The 5 Best States to Buy a Home -- If You're a Banker

homebuying mortgages lendingtree consumer credit loans best states
Timothy Jacobsen/AP
Looking for the states that provide the best value for homebuyers? The results may lie in a new report from online lender exchange LendingTree about which states are hot, and which are not, for bankers wanting to lend money to homebuyers.

In preparing its report, LendingTree crunched the numbers on average consumer credit scores, indebtedness and loan-to-value ratios for consumers seeking mortgage loans across the 50 states, the District of Columbia, and also "America" as a nationwide average -- so 52 entries in total.

The results may surprise you. (Click to view larger image.)


LendingTree, owned by (TREE), then converted these numbers into a weighted average score running from 0 to 100 -- and ranked the entries from 1 through 52. What you see above is a LendingTree infographic reflecting the results, highlighting the 10 states with the worst "borrower health" and the 10 states with the best.

After running this report, LendingTree came away with some surprising revelations. For example:
  • Consumers' average credit scores in America have increased by more than 10 points over the past year -- so credit quality is improving.
  • Average loan-to-value ratios (the amount of the mortgage loan sought, relative to the price of the house) have declined by 1.6 percent -- so consumers are better able to afford the loans they're seeking.
  • 41 individual states saw their average credit scores rise, and 43 saw their loan-to-value ratios decline.
LendingTree also came up with a list of the top five states in which to buy a home -- from a lender's perspective, of wanting to help homebuyers who are likely to eventually repay their loans. And the winners are...

5. California
The Atlantic magazine recently pointed out that California is home to seven of the 10 most expensive metropolitan housing markets in the country. It's also the third most expensive housing market, as a state, in the entire country (as of the end of 2012), with the average house costing upwards of $431,000.

Yet according to LendingTree, the high quality of California homebuyers makes this a great state in which to lend -- or borrow -- money to buy a home. The average California homebuyer boasts a credit score of 679, a loan-to-value ratio of 85.6 percent, and scores a 90.77 (out of 100) on LendingTree's weighted scale.

4. Massachusetts
Massachusetts, home to the second most expensive housing market in the land ($489,000 and up), is nonetheless No. 4 on LendingTree's list of healthy homebuyer-borrowers. Its homebuyers receive a respectable 91.76 score on the LendingTree Borrower Health Report.

Average credit scores here are a palindromic 676, just three points below those of California, while the average loan-to-value ratio matches California's 85.6 percent.

3. Hawaii
The Aloha State holds the honor of being the most expensive state in the Union in which to buy a home ($742,000), and also of hosting the most expensive municipal housing market as well -- Honolulu. Yet with a Borrower Health rating of 92.09, residents seem to have little trouble getting their mortgages approved here.

If the average loan-to-value ratio is a bit high at 87.7 percent, then the credit quality of the borrowers more than makes up for that. Credit scores average 677 points.

2. New Jersey
Despite the bad rap it gets on television (and in New York), New Jersey charges a steep price of admission to its housing market, where houses cost an average of $421,000. That makes the Garden State the fourth most expensive in the land. And yet, big incomes from commuters into the Big Apple help to defray that cost, and keep loan-to-value ratios down to a manageable 83.9 percent, while credit scores average a respectable 679 points.

Borrower health score: 93.67.

1. Washington D.C.
And finally -- drum roll, please -- we come to the No. 1 best place to get a loan to buy a house in these 50 states and one district: It's that district itself, Washington, D.C. Clearing runner-ups New Jersey and California by an even 10 points, credit scores average 689 in the District. And if the residents there bemoan "taxation without representation," well, at least they've got enough disposable income lying around to keep loan-to-value ratios down around 85.3 percent.

Put it all together, mix well, and out pops LendingTree's conclusion: With a 96.53 score for "borrower health," the nation's capital has the "healthiest" borrowers in the nation, and so should be the easiest place in the country for residents to get a new home mortgage.

Motley Fool contributor Rich Smith has no position in any stocks mentioned.

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Not New to the Market, new to the con games going on, the games have changed since I and the ex were licensed a few decades back.

August 27 2013 at 12:11 AM Report abuse rate up rate down Reply

Imagine that! The states with the most expensive real estate are the best places to loan money. Who could have foreseen that result?

