More homeowners mortgage-free than underwater

Nearly 30% of U.S. homeowners own their home free and clear, compared with 20% who are underwater. West Virginia has the highest percentage of free-and-clear owners.

By Teresa at MSN Real Estate Jan 14, 2013 12:35PM

© Steven Puetzer/Getty ImagesMore homeowners own their home outright than are underwater on their mortgage, according to new Zillow data.


Looking at data from the credit-scoring agency TransUnion, the real-estate portal determined that 20.6 million homeowners, 29.3% of all homeowners, own their home free and clear. That compares with just over 14 million, about 20% of homeowners, who owe more on their home mortgage than their property is worth.


But the rate of free-and-clear ownership, like the rate of negative equity, isn’t uniform across the country. Not surprisingly, the percentage of homeowners without a mortgage is greater in areas where homes are cheaper.


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The state with the highest percentage of homeowners without a mortgage is West Virginia, at 45%, followed by Louisiana, at 39%, and Arkansas, at 38%. In contrast, the lowest rate of free-and-clear ownership is in the District of Columbia, at 21%, followed by Nevada and Maryland, both at 21%.

"Similar to negative equity, the free-and-clear homeownership rate is largely driven by home values – but in a different way," Cory Hopkins wrote at the Zillow blog. "Underwater borrowers are pulled to the surface as home values rise. But we found that in areas with proportionally lower overall home values, free-and-clear homeownership rates are likely to be higher. This makes sense – smaller loan amounts are easier to pay back more quickly."

The report also looked at mortgage-free homeowners by age. Not surprisingly, the age group with the greatest percentage of mortgage-free homeowners was people over 85, at 78%. That was followed by homeowners 74 to 84, at 63%, and homeowners 65 to 74, at 41%.


But the next-highest percentage was homeowners 20 to 24, 35% of whom owned their home free and clear. That is likely to reflect the fact that homeowners in that age group either are very wealthy or had their homes purchased by parents.

You can see all the data here, some of it down to the county level. The analysis also looked at mortgage-free ownership by credit score.

Tags: loans
Feb 23, 2013 10:49AM
My next home will be purchased with cash...and that will be within the next 3 years. Leaving the expensive west coast and it's liberal ways for the more sensible mid-west and it's less expensive life. Retirement is coming along and I intend to enjoy it.
Feb 23, 2013 10:02AM
Paid off should also mean an end to property taxes at retirement age too when were living off our meager retirement pay
Feb 23, 2013 9:55AM

When i move too denver in 2005 cheapest houses were highest crime areas were over $100,000 dollars and the crap house i bought in older neighborhood was $200,000 then recession and value dropped $90,000 to where that house should have been in the first place.

Realestate has expected unrealistic profits on every sale for so long houses shot way over real value and incomes of workers to repay the loans.

Feb 23, 2013 9:49AM
If I could get a house in an area that wasnt a sht hole for 30-60 thousand dollars my house would be paid off too
Feb 23, 2013 9:31AM
37% of homeowners 74 to 84 still have a mortgage! If their parents were the Great Generation, they are the Financially Irresponsible generation. They were also the people 'managing' our economy over the last few decades.
Feb 23, 2013 8:49AM
I rented for ten years, saving for a down payment on a house I could afford, and I took out a thirty yr mortgage for cash flow reasons.  I did not buy this house for an investment. I bought it to enjoy living in it. I moved around a lot for my job.  If u are lucky enuf to stay i n one house, u can pay off the mortgage. So just because someone is 65, doesn't mean they should be able to own their house, if they've moved around a lot or even a few times. Some young people do make good money, or their parents help them out, but more people in the USA rent than own their own homes. If u really want your own home, u may have to very frugal, but the payoff is that you've achieved yr goal. Being bitter or jealous just depletes yr energy, use that energy to reach yr goal and can buy yr own place.  And don't disparage folks who live in trailers, some trailers are quite nice, u may find that u can find an affordable one and that can be yr first home.
Feb 23, 2013 8:48AM

Learn to live within your means and without the latest and fanciest things that are on the market.

My home has been mortgage free for 24 years and I have no other debts.   I don't use credit cards, and half my income (after charitable donations) is invested. 

Just learn to do without every new thing that comes on the market, quit being part of the disposable society, and you can be debt free too.

