More than two million families will buy their first home this year: Add Bill and Hillary Clinton to the list.

Of course, when your first house is a $1.7 million, 5-bedroom home, with two fireplaces, a swimming pool, and gym, you don’t exactly fit the average first-time home buyer profile.

But you do go through the same process of finding and financing a home. Like any other home buyers, the First Family had to find a neighborhood that worked for them, and a house that met their wants, needs, and budget.

As many home buyers do, they put down twenty percent, which in this case came to $350,000.

But even though it’s the First Family that’s buying this house in Chappaqua, New York, they’ll pay a lot of the same kinds of housing and mortgage costs borne by any homeowner.

Here’s a look at the kind of monthly housing expenses these new home buyers might be facing:

Home loans come in a variety of sizes: conventional loans ($240,100 or less); jumbo loans ($240,101 to approximately $600,000); super-jumbo loans ($600,000 to approximately $1 million) and anything over $1 million, which is typically a unique loan that the lender will keep in house.

(The federal government limits the amount of mortgage interest you can deduct to loans of $1 million or less. In addition, you may also deduct the interest paid on a home equity loan of up to $100,000.)

Each step up the ladder may cost you a little more in fees and a slightly higher interest rate. So if the going rate for a conventional 30-year fixed rate loan is 7.25 percent, you might pay 7.75 percent or more for a home loan over $1 million.

Typically, lenders require a 25 or 30 percent down payment for home loans over $1 million. Martha Frellsen, a loan officer with Chase Manhattan Mortgage, said it’s likely that the First Family’s mortgage package included a 70 percent first loan with a 10 percent home equity loan. That would leave a 20 percent down payment.

Frellsen said the numbers might work this way: If the Clintons took a 3-year ARM for the first mortgage of $1.2 million, their interest rate might run around 7.5 percent, for a monthly payment of $8,390.57. They could have then taken an interest-only home equity loan for $170,000, which would be pegged at the prime interest rate. This second loan would cost $1,168.75, although the entire balance would be due at the end of the loan term. Total monthly mortgage payments would cost approximately $9,560.

While the lender would probably have waived the real estate tax and insurance escrow, New York is a fairly expensive state in which to close a loan. Frellsen said it would not be unusual if the Clintons paid $1,000 in title charges, $700 for two appraisals, $20 for a credit report, a tax service fee of $75, and a discount point (a point is one percent of the loan amount) of $12,000 to complete the loan.

Typically, at closing you pay the remaining interest balance on your loan from the date of your closing through the end of the month. By closing so early in the month, the Clinton’s would have had to come up with almost a full month of interest on their loan up front. Their first mortgage payment should be due January 1, 2000.

In addition to monthly mortgage expenses of $9,560, the Clintons must now pay their real estate property taxes. The Associated Press reported that taxes on their new home run about $26,000 per year, or $2,166 per month. Homeowner’s insurance could run at least $3,000 per year, or $250 per month. The monthly total is now $11,476 per month.

It isn’t just the mortgage, insurance and taxes that Bill and Hillary will need to pay each month. There are other costs of homeownership, and these can really add up.

The house comes with some property, which will need to be maintained. It’s likely the First Family will need a lawn maintenance, snow removal, and pool cleaning service. In addition, the landscaping may need to be altered to accommodate Secret Service or press pool requirements

The house is old, so there will be some additional maintenance and upkeep costs, perhaps another $10,000 to $20,000 per year.

Even homes in mint condition often get a fresh coat of paint and new carpet. Decorating to White House standards could cost hundreds of thousands of dollars. In addition, the Clinton’s have never had to furnish their own home, and so may need to purchase furniture, and perhaps even a set of dishes, silverware and glasses.

Since the Clintons will only be living there part-time (at least until Bill is out of office), they’ll probably need to hire a staff to manage and clean the house in their absence.

Throw in utility, cable, and telephone bills, and the Clintons may find themselves quickly facing more than $20,000 worth of housing expenses each month, or $240,000 per year, more than the president’s current salary.

To comfortably afford a home this expensive, and the maintenance it requires, a conventional lender would require a home buyer to earn an average annual salary of approximately $650,000 to $750,000.

Published: Oct 25, 1999