Home prices have been on the rise for much of the past year, which could lead many to believe that houses were not affordable
According to the National Association of Home Builders/Wells Fargo Opportunity Index that was not the case, as 74.9 percent of homes sold in the fourth quarter were affordable to families earning the median income of $65,000, up from 74.1 percent in the previous quarter.
“The most recent housing affordability data should be encouraging to many prospective home buyers, because it shows that homeownership remains within reach of median-income consumers even as most local markets appear to be on a recovery path,” said NAHB chairman Rick Judson.
The most affordable major housing market in the country was Ogden-Clearfied, Utah, where 93.7 percent of homes were affordable to families earning the median household income, while Ocean City, New Jersey was the least affordable with just 43.5 percent homes affordable to median income families.
With middle class families still able to afford buying a home, the market could see a pick up in activity in the near future. However, prospective buyers need to be sure to prepare themselves before committing to a purchase.
Tips for preparing to buy a home
When people are considering buying a home, there are some steps that need to be taken in preparation.
Pay down your debt – When you apply for a mortgage, lenders will look at any of your existing debt to determine if you are able to take on new loan. To help increase your chances of getting approved, it could be beneficial to pay down your credit card debt and any other debt you may have. This could help improve your credit score and show lenders you are able to take on a home loan.
Determine what you can afford – Another important aspect of preparing to buy a home is determining what you can afford. Overspending when buying a house can be disastrous, as it could lead to foreclosure and cause major damage to your credit score. That said, doing some analysis to determine how much home you can afford is essential.
Get preapproved – Already being approved for a mortgage when making offers on homes can be extremely beneficial. It shows sellers that you are serious about buying and can show you the amount of money you have available from a lender to spend.