January 14th, 2013
We so often hear about people being underwater on their mortgages, so who would have thought that more people actually have no mortgage debt at all?
According to Zillow’s post “More Homeowners are Mortgage-Free Than Underwater,” there are more Americans who own their homes outright – about 21 million – than those who are in negative equity, or owe more than their home is worth – about 14 million.
Similar to negative equity, the free-and-clear homeownership rate is largely driven by home values – but in a different way. 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.
Demographics like age and credit score also play a role in free-and-clear homeownership, as those who are older with higher credit scores are more likely to have no mortgage.
For more data on free-and-clear homeownership, including data at the state, metro and county levels broken down by homeowners’ age and credit rating, visit the full research brief.