August 26 2013 at 8:18 PM Report abuse rate up rate down Reply

Been three hours and no one has gotten on this Comment Board, so I will add another. Buying Short Sale or REO properties, the buyer has to take the risk as to paying for inspections, paying to turn on utilities, as to paying for appraisals, etc., which can easily cost the buyer upwards of $1,500.

This does not include the escrow which can run from $1,000 to $5,000 or more.

The seller and seller's bank holds all the cards, and can cancel at any time right up to a day or two from closing, and this leaves the buyer 'holding the bag' so to speak, he or she may in the course of days, weeks, or months get back his or her escrow, but will not recover the out-of-pocket money, and trust me I have tried more than once.

I have even had my RE agents write into the contracts that if the seller or seller's agent FAIL to Close, that he or they are responsible and must reimburse the buyer, me, only to have the paperwork REFUSED.

Their theory is that 'they are already giving me a break in price' and therefore, they should not have to cover my expenses, which is ok, but now allows them to NOT Close and the buyer to lose, which gets mighty expensive after one or two deals go sour.

We definitely need a LAW change that protects the buyer from inept sellers, the Banks, in these cases.

August 26 2013 at 7:47 PM Report abuse +1 rate up rate down Reply
1 reply to mac2jr's comment

Do you want some cheese to go with that whine? TV shows make it seem that buying, remodeling, repairing, and flipping houses is easy, but it\'s a risky business. Sometimes you can make a killing, but you can also lose your shirt. It\'s not a business for the faint of heart.

August 26 2013 at 8:39 PM Report abuse -2 rate up rate down Reply

Who is Responsible?
This author recently went through an interesting development; he tried to purchase a Freddy Mac foreclosure house, and went to contract on it. Unfortunately, the Mortgage Lender required an appraisal of the property, and the appraiser required that the utilities be turned on, which on the surface does not seem to be unreasonable.

Due to the property being vacant for a long period and winterized, I offered up $500 to have a plumber go in and turn on the water, make sure there were no leaks or other water related problems, the Seller's agent, a local Real Estate, refused the offer. Additionally, the local authorities were getting complaints from the neighbors about trash and tall grass, the Seller's Real Estate was informed and ordered to clean up the mess.

So, here is what happened, the Seller's Real Estate paid someone to do the grass and cleanup, the job done was totally sub-prime and the place looked worse than if not done. The water was turned on without checking for leaks and some 4,000 or more gallons of water poured into the ceiling area from the broken Swamp Cooler line, and this water flooded down to the carpet through dozens of interior and exterior walls.

Now normally, water will not cause a problem, but if left to stand for a period will develop mildew and mold. The Seller's Real Estate was informed of this and asked by me to immediately dry up the building, they refused, and three weeks later the building' interior was black with mold. The Seller's Real Estate was then asked to get a Certified Company in to clean up the mess, they got a $8,000 bid and turned it down for a local handyman type that not only did not do the job properly, but caused nearly $20,000 in additional damage for his $650 job. The buyer, myself, refused to complete Closing and lost over $700 in out-of-pocket expenses incurred during this 'adventure' in stupidity.

So, the question is, who should have been responsible, Freddy Mac, or the Freddy Mac's entrusted Real Estate Representatives? I can see that if a owner still resides in a home for sale that the owner is responsible for any damages during the Contract to Closing period, but if the home is vacated and the Real Estate has the exclusive right to list, offer, and sell the property, should not the Real Estate also be responsible for that property under its control? And should a buyer who put money out of pocket have to lose that money if the deal goes south due to the Seller's agents NOT DOING THEIR JOB and expending due diligence to protect the rights and finances of all parties?

Last seen the house had a 'Do Not Enter, Biohazard' signs on both the front door and window, and Freddy Mac's Real Estate Agent was trying to sell the house 'As is' for more than this buyer's contracted price, even with the nearly $20,000 in damage, they want their commission at all cost to all.

Do we need a new law or regulation to protect absentee Seller's assets?

