Where The HV's Most Overleveraged Mortgage Debtors Live

With demand for homes exceeding supply, prices are rising for homes in the Hudson Valley. Does that mean would-be buyers are feeling pressure to buy something they can't really afford?

Analyzing where homeowners have the most unsustainable mortgage debts, free credit-score website WalletHub released its 2018 Home Overleverage Report. WalletHub compared the median mortgage debt to the median income and median home value in more than 2,500 U.S. cities.

While almost all of the cities with the most overleveraged mortgage debtors are in California, three Hudson Valley communities made it into the top 100: Port Chester, Spring Valley and Monsey.

In order to determine the municipalities where people are most overleveraged on their homes, WalletHub first calculated the ratio between the median mortgage debt (based on TransUnion data from October 2017) and the median income in each of 2,530 U.S. cities. Next, they calculated the ratio between each city’s median mortgage debt and its median home value.

The community with the most overleveraged mortgage debtors is Willis, Texas, WalletHub found. Its median mortgage debt was $141,422 while its median house value was only $74,600. The median income was $33,933, creating a mortgage debt-to-income ratio of 417% and a debt-to-house value ratio of 190%.

Port Chester

• Median mortgage debt: $285,989.
• Median house value: $445,400.
• Median income: $37,676.
• Debt-to-income ratio: 759%
• Debt-to-house value ratio: 64%

• Median mortgage debt: $227,846
• Median house value: $273,700
• Median income: $36,065
• Debt-to-income ratio: 632%
• Debt-to-house value ratio: 83%

Monsey

• Median mortgage debt: $303,828
• Median house value: $562,700
• Median income: $39,410
• Debt-to-income ratio: 771%
• Debt-to-house value ratio: 54%

"Being overleveraged is a gamble in any circumstance," Richard J. Sobelsohn, an adjunct professor of law at Fordham University, told WalletHub. "Being overleveraged today with increasing values quite often is not overleveraged tomorrow. But that is a decision that real estate investors make."

Conventional wisdom says keep the mortgage, property taxes and homeowners insurance to 28 percent of your gross income, said Robert Stoll, founder of Honey Lake Advisors. "Many lenders will lend you more money...but buyers have to keep in mind that if they pay too much for a home they will have to sacrifice elsewhere."

See more about WalletHub's methodology here.

(Image via Shutterstock / docent)

SEE: Seller's Market For Hudson Valley Homes: Report