Insurance.com Shows States with Most and Least Underwater Homes

Rhea-AI Summary

Insurance.com has published a study highlighting the states with the highest and lowest percentages of upside-down mortgages, also known as underwater homes. As of 2020, notable findings indicate that Louisiana leads with 19.3% of homes underwater, followed by Illinois and Iowa. Conversely, Vermont has the lowest rate at 2.6%. The study stresses the importance of understanding the causes of these mortgages, such as housing market fluctuations and missed payments, emphasizing homeowner awareness. The report includes an interactive tool for users to check their local area.

Positive

• The report includes an interactive map for users to view local underwater home statistics.
• Homeowners are educated on managing their underwater mortgages effectively.

Negative

• 4.5 million Americans were reported to be underwater on their mortgages in 2018.
• High percentages of underwater homes in specific states may indicate regional economic issues.

FOSTER CITY, Calif., Dec. 15, 2020 /PRNewswire/ -- Insurance.com releases a new study detailing the states (and counties) where the largest percentage of upside-down mortgages exist.

The new research, Underwater or upside-down mortgages: What you need to know, highlights five states with the most and least underwater homes and discusses what homeowners should know about the phenomenon.

"In difficult times, many homeowners face mortgage challenges, possibly through no fault of their own," explains Michelle Megna, editorial director for Insurance. "Though the pandemic has caused many challenges, underwater mortgages existed before the pandemic; 4.5 million Americans were upside-down on their mortgages in 2018."

Five states with the highest percentage of underwater homes:

• Louisiana: 19.3%
• Illinois: 15.6%
• Iowa: 15.5%
• West Virginia: 14.3%
• Arkansas: 13.8%

Five states with the lowest percentage of underwater homes:

• Vermont: 2.6%
• Nevada: 3.3%
• Hawaii: 3.4%
• Washington: 3.6%
• District of Columbia: 3.8%

The report includes an interactive map enabling readers to view the counties with the highest percentages of seriously underwater homes within each state. Readers can also enter their state and county into a convenient tool to discover the percentage of underwater homes in their area of interest.

A variety of factors cause homeowners to owe more than their home is worth. Understanding them and how to avoid them is essential. Common causes of upside-down mortgages include:

• Housing market bubble burst: There is no guarantee that a home will appreciate. When a home purchase is made during a period of above average price growth (bubble), followed by a sharp drop (burst) in home prices, homeowners can be left with mortgages higher than their home's current value.
• Low/No down-payment loan: While great for aspiring homeowners with little money in the bank, these loans don't accelerate building equity.
• Missed payments: Financial consequences of missing payments can compound, ultimately increasing a mortgage's principal balance.
• Excessive refinancing or borrowing against the home: Money in hand now means a reduction in equity.
• Location: A decline in the local economy or neighborhood can cause a reduction in property value. Insurance combined 2020 data to create a tool to show locations with the most and least underwater homes.

"When underwater on a home, the best thing to do, when possible, is to stay put and pay down the mortgage," adds Megna.

It's also important to prevent damage and destruction while paying down the mortgage. Consider the impact on home insurance. While the insurance company only insures the house for the replacement value based on the current market, if a homeowner is upside-down, the insurance payout may not cover the full amount owed to the bank in the event of a major loss, such as fire or tornado.

For those unable to stay in the home, it's advised to speak to a lender about a short sale before facing bankruptcy or foreclosure.

Methodology
Throughout 2020, Insurance commissioned quarterly surveys of counties with at least 2,500 properties with mortgages derived from publicly recorded mortgage and deed of trust data. Seriously underwater homes are defined as having a loan to value ratio of 125% or higher, meaning the property owner owed at least 25% more than the estimated market value of the property.

Megna is available to elaborate on this research and answer questions about home insurance options for those with underwater mortgages.

About Insurance
Insurance is owned and operated by QuinStreet, Inc. (Nasdaq: QNST), a leader in providing performance marketplace technologies and services to the financial services and home services industries. QuinStreet is a pioneer in delivering online marketplace solutions to match searchers with brands in digital media. The company is committed to providing consumers with the information and tools they need to research, find and select the products and brands that meet their needs.  Insurance.com is a member of the company's expert research and publishing division.

Insurance is a trusted online resource dedicated to educating consumers on auto, home, health and life insurance, developing relationships directly with carriers to offer consumers comparison rates from multiple companies. Since 2001, Insurance.com's industry-first online tools, data-based reporting and experienced experts have helped consumers make informed insurance-related decisions, so they can choose the right insurance for their individual needs.

Twitter: @InsuranceDotCom
Facebook: https://www.facebook.com/InsuranceDotCom

Media Contact
Charlene Arsenault 
Media Outreach Specialist 
508-832-8918
carsenault@quinstreet.com 
LinkedIn

 

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SOURCE Insurance.com

FAQ

What did the Insurance.com study reveal about underwater mortgages?

The study identifies states with the highest and lowest percentages of underwater mortgages, noting Louisiana at 19.3%.

Which state has the lowest percentage of underwater homes according to the report?

Vermont has the lowest percentage of underwater homes at 2.6%.

How many Americans were upside-down on their mortgages in 2018?

In 2018, 4.5 million Americans were reported to be upside-down on their mortgages.

What are some causes of underwater mortgages highlighted in the study?

Common causes include housing market bubble bursts, low down-payments, missed payments, and location decline.

How can homeowners avoid upside-down mortgages?

Homeowners can avoid upside-down mortgages by understanding market conditions and managing their finances carefully.