Home prices continue to tumble

11.20.08
By Sarah Beldo

The price of a typical American home may be falling, but does that mean now is a good time to buy?

Experts do not have a clear answer - and it probably depends on your particular situation.

According to figures from the National Association of Realtors, the median price for a U.S. home fell by 9 percent in the third quarter.

Prices declined in 120 metropolitan areas, increased in 28 and stayed the same in four. The nationwide median now stands at $200,500.

But if reading that price makes you want to take out your checkbook and run to your local realtor, you may want to think again. According to NAR president Charles McMillan, the figure is being brought down by the large proportion of distressed home sales taking place.

"It's very challenging to understand proper valuation, given the differences between distressed sales and a larger share of traditional homes in sound condition," he explained.

And, making the home-buying situation even more difficult is the fact that lenders have been growing increasingly choosy about the criteria they use to approve borrowers for a home loan.

That means that your credit score should be high and your borrowing history should be nearly flawless to get the best deals on mortgage loan rates.

Consumer advocate John Ulzheimer told CNBC's On the Money that people who are planning to purchase a home should prepare early to make sure their score is in tip-top shape.

His advice during this period includes paying off all credit card debt and leaving the accounts dormant while the loan is being reviewed.

Also, prospective borrowers should not attempt to apply for a separate loan for a different purpose during this time, Ulzheimer added, explaining that adding future debt to your credit report can make lenders wary.

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