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Million-Dollar Mortgages: A Growing Trend

Overview

With mortgage rates hovering around 7% and home prices remaining high, more borrowers are taking on mortgages exceeding $1 million. The number of cities where average mortgage balances surpass $1 million has increased significantly, from 26 cities in 2023 to 47 cities in June 2024. This trend persists despite home sales and new mortgages being below pandemic-era levels. According to the National Association of Realtors, 32% of home sales in early 2024 were all-cash transactions, a decade high, even as median existing home sale prices reached a record $426,900 in June 2024.

47 Million-Dollar-Mortgage Cities (and a Few $2 Million Cities)

While California cities dominated the list of hefty-sized mortgages in 2023, the trend has spread more broadly in 2024. New states with million-dollar-mortgage cities include Colorado, Connecticut, Massachusetts, and Texas. Notable new entries in 2024 are Wellesley Hills, Massachusetts; Old Greenwich, Connecticut; and Saratoga, New York. The Hamptons on Long Island, New York, also had four $1 million-plus-mortgage communities in 2024. However, the suburbs and exurbs of San Francisco and Los Angeles still account for the majority of communities with million-dollar mortgages.

Cities with Average Mortgage Balances Exceeding $1 Million

As of June 2024, three cities have average mortgage balances exceeding $2 million: Bal Harbour, Florida; Atherton, California; and Hidden Hills, California, according to Experian data.

Mortgage Balances Nationwide: The State of Play

No state has an average mortgage balance near $1 million. California comes closest with an average mortgage balance of $443,000 in June 2024. California also leads in the percentage of mortgages with balances of $1 million or more, at 7.4%. Washington, D.C., has an average balance of $506,600, with more than 1 in 10 mortgages reaching the million-dollar mark. While million-dollar mortgages aren’t the norm, they are becoming more common across the country.

High-Dollar Mortgages: Credit Still Plays a Role

Credit scores are crucial when applying for a mortgage, especially for the new $1 million mortgages in 2024. These properties may require non-conforming mortgages, typically in the form of jumbo loans, as the conforming mortgage limit is $766,550 in 2024, up from $726,000 in 2023. In some expensive areas, the limit can be as high as $1.15 million. Non-conforming loans require higher credit scores, lower debt-to-income ratios, and higher down payments because banks may have to keep these loans on their balance sheets, increasing their risk. Currently, average jumbo loan APRs are about a quarter-percentage point higher than conforming mortgage rates. Improving credit is essential for buyers hoping to secure a large mortgage at a favorable interest rate.

Contact O1ne Mortgage

For any mortgage service needs, call O1ne Mortgage at 213-732-3074. Our team is ready to assist you with expert advice and personalized service to help you navigate the mortgage market.

Methodology

The analysis results are based on an Experian-created statistically relevant aggregate sampling of our consumer credit database, which may include the use of the FICO® Score 8 version. Different sampling parameters may generate different findings compared to other similar analyses. Analyzed credit data did not contain personal identification information. Metro areas group counties and cities into specific geographic areas for population censuses and related statistical data. FICO® is a registered trademark of Fair Isaac Corporation in the U.S. and other countries.