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One of the most important events that occurs in a person’s life is owning property. Back in 2013, that aspect of the American Dream for the middle class seemed more like a pipe dream. Legislative action lead to sweeping changes in how members of the middle class could successfully secure loans. And while becoming a homeowner today isn’t as out of reach for the middle class as it once once, there can be obstacles.

When President Barack Obama first took the presidential stage, not only was the housing market in jeopardy, many in the middle class were worried about their jobs, their overall career opportunities and their lack of disposable incomes. All of these elements combined to make it increasingly difficult to be approved for a mortgage. The problem for those who already had real estate loans was they had no idea if they were going to be able to continue paying them.

To ease the fear of homelessness of the barriers of securing a loan, measures were taken to make it easier for homeowners to refinance their loans while interest rates were at their lowest and to allow qualifying and responsible borrowers to successfully secure loans. When members of the middle class were approved for mortgages, they were secure, like those with 30-year fixed rates.

In addition to aiding hopeful homeowners, changes were made so that lending institutions had easier access to a variety of borrowers, ensuring complementary pairing for everyone involved. Additional measures implemented to make it easier for the middle class to secure loans included:

  • Making refinancing easier
  • Waiving closing costs for those who refinance into shorter loans
  • Increasing refinancing eligibility to borrowers without loans secured by the government

So how have those changes made a difference for today’s middle class and housing market?

There is some good news, and some bad.

Because home prices have increased faster than the incomes used to pay for them, home affordability is still a bleak picture. That being said, compared to previous years, home loan rates are still historically low, and home prices are still undervalued. One thing to bear in mind with this information is that the definition of middle class differs from region to region. Someone considered to be part of the middle class in New York City would likely be a member of the upper class in more rural areas. What this means is that becoming a homeowner for members of the middle class is more difficult in major metropolitan areas like Los Angeles and easier in Detroit and Cleveland.

Just like back in 2013, one of the main issues is overall income. The price of earning a degree is higher than ever, which means many are left without an undergraduate or graduate degree, which means they’re unable to qualify for higher paying jobs, which means they’re unable to be approved for a loan.

While not every part of the current problem can be resolved, increasing the number of residences being constructed will most certainly help. The more homes and commercial real estate properties there are to meet a demand, the lower prices will be, and the easier it will be for the middle class to secure loans for properties they can afford. Another issue is the fact that metros aren’t building more homes, meaning those that are available are priced well out of the range of the middle class.

No matter the year, having a degree, a well-paying job and looking in the right area at the right time can all increase a person’s chances of being approved for a home loan. Members of the middle class will do well to consider their options for homes in rural areas and those surrounding metropolitan areas where new and affordable homes are being constructed.


The Atlantic