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Posted 04/22/2016

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Try To Guess The Mortgage Payment On J. Law’s $7 Million Mansion

Jennifer Lawrence's Home (source: REALTOR.com)

Speculating On Jennifer Lawrence's Home Costs

The Hunger Games. Silver Linings Playbook. Joy. X Men: Apocalypse. The barrage of movies has earned Jennifer Lawrence top-of-mind awareness with much of the American public.

She has also earned a ton of money.

But when the prolific 25-year-old actress is not busy shooting her next film, where does she call home?

More important, how much does “home” cost?

Here’s a look at how Lawrence might have financed her recent home purchase, and how much she would be paying for the loan at recent mortgage rates.

Click to see today's rates (Sep 23rd, 2017)

Celebrity Home Buyers Hide Facts About Their Purchase

Like most celebrities, Lawrence owns a home in Los Angeles. She bought the 5,500 square foot house sometime in 2014 for about $7 million from Jessica Simpson and her husband Eric Johnson.

The house is also a former home of Ellen Degeneres (like many homes in the L.A. area) -- Ellen has owned at least thirteen homes since 2005.

Lawrence's Los Angeles beauty home has five bedrooms and five bathrooms. The meticulously manicured outdoor space features ivy-covered walls, a courtyard, pool, and koi pond.

The home is actually quite modest compared to much more lavish homes owned by stars such as Eddie Murphy and Oprah, despite Lawrence’s net worth of $60 million.

How did Jennifer Lawrence pay for her fairy tale home?

We can only speculate because most high-profile real estate transactions, such as those of celebrities, are hidden from public records.

The stars often pay non-famous straw buyers to purchase homes, to keep their names off-record. Some also buy the property in the name of an LLC they made up, or a combination of both.

For example, Kanye West’s Hollywood home was purchased through KW International, LLC.

Wow. KW? No one will ever suspect it was you, Kanye.

Lawrence Is In The Money Despite Hollywood Gender Pay Gap

Jennifer Lawrence purchased her home in 2014, which means she likely used her earnings from 2013 to help close the sale. During 2013, Lawrence starred in the Hunger Games: Catching Fire and American Hustle.

The Hollywood Reporter divulged that Lawrence earned $10 million for Catching Fire, which includes salary, bonuses, and escalators.

She also earned $1.25 million for American Hustle, plus 7% of the movie’s gross revenue. This deal sparked Lawrence’s essay and ensuing controversy around the Hollywood gender pay gap. Lawrence and Amy Adams made far less than their male costars in the movie.

Getting A Jumbo Loan

I know what you’re thinking -- why would a glamorously rich celebrity need a mortgage to buy a home? Well, the reality is that these mortgages are not your typical home loan.

The maximum amount of money you can borrow with a conventional, FHA, or VA mortgage in Los Angeles County is $625,500. So, if a homeowner wants to borrow more than the limit, it's often relegated to jumbo loans -- loans which are in excess of the national mortgage loan limits.

Keep in mind that while someone may be able to afford to buy a home outright, they may not want to tie up all their dough with a single purchase.

A celebrity who has enough money to pay cash for a Beverly Hills mansion, for example, may want to save those monies from other expenses such as owning other homes in other cities or countries, paying for multiple cars, and buying designer clothes for red carpet affairs and the like.

For instance, Lawrence may want to stash cash within the cavernous abyss of District 13 in the unlikely event of a Capitol fire-bomb attack. (That was a joke.)

Whatever the reason, the rich and famous do take out home loans.

Click to see today's rates (Sep 23rd, 2017)

Even Cash-Rich Stars Get Mortgages

With Lawrence’s 2013 earnings of about $11 million, she would have had enough money to pay for the $7 million home in cash. But let’s suppose she didn’t want to spend all of her money in one place (a girl’s gotta eat, after all).

Based on her earnings, we can assume that Lawrence was able to make a 20% down payment. If this is true, her down payment would have been $1.4 million.

After the down payment is covered, $5.6 million dollars are still needed to purchase the property. With the Hunger Games being a successful, billion-dollar franchise, and with two more movies scheduled for release as of the date of Lawrence's purchase, lenders would likely have considered Lawrence to be a low-risk borrower.

She would have qualified for a low interest rate on her loan.

The average mortgage rate of 2014 was 4.17%. We will use this number to calculate what Lawrence’s monthly payment might have been.

Click to see today's rates (Sep 23rd, 2017)

Could You Afford This Payment?

At an interest rate of 4.17%, the monthly payment on a 15-year loan would be $41,901. The monthly payment on a 30-year loan would be $27,287.

Imagine paying this much for your house each month!

Lawrence is now the highest-paid actress in Hollywood, earning $52 million in 2015. With this much money (not to mention earnings from 2014) is plausible that she could have used the money to pay off her mortgage already.

What Are Today’s Rates?

Whether or not the actress used a loan to purchase her home, it is still fun to speculate what her mortgage pay be like. What do you think? What other celebrities’ mortgages do you wonder about?

 

Get today's live mortgage rates now. Your social security number is not required to get started, and all quotes come with access to your live mortgage credit scores.

Click to see today's rates (Sep 23rd, 2017)

The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.

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2017 Conforming, FHA, & VA Loan Limits

Mortgage loan limits for every U.S. county, as published by Fannie Mae & Freddie Mac, the Federal Housing Administration (FHA), and the Department of Veterans Affairs (VA)