States With the Best Mortgage Health

Mortgages
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The U.S. continues to recover from the mortgage crisis that began eight years ago, but the pace of that recovery has been uneven across the nation.

While homeowners in some states, such as Iowa, have seen serious mortgage delinquency rates drop below 2%, residents in other places, such as New Jersey, are still struggling with a delinquency rate that tops 7%. The U.S. average rate is 3.8%, according to January 2015 data.

During the height of the mortgage crisis, the nation’s serious delinquency rate — which is defined as payments more than 90 days overdue and is an indicator of potential foreclosures — was 8.6%, more than double the current average.

To determine which states have homeowners who are in the best position to handle their mortgages, NerdWallet examined data on serious mortgage delinquencies, foreclosure inventories, credit scores and monthly homeowner costs as a percentage of income.

The map below includes data for all states. Click on a category, then hover over a state to see its data. Darker colors represent higher numbers.

Key takeaways

The Midwest rises above. Midwest states dominated our list, with the top six states where homeowners have healthy mortgage profiles.

The one-third rule holds true. You’ve likely heard that you shouldn’t spend more than about a third of your income on housing. Data appear to support that — the bottom five states on our list have among the highest percentage of residents who spend 35% or more of their annual income on housing.

Follow the money. Income growth — or lack of it — was a big indicator of mortgage health. Homeowners in Rhode Island, Nevada and Connecticut saw a high mortgage delinquency rate as residents also experienced major income contractions.

North Dakota is No.1. Residents in North Dakota, which is at the top of our list, saw their income grow 11.2% from 2009 to 2014, compared with a 2.8% decrease for the rest of the country. The state currently has the lowest mortgage delinquency rate.

Southeast scores low on credit. Residents in the Southeast struggled the most with credit, recording four of the five worst credit score averages by state. There was a 66-point variance between the most creditworthy state, Minnesota, and the least, Mississippi.

 

StateAverage credit scoreResidents who spend over 35% of their income on housingChange in median income 2009-2014Serious mortgage deliquency rateForeclosure inventoryMortgage health score
North Dakota69612.60%11.19%1.01%0.43%98.13
South Dakota69617.20%1.96%1.80%0.60%88.59
Nebraska69117.70%0.23%1.96%0.42%87.78
Iowa69316.20%0.72%2.58%0.90%84.52
Wyoming67018.70%-2.40%1.83%0.51%83.40
Minnesota70422.00%-0.41%2.18%0.53%83.19
Alaska67122.20%-3.68%1.39%0.33%82.10
Montana68625.80%-1.38%1.66%0.46%78.39
Colorado68125.40%-0.36%1.67%0.51%77.70
Kansas67518.00%-1.08%3.18%0.88%77.64
Utah67723.80%-0.42%2.15%0.51%77.22
Wisconsin69223.70%-5.17%2.47%0.71%77.13
Missouri67021.00%-3.67%3.00%0.62%75.50
West Virginia65818.10%-1.19%3.26%0.83%74.89
Virginia67524.20%-1.45%2.55%0.56%74.54
Idaho67625.60%-4.02%2.45%0.83%71.71
Michigan67225.00%-0.77%3.01%0.56%71.52
New Hampshire69628.60%-1.04%2.87%0.78%70.01
Texas65222.90%-0.99%3.03%0.70%69.93
Arizona66228.80%-7.46%2.02%0.48%69.61
Indiana66018.70%-1.93%4.07%1.31%68.49
Arkansas65219.80%-1.72%4.40%0.87%67.43
North Carolina65924.20%-3.96%3.42%0.82%67.32
Kentucky65820.60%-3.42%3.83%1.24%67.28
Tennessee65623.80%-4.22%3.86%0.68%66.56
Vermont69327.30%-5.46%3.23%1.37%66.08
Oklahoma65319.70%2.77%3.94%1.43%65.97
Ohio67221.80%-2.14%4.35%1.38%65.17
Alabama65122.70%-4.70%4.46%0.78%64.22
Washington68128.30%-2.23%3.23%1.20%64.12
Massachusetts69228.30%-2.77%4.05%1.31%61.91
Georgia64626.70%-6.63%3.94%0.78%60.59
Pennsylvania68423.50%-3.15%4.91%1.81%60.11
Louisiana64522.20%-5.54%4.72%1.24%60.09
California67037.90%-5.32%2.01%0.53%59.75
South Carolina65024.70%-3.97%3.98%1.39%59.74
Oregon67829.90%-5.04%3.59%1.58%58.03
Maine68625.80%-2.57%5.53%1.87%55.05
Mississippi63825.20%-2.45%5.56%1.03%53.53
Illinois67728.10%-4.10%5.00%1.83%53.18
New Mexico65225.90%-6.19%4.32%2.05%53.16
Delaware66626.00%-5.38%5.10%1.93%52.99
Washington, D.C.66226.00%8.87%4.35%2.46%51.92
Maryland66826.60%-3.80%5.67%1.99%50.07
Rhode Island68531.50%-8.62%5.49%1.60%49.92
Connecticut68729.30%-5.86%5.42%2.13%49.83
Hawaii69037.70%-2.19%4.45%2.74%40.26
Nevada64232.80%-13.10%5.27%2.19%39.12
New York68131.40%-2.96%7.21%4.00%28.16
Florida66036.30%-4.42%7.71%3.53%20.17
New Jersey68034.80%-5.19%8.94%5.19%10.07

 

Methodology

To calculate the mortgage health of all 50 states and Washington, D.C., we looked at several factors:

Average credit score. State data for May 2015 is from Experian. This was 10% of the score.

Serious mortgage delinquency. This is defined as a mortgage payment that is over 90 days past due. Information was provided by CoreLogic, a data and analytics company, in its January 2015 National Foreclosure Report. This is 30% of the score.

Foreclosure inventory. This is the percentage of homes with mortgages that have been in the process of foreclosure. Data were provided by CoreLogic; this is 30% of the score.

Monthly homeowner costs as a percentage of income. We looked at the percentage of homes with monthly homeowner costs that consumed over 35% of the household’s income. Monthly owner costs include mortgage payments, real estate taxes, insurance, utilities and condo fees. These data are from the U.S. Census Bureau’s 2013 American Community Survey. This is 30% of the score.


Image via iStock.