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August, 2004 Newsletter

+++++++++++ August 1, 2004 +++++++++++++++++++

CONTENTS:
Introduction: Resales soar, new home sales dip
Mortgage Rate Update: Rates Take a Breather
This Month's Tip: Various Home Inspections
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Introduction: Welcome to the August edition of the
Home Buyer's Newsletter, brought to you by the
Home Buyer's Information Center.
The Home Buyer's Information Center

Sales of existing single-family homes set another record in June,
with an improving economy and favorable affordability conditions
helping to satisfy a strong market demand, according to the
National Association of Realtors®.

Existing-home sales rose 2.1 percent in June to a seasonally
adjusted annual rate* of 6.95 million units from an upwardly
revised level of 6.81 million units in May, which was the previous
record. Last month's sales activity was 17.4 percent above the
5.92-million unit pace in June 2003.

David Lereah, NAR's chief economist, said last month's
performance is close to the peak for the housing market.
"Although we've been expecting sales to ease, it's clear
the market has tremendous momentum," he said. "The
improving job market and higher consumer confidence
are feeding into a large demographic demand for housing.
It's unlikely that we'll top the pace in June, but home sales
remain very healthy and are likely to stay quite strong,
even with some easing expected in the second half of the
year."

On the new home side, sales of new one-family houses in
June 2004 were at a seasonally adjusted annual rate of
1,326,000, according to estimates released jointly on July
27th by the U.S. Census Bureau and the U.S. Department
of Housing and Urban Development. This is 0.8 percent
(±11.2%) below the revised May rate of 1,337,000, but is
11.1 percent (±11.6%) above the June 2003 estimate of
1,194,000.

The median sales price of new houses sold in June 2004 was
$209,900; the average sales price was $262,400. The
seasonally adjusted estimate of new houses for sale at the end
of June was 374,000. This represents a supply of 3.4 months
at the current sales rate.

If nothing else, home sales activity in the U.S. definitely has legs!
Even with an upward trend in mortgage interest rates, the market
has barely taken a breath throughout the first half of 2004. The
outlook for the second half? Look for continued strong sales,
although the days of record-breaking performance may be, at
least for the short-term, abating a bit.

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Mortgage Rate Update: Rates Take a Breather

Mortgage interest rates took a breather during the month of July
after two months of fairly steady increases. 30-year fixed-rate
mortgage rates averaged 6.08% at the end of July after beginning the
month averaging 6.21%. This was a bit higher than the low point for
July, however, when the average was 5.98% according to mortgage
company Freddie Mac. In the same time period, 15-year fixed-rate
mortgages opened the month 5.62% and ended the month at an
average of 5.49%. As for the trend, although the overall movement
during the month of July was down, there were increases in both the
15-year and 30-year averages in the final reporting period which
ended on July 29th, so those who have not yet locked in a mortgage
need to keep a close eye on rate direction.

For current average mortgage rates, see:
Mortgage Rates
For more information on mortgages, visit the Mortgage
Section at:
Mortgages

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++++++++++++++++++++++++++++++++++++++++++++++

This Month's Tip: Various Home Inspections

Most home buyers are aware of, and arrange for, a whole house
inspection prior to making a final commitment to purchase a
home. In addition, though, there are some other inspections that
a buyer may want--or need--to consider when purchasing a home.
We will discuss each of these inspections separately:

+ Whole house inspection
+ Engineering/structural inspection
+ Termite inspection
+ Radon inspection
+ Mold/mildew inspection

Whole house inspection

A whole house inspection is designed to reveal major defects
in a home (structural, electrical, plumbing, roofing, appliances and
the like). It is not designed to address cosmetic items (paint that
needs touched up, carpet that is worn, landscaping that needs
freshening, etc.).

A whole house inspection is done by either a professional home
inspector (home inspections is their only business) or by a general
contractor. You may get a more objective report from a professional
home inspector, since they have no stake in itmes that need repairs.
This could be an issue with a contractor that does inspections, since
it is possible that they may be looking for work.

The whole house inspection is done shortly after the contract is
approved by both buyer and seller (the inspection, though, must
be addressed in the contract). The inspection is almost always paid
for by the buyer, and cost will usually range from $300-500, depending
on the size and/or the age of the home. For more information on whole
house inspections, see the discussion on the site:
Home Inspections

Engineering/Structural inspection

If the whole house inspection discovers problems with the structure
of the home, it may become necessary to have an engineering
or structural inspection of the property. This type of inspection will
go into much more depth and detail when investigating the problem
(for example, a badly cracked foundation) to determine both the cause,
the remedy and the estimated cost of remediation of the problem.

This type of inspection would be done by a licensed building or
structural engineer, and may be paid for by the seller, the buyer or
a combination of both.

Termite inspection

Although usually referred to as a "termite inspection", this inspection
will check for most types of wood destroying insects and organisms
(such as mold). Wood destroying pests are a possible problem in
virtually all areas of North America and are potentially serious problems
in certain areas of the continent. Unlike other inspections, which are
generally optional, a termite inspection is often a required element of
the contract.

The termite inspection will be done by a professional pest inspector
or pest control company. Who pays for the inspection will depend on
what is customary in your area. In some areas the buyer is responsible
for the cost and in other areas it is the seller's responsibility. Repairs
due to damage would almost always be the responsibility of the seller
and would need to be done before settlement.

Radon inspections

Radon is an odorless, invisible gas that may be found in a home due
to the normal decay of uranium found in soils. Although some areas
of North America are more prone than others, radon is found throughout
the continent. The probelm with radon is that it has been determined to
be a cancer causing gas. The Surgeon General of the United States
has determine that radon is the second leading cause of lung cancer
in the U.S. today.

The good news is that radon detection inspections are relatively easy
and radon control, if it is found, is fairly straightforward and not
prohibitively expensive. The inspection generally consists of the
placement of a radon detector in the most prone area of the home
(the basement or first level) for 2 days to determine whether or not
high levels of radon are present in the home.

Testing costs are often the responsibility of the buyer. If high levels
are found, removal costs are generally paid for by the seller.

Summing Up

If you are buying a previously owned home, no matter what the age, don't
start short-changing yourself by failing to take advantage of the various
inspections that are available to you. Beyond the whole house inspection
(which should be done on EVERY purchase) consult your Agent to see
what additional inspections would be necessary or recommended
in the area in which you are purchasing.

Next Month's Topic: Buy Low, Sell High
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The Home Buying Checklist

Many of our visitors have said that one of the most valuable
aspects of the Home Buyer's Information Center is the
Buying Checklist, where they can make sure that all
the bases have been touched. You can find the checklist
here:
Home Buyer's Checklist

As always, if you have suggestions for improving the
site, or topics you would like to see addressed in
this newsletter (or, if you have used the Home Buyer's
Information Center to successfully purchase a home),
drop us a quick line here:
Home Buyer's Information Center Feedback

A special thanks to all those who have written to let us know
that they have found the Home Buyer's Information Center a
helpful resource in their buying process.
Have a great month and good luck in your home buying process!

The Team at the Home Buyer's Information Center

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