowner.
Cities That Give Homeowners With a Mortgage the Best Return on Investment
To see how a city ranked within only its state, either sort the table on the “State” column or type your desired state into the search bar.
To be considered for this ranking, a city had to have a minimum of 7,000 total households with a mortgage.
The data found below derives from a dataset from GreatData that was licensed by LendEDU. GreatData compiles the most up-to-date data and estimates from the U.S. Census Bureau, in addition to calculating its own projections based on historical trends, to provide accurate and current household data for nearly 30,000 U.S. cities.
Tips for Homebuying With a Mortgage
The home buying process can be overwhelming, especially if you are using a mortgage to finance the purchase. Here are a few general mortgage tips you should consider when in the hunt for a house.
Types of Mortgage Loans
There are many different types of mortgages that you can choose from depending on your eligibility. The majority of homebuyers will end up acquiring a conventional mortgage and could check out this guide to see some of the best mortgage lenders.
Then there are government-backed mortgages like VA and FHA loans, jumbo mortgages for extra-large loans, and online mortgages. There are even mortgages specifically for first-time homebuyers.
Additionally, you must choose between a fixe-rate mortgage loan or a variable-rate mortgage. There are pros and cons to each and it really depends on your situation as a prospective homebuyer.
What Impacts Your Mortgage Rate?
Mortgage interest rates will vary depending on the Prime Rate, which is set by the Federal Reserve, but there are also a number of other individual factors that will impact what type of rate you receive.
For example, your credit score, down payment, loan term, property’s use, and decision to buy mortgage points will all alter your mortgage rate so that it is specific to your financial situation.
The most popular mortgage loan type is the 30-year mortgage. You can check out this guide to familiarize yourself with current 30-year mortgage rates.
Additional Costs to Consider
Your monthly mortgage payment isn’t the only thing to consider when thinking about the costs of owning a home.
Other costs to take into account are your property’s taxes, homeowner’s association fees, homeowner’s insurance, private mortgage insurance, program fees, and closing costs.
All data found in this report comes from GreatData. LendEDU licensed the dataset provided by GreatData, which derives mainly from the U.S. Census Bureau. For some data points, like “Median Monthly Home Cost (monthly mortgage & utilities costs),” “Median Home Value,” and the total number of houses with a mortgage, the data comes from the most recent U.S. Census Bureau update but GreatData also calculates and combines its own projections based on historical trends to provide the most up-to-date data.
For some cities listed in the report, GreatData provided multiple ZIP Codes within the city, with each ZIP Code having its own data. In these instances, we combined all ZIP Code data for that city to provide a single, weighted stat line for each city. For example, to find the weighted median monthly home cost for a city with multiple ZIP Codes, we weighted each ZIP Code’s median monthly home cost by that same ZIP Code’s total number of houses with a mortgage.
Similarly, to find the weighted median home value for a city with multiple ZIP Codes, we weighted each ZIP Code’s median home value by the total number of houses in that ZIP Code.
To be considered, a city, or all of its ZIP Codes, had to have a minimum of 7,000 households with a mortgage.
Once each eligible city had a single statistic line for all pertinent statistics, we divided its median home value by its median monthly home cost to develop the Home Value-Investment Indicator (HVII). To calculate HVII, we divided a city’s median home value by the same city’s median monthly home cost.
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