Feb 23, 2013 8:31AM
I am now 70 and single.  I purchased my home with a 30 year mortgage three years ago.  Do not say the seniors who have nor paid off their mortgages are irresponsible and have not taught their children about money.
Feb 23, 2013 7:59AM
Mortgage free is the right terminology, free and clear is not. Homes are never free and clear, they always belong to the county. That does not include high insurance premiums. The last home that I bought I lived in for 6 years and during that time I had to fix the garage door opener, the water heater, both AC units twice plus servicing, the stove, the cook top, the icemaker,2 broken windows, 2 mailboxes and many other aggravating things. This did not include a new roof and various other home improvement projects. Owning a home? No, not worth it. Most of these ads are propaganda by the real estate people. There is absolutely nothing wrong with renting, there are many advantages. There is also no guarantee you'll make money buying a house even if you stay. Also, the tax break you get on house interest isn't that great either, but it certainly is unfair. When something is unfair it could be on the block.
Feb 23, 2013 7:52AM
Just because someone has a mortgage payment doesn't mean they are irresponsible, and vice versa- just because someone owns their home outright doesn't make them a master money genius either. If you live in an area where you can buy a house for $150K, obviously you are going to be able to pay it off faster than if the average cost of a home in another zip code is $350K, This article is stupid. If you are between the ages of 20-24 and you own your home outright, its because your parents bought it for you or you inherited the home/$$$ to buy one, otherwise what 20 year old kid has six figures laying around to buy a house, which has no bearing on the point of this article since thats not the norm.

As long as people buy homes that can afford and can carry a comfortable mortgage, I don't see what the issue is whether you own outright, have a loan, or are underwater. Unfortunately, not everyone who is underwater bought irresponsibly. If you bought at the height of the market and live in an area that saw huge home value hits, there isn't much you can do but ride it out. 
Feb 23, 2013 7:13AM

It doesn't take long to pay them off in Yuppie Land either if you have a good job. Remember that West Virginia, Arkansas and many of those other states you disparage tend to have lower than average incomes.


The main difference is that some people, regardless of their circumstances, have the sense and self discipline to live within their resources while others live fantasies.

Feb 23, 2013 6:55AM
Hmm. West Virginia, Louisiana, Arkansas - Red States. District of Columbia, Nevada, Maryland - Blue states. Coincidence?
Feb 23, 2013 6:36AM

Sniff sniff, smells like  a desperate placed story to get us all back into the home buying business,lose our shirts all over again,owe money again and be abused for trying to buy a home!

Well the market is rigged and these lies aren't fooling anyone!

Buying a house is tooooooo much BS, with tons of hidden fees and sur charges from nameless people who do nothing but read your paperwork!

Until the housing market downsizes the paperwork,stream lines its buying process and stops treating its customers like dumb animals no ones going to go through it.

In short you need to sell houses and there are plent of empty ones,but I see no reason to buy a it only cost me money and has little reward thanks to hyper inflated prices and the secret debt that it carries! Obama in office no home buying for me!

Feb 23, 2013 6:25AM
Good for Arkansas.
I still can not comprehend that the baboons would increase the national  debt 4 trillion dollars in 8 year much less the outrageous boondoggle of all boondoggles in allowing the debt to increase 8 trillion in 4 years.  Are they out of their minds. Is Nancy gone completely off her rocker or is she making killing of the benefits.    Democrats,  Want more taxes?  Bring our production jobs back home and put people back to work and you will have your taxes.  Tax import directly proportion the the unemployment rate in the US. Tax imports enough to pay for all unemployment and welfare claims. Make it  a pay as you go basices. No exceptions and no loop holes.  Just like the flat tax idea.  it will never happen because to much money is being made from the tax codes as written.  Why do you think they were written in the first place.  As Ross Parot said "Follow the money"

Feb 23, 2013 5:16AM

This is all well and "nice-nice", but this lefty network fails to mention that these homeowners STILL HAVE TO PAY PROPERTY TAXES!!!  Here in NJ, property taxes have (for years thanks to democratic rule) been crushing homeowners (even if they do own outwright) into the dirt with an average number of around 6,000.00 a year.  (By the way 6 grand is a LOW number, many pay as much as 12 to 14 grand a year).  Seniors are NOT exempt from these painful numbers, and many have to decide every month whether to pay for meds or pay the property tax so they do not get thrown out of their own home.  The democrats here do not see this, yet they promote that the Republicans do not care about seniors. 




Nice try MSN, but as always, you spin-masters just don't get it right...


Just saying...




A dis-satisfied customer and voter...




Feb 23, 2013 4:50AM

Both posts are prophetically true.  My generation simply had to have it all and borrowing was supposed to be the cure for it.  Remember we were supposedly in our "prime" during the Reagan years when borrowing and deficit financing was the new, new thing....and no end in sight.  We are paying dearly for this right now...and the generations afterwards are too.  No wonder we should be thrown under the bus.  The day the boomers are put in their place, the better.


Feb 23, 2013 4:48AM
I guess that it doesn't take long to pay off a trailer in West Virginia and other southern states
Feb 23, 2013 4:08AM
More people would be able to afford to buy their house outright, and not have to carry a mortgage, if they could quench their appetite for the latest and flashiest car, smart phone, TV and all the other overpriced gadgets and toys. Americans are the biggest consumers and wasters on the planet.
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