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Mortgage Real Estate

The Best and Worst States for Mortgage Debt

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If you’re thinking about purchasing a house, chances are the word “mortgage” is looming on your mind right now. Most home-buyers will utilize a mortgage in order to purchase their home, but exactly how much mortgage debt can you expect to accumulate? This will vary by multiple factors, including the purchase price of the house, the amount of your loan, and the size of your down payment. On average, however, certain states tend to have lower amounts of debt while others have more. Which states have the lowest debt, and which ones have the highest? Read on to find out more!

Lowest Mortgage Debt and House Prices

Lowest Mortgage Debt Lowest Median House Prices
West Virginia - $110,729
West Virginia - $108,236
Indiana - $120,354
Mississippi - $126,502
Mississippi - $121,608
Arkansas - $128,101
Ohio - $122,765
Oklahoma - $128,934
Kentucky - $126,310
Alabama - $138,975
Arkansas - $128,842
Kentucky - $146,871
Iowa - $131,709
Ohio - $150,374
Michigan - $132,523
Kansas - $150,657
Oklahoma - $134,244
Iowa - $152,885
Maine - $136,963
Indiana - $155,640

These ten states had the lowest average mortgage debt in 2019! West Virginia was the lowest, with an average of only $110,729. The next-lowest state was Indiana, which jumped up a little under $10,000 for an average mortgage debt of $120,354. Maine was number ten, for an average amount of $136,963.

West Virginia also has the lowest median home prices of the 50 states plus DC. Many of the other states found on the lowest mortgage debt list are found here, but not all! Michigan, number 8 on the lowest mortgage debt list, has a median home price of $173,277, almost $20,000 more than Indiana. Alabama, which is number 5 for lowest median house prices, has an average mortgage debt of $140,659, just a little higher than Maine at number 10.

If you’re looking to purchase a house, buying in one of these states may mean spending way less. This four-bedroom, two-bathroom house in Charleston, WV was listed on Realtor.com for a mere $10,000! Of course, sometimes it’s best to be wary of these super-low-priced homes, as it could mean they have lots of renovation work that needs to be done.

Highest Mortgage Debt and House Prices

Highest Mortgage Debt Highest Median House Prices
District of Columbia - $418,555
Hawaii - $636,451
California - $363,537
District of Columbia - $626,911
Hawaii - $344,819
California - $554,886
Washington - $262,641
Massachusetts - $422,856
Colorado - $258,026
Washington - $409,228
Maryland - $252,583
Colorado - $397,820
Massachusetts - $252,207
Oregon - $361,970
New Jersey - $239,362
Utah - $348,376
New York - $236,093
New Jersey - $335,607
Connecticut - $225,386
New York - $321,934

What about on the other side of the spectrum? Washington D.C. tops this list of highest average mortgage debt with a total of $418,555! This is almost four times as much as the average mortgage debt in West Virginia! It’s followed by California (with an average of $363,537) and Hawaii (with an average of $344,819). Connecticut is the last on the list, with an average mortgage debt of $225,386, although it’s closely followed by Nevada ($225,095).

Again, it’s no surprise that many of the states with the highest median house prices also appear on the highest average mortgage list! DC, Hawaii, and California make up the top three for both lists, with Hawaii holding the title for highest median house price at $636,451 – nearly six times more expensive than the median price in West Virginia! New York, which comes in with a median house price of $321,934, is about half of the median price of Hawaii.

It’s no real mystery why these states have the highest house prices and the most mortgage debt – who wouldn’t want to live near a beautiful Hawaiian beach or near the country’s capital? However, there is hope even for those looking to purchase in these high-cost states! This fixer-upper in Pahoa, Hawaii only costs $49,900!

Most versus Least Expensive

How do houses in the most expensive and least expensive states compare? Take these two listings, for example. This 2-bedroom, 2-bathroom house in Pahoa, Hawaii is listed at $109,500. It’s 1,904 square feet and is on a 0.28-acre lot. The roof appears to be in need of repair, and it most likely is a fixer-upper.

By contrast, this 4-bedroom, 2-bathroom house in Charleston, West Virginia costs $94,500, is 2,065 square feet, and is on a 0.09-acre lot. However, from the photos, it has no noticeable issues, and it has two more bedrooms while being $15,000 less. In the end, whether or not you purchase a house and where you purchase depends on a multitude of factors, but keep in mind that you can get more for your money in certain states.

Is Debt Increasing or Decreasing?

Generally, is the average mortgage debt increasing or decreasing? From 2018 to 2019, all states experienced a rise in the average mortgage debt, with the exception of New Mexico and Connecticut. The following states saw the most dramatic increase:

State 2018 2019 Percent of Change
Louisiana $145,922 $151,763 4.0%
Texas $170,521 $176,736 3.6%
Colorado $250,003 $258,026 3.2%
Utah $207,090 $213,771 3.2%
Washington $254,833 $262,641 3.1%
Idaho $164,628 $169,603 3.0%
Massachusetts $244,838 $252,207 3.0%

New Mexico and Connecticut both decreased by less than 1%, so overall, the average mortgage debt in the US is increasing.

What Will We See for 2020?

The above data comes from 2019 – what will we see for 2020? Home prices have trended up over the year, as people look to move to less crowded areas and take advantage of low interest rates. The low interest rates have also generated an increase in purchase and refinance mortgage applications. The combined increase in prices, plus an influx of new mortgagors, means we should see an increase in the average mortgage debt for each state. However, many homeowners have taken the opportunity to refinance, which may allow them to pay off their mortgage debt faster. It certainly has been an interesting year in the mortgage world, but if you’re looking to purchase or refinance, now is the perfect time to take advantage of low interest rates!

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