A new report says it now takes 22 percent of median income to pay monthly housing costs, the highest level since 2010. We've got tips that can help you save in this challenging market.
No, it’s not your imagination: Homes really are getting more expensive.
Rising mortgage rates mean it now takes 22.2 percent of median income to purchase the median-price home, according to a report released this week by Black Knight Financial Services. That makes homes less affordable today than they have been at any time in the past half-dozen years.
Black Knight says the amount of cash necessary to buy a home — which includes the amount of money it takes to pay monthly principal and interest — jumped 10 percent in the last quarter of 2016 alone.
If you plan to look for a home in 2017, such soaring costs can feel discouraging. But if you take a few smart steps, you can still afford the home of your dreams.
For starters, with mortgage rates on the rise, you need to look for every advantage possible in both securing a low mortgage rate and making yourself more attractive to sellers.
Raising your credit score is among the most important things you can do. As we have explained in the past:
With a score of 745, you’re near the top of the 700-759 range. With effort, you might gain enough points to move into the highest category, 760-850, giving you access to lower interest rates.
Wondering how to raise your score? Check out “7 Fast Ways to Raise Your Credit Score.”
Another important step is to make sure you are preapproved for a home loan, which helps boost your odds of getting a good deal on the home you want. As we have noted:
By preapproving your loan, the bank provides a conditional commitment to lend you up to a specified amount. That can impress sellers and help you when you’re competing with other buyers for a home.
For more tips, check out “9 Golden Rules of Mortgage Shopping.”
Also, do not ignore other ways to lower costs beyond your monthly mortgage payment. As we have pointed out:
While you’re investigating rates, don’t forget the fees. Many mortgages come packed with fees of all kinds. Some — such as your county recording fee — are likely fixed, but others are negotiable.
Learn more in “The 6 Worst Mortgage Mistakes You Can Make.”
Finally, once your ducks are in a row, compare lenders to ensure you are getting the best rate. You can find the best mortgage rates in our Solutions Center.
Do you have other tips for getting a great deal on a home loan? Share them by commenting below or on our Facebook page.