August 26 2013 at 4:13 PM Report abuse +1 rate up rate down Reply
1 reply to mac2jr's comment

New to this game huh? Common in my area is a racket where in the course of prepping the property to go back on the market, the bank hires a \'clean-up\' company to cut the grass and remove anything left by the previous owner - including the furnace, water heater, stove, garbage disposal, and air conditioning compressor.The bank, of course, feigns ignorance, although I found out through contacts that many of these \'Clean-up\' companies are run by low-rent relatives of Freddie Mac employees or whatever bank holds the mortgage.

August 26 2013 at 8:32 PM Report abuse +1 rate up rate down Reply

Go to a website like and type in Tucson, or Las Vegas, or Phoenix and the map will light up with 'homes for sale'. Pick any that are 'for sale' in the under $70,000 range and try to buy it, you will find the words 'Pending', 'Contingent', Cash only', 'Bank Owned' etc., which means that the property has BEEN SOLD, it is no longer on the market, unless you want to outbid the buyer by tens of thousands of dollars.

Who are the 'buyers' of these properties; according to BBC (British Broadcasting Company) and their reporters, the British, the Australians, and the Canadians are buying up American Southwest properties as fast as each hits the marketplace via MLS (Multiple Listing System) and one has to wonder if some of these 'investors' are not paying Real Estate firms for 'advanced' info.

Thus, although the banks are getting rid of properties, and Real Estate Salespeople and Brokers are making money, Americans are getting screwed coming and going; first by not being able to purchase affordable homes, second by paying higher prices for homes when the market improves and these foreigners 'dump' their purchases on the public for tens of thousands of profits, and third for having to pay high rents when low cost housing should be available.

One has to ask, where are the authorities, and why are we allowing this rape of America?

Where are the American Mortgage Bankers, the American Real Estate Brokers, and the American Civil Liberty people and why are they not doing something to stop this?

Where are the Congress people of Arizona, California, Florida, New Mexico, Nevada, and the remainder of the USA that are allowing this to happen?

What is needed?

We need a law that states that any bank owned property that has been foreclosed upon or repossessed must be offered to 'Owner Occupied' buyers for a period of one month before each can be offered to non-resident investors.

We need a law that states that any home listed on MLS must be 'Active' and all that are not 100% Active must be removed from the MLS inventory showings. People are spending hours to weeks looking for and at thousand of homes that are 'for sale' only to find that 'none' are available, this is not helping the industry and is not helping move homes that really are for sale..

August 26 2013 at 4:12 PM Report abuse +1 rate up rate down Reply
1 reply to mac2jr's comment

In real estate, the old saying that \"cash is King\" has never been more true. If you think that you are being beaten to a sale by deep-pocketed investors who have inside information, remember that they certainly are using local agents who are being paid to be aggressive. You snooze, you lose.

As for what the \"authorities\" are doing: they are thanking their lucky stars that these foreign buyers are helping to stabilize the housing market.

August 26 2013 at 8:55 PM Report abuse rate up rate down Reply

Real Estate in the Southwest
Something has been silently happening to America and its property ownership and that something is not in America's long term best interest.. There are people making billions in short-term profits, some are Americans taking advantage of the situation and of their fellow neighbors, but too many are foreigners that are stripping the USA of valuable Real Estate.

Here is what is happening; people who got 'nutty' during 2002-2005 period and went on a bidding war for homes that they 'thought' they could 'flip' got into trouble when the prices of the homes outstripped the amounts that other 'investors' and people would or could pay. This resulted in millions of homes across the USA going 'underwater' and their owner's walking away from their contracts and commitments, thus putting stress on the mortgage banking and Real Estate systems.

The banks are now holding loans that they are not collecting on, and therefore are 'dumping' homes onto the market in an attempt to recover something. Here is the rub...

We have millions of low income people that are currently paying rents that range from a few hundred dollars to over a thousand dollars per month, and these high rents are keeping these people from saving the thousands of dollars needed for a down payment and closing cost on a home that can cost much lower than he or she is paying in rent.. At the same time there is a glut of low priced homes, in the $70,000 or less range that have total monthly cost of less than $500 for mortgage, insurance, and taxes.

So why are these people not buying these homes and enjoying a better life with less cost and more money to spend on educations, clothing, automobiles, food, furniture, babies, etc.; simple even if he or she somehow gets the dollars for the down payment, he or she is NOT being allowed to purchase because there are NO homes to purchase..

August 26 2013 at 4:12 PM Report abuse +1 rate up rate down Reply