5 Worst States to Get a Mortgage

By Selena Maranjian Markets Fool.com

It's a good time to buy a home. Accordingto the Mortgage Bankers Association, getting approved for a home loan is easier than it has been at any time in this past decade -- in fact, mortgages are almost twice as available as they were five years ago, and lenders have recently been approving 77% of loans, up from 71% in mid-2015. On top of that, interest rates are still extremely low, historically speaking.

Continue Reading Below

The lower the interest rate you get for your mortgage, the less you'll pay every month. Interest rates have actually been inching up, though, and seem likely to continue doing so over the coming years. PerMortgage News Daily, the national average rate for a 30-year loan was recently 4.19%, up from 3.62% a year earlier. Some experts are suggestingthat mortgage rates could exceed 6% by 2020.

New Orleans, flooded. Image source: Pixabay.

Location, location, location

The interest rate you get plays a big part in your satisfaction with your mortgage -- but there are other real estate factors to consider, too. Below, for example, are five states deemedworst for homeowners by the folks at valuepenguin.com. They arrived at their results by assessing factors such as a housing market strength, costliness of home maintenance, local crime rates, and general risk of calamities.

Rank

State

Homeowner Score (out of 100)

1

Louisiana

21

2

Mississippi

29

3

Tennessee

30

4

New Mexico

35

5

Alabama

35

Continue Reading Below

Source: valuepenguin.com.

It's probably easy to guess why you might not do well as a homeowner in Louisiana. The state ranks high for crime and is also vulnerable to natural disasters such as flooding, as happened with Hurricane Katrina. Tennessee and New Mexico have been ranked in the top five in a listof the most dangerous states in America.

Tax tolls

Another key consideration as you mull becoming a homeowner in certain locations is the property tax hit you'll face. Here are the five states with the highest effective property tax rates, per WalletHub and data from the U.S. Census Bureau:

State

Effective Real State Tax Rate

Median Home Value

Estimated Tax on Median Home

New Jersey

2.29%

$319,900

$7,335

Illinois

2.25%

$175,700

$3,959

New Hampshire

2.10%

$237,400

$4,996

Wisconsin

1.97%

$165,900

$3,266

Texas

1.93%

$131,400

$2,537

Source:WalletHub and data from the U.S. Census Bureau.

Of course, be sure to consider other taxes in each region, as well. Texas and New Hampshire have little or no income tax, for instance, but they still need revenue, so their property taxes are relatively high. And as the table above makes clear, a home's value has a heck of a lot to do with the total tax bill. New York, Massachusetts, and Rhode Island, for example, have property tax rates considerably lower than the ones above, but above-average median home values leave their residents with significant tax bills.

Image source: Getty Images.

Make informed choices

Fortunately, right now, and probably for the next year or two, interest rates will remain on the low side, historically speaking, allowing you to buy more home than you otherwise could. Even if you're in a state with relatively high interest rates, a little shopping around can yield better deals. And even the worst rates these days are still excellent, compared to many previous years.

It's smart to figure out just how much home you can afford -- especially because your tax bill will be based on the home's value. It can be tempting to go big, but doing so can leave you with little margin of safety, in case you or a spouse loses a job or your household faces some major unexpected expenses. Also, once you decide that you're ready to make an offer as soon as you see a home you want, it's helpful to get pre-approved for a mortgage. That can make you a more competitive buyer.

So go ahead and take advantage of low interest rates for mortgages -- which currently exist in all 50 states -- but also consider other aspects of homes you consider, such as their location and their tax rates. Make some smart moves now and you may be able to spend thousands of dollars less.

The $16,122 Social Security bonus most retirees completely overlook
If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets" could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $16,122 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after.Simply click here to discover how to learn more about these strategies.

The Motley Fool has a disclosure policy.