Another Sound Bite for Rick Perry: Only 10% of Texans Are Now Underwater on Mortgages Compared to 22.5% Nationwide

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Fact: 40 percent of underwater borrowers hold home equity loans.

You know what’s keeping the Title Companies going don’t you—all those re-fi’s. Mortgage rates are at record lows, and the rule of thumb is that if you recoup the cost of refinancing in a year or two and plan to stay in the home past that time frame, refinance when rates are at a historic low and save money.

Of course, as Steve Brown points out, that formula doesn’t work if you are underwater on your mortgage. That is, you owe more than the home is worth. This is the scenario where you bring in a nice pile of cash to the refinancing table—few want or are able to do that.

Fortunately, that scenario is dwindling in Texas. According to the folks who track this at CoreLogic, three-fourths of U.S. homeowners who are underwater in their loans are stuck paying higher interest rates. Stuck because unless they take cash to refinance, it ain’t happening.

Steve says only 12 percent of Dallas homeowners, or 90,000 borrowers, are now underwater. I cannot tell you how good that is. We’ve come a long ways, baby: in 2009, almost 30 percent of Dallas mortgages were underwater.

The national numbers are far higher: 22.5 percent of home borrowers — 12 million people — are underwater on their mortgages. They bought or borrowed on their home when the prices were too high. 40 percent of underwater borrowers hold HELOCs, or home equity loans.

Experts say high negative equity is one of the main things hurting the housing recovery, holding back refinancing and sales.

How did we get our numbers whittled down? The homes went into foreclosure, were bought up by investors, and the underwater homeowners started a new financial chapter in their lives.

The top states for upside-down mortgages continue to be the bad-boy sand states: Nevada, where 60 percent of the houses are worth less than the debt on them; Arizona, 49 percent; and Florida, 45 percent. I don’t even want to think about Detroit.

Of course, those are also the states where investors can pull their greatest returns on rental properties.

In Texas, 10 percent of home loans are underwater and an additional 5.1 percent are near negative equity. Wonder when we’ll start hearing this nugget from the Perry campaign?

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Candy Evans

A real estate muckraker, Candy Evans is one of the nation’s leading real estate reporters. She is also the North Texas real estate editor for Forbes.com, CultureMap Dallas, Modern Luxury Dallas, & the Katy Trail Weekly. Candy has written for Joel Kotkin’s The New Geography, Inman Real Estate News, plus a host of national sites. Constantly breaking celebrity real estate news, she scooped former president George W. Bush's Dallas home in 2008. She is the founder and publisher of her signature CandysDirt.com, and SecondShelters.com, devoted to the vacation home market. Her verticals have won many awards, including Best Blog by the venerable National Association of Real Estate Editors, one of the nation’s oldest and most prestigious journalism associations. Candy holds an active Texas real estate license but does not sell. She is on the Board of Directors of Braemar Hotels & Resorts (BHR).

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  1. Richard Woodward says

    I think it is great Texans has few underwater mortgages but HELOC's have little to do with that number in Texas. Texas is the only state in the United States that will not allow home owners to borrower against their homes equity exceeding 80% of it's value. It was not until 1998 or 1999 that Texans could even do a HELOC. Perhaps this and the very slow and gradual home value increases we typically see in Texas garnered us such low underwater mortgage numbers.

  2. Richard Woodward says

    I think it is great Texans has few underwater mortgages but HELOC's have little to do with that number in Texas. Texas is the only state in the United States that will not allow home owners to borrower against their homes equity exceeding 80% of it's value. It was not until 1998 or 1999 that Texans could even do a HELOC. Perhaps this and the very slow and gradual home value increases we typically see in Texas garnered us such low underwater mortgage numbers.

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