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December, 2002 Newsletter

+++++++++++ December 1, 2002 +++++++++++++++++++

CONTENTS:
Introduction: Outlook for 2003
Mortgage Rate Update: Rates Up Slightly
This Month's Tip: Buy or Rent?
++++++++++++++++++++++++++++++++++++++++++++
Introduction:
Season's Greetings from the Home Buyer's Information
Center!

So, as we come to the close of 2002, this is
a good time to try to get a feel for what the
outlook will be for the coming year? Housing
activity is expected to remain historically
strong through 2003, although below the record
projected for this year, according to the
National Association of Realtors®. The housing
and economic forecast was presented at a news
briefing by David Lereah, NAR's chief economist,
during the REALTORS® Conference & Expo.

Lereah expects the national median existing-home
price for 2002 to be $157,200, up 6.4 percent
from last year, and to rise at a more typical
rate of 4.2 percent in 2003. The median
new-home price is seen at $183,600 for all of
this year, an increase of 4.8 percent from 2001;
a 4.8 percent rise is projected in 2003.

Lereah said lower interest rates are sustaining
the housing market as well as the general economy.
"The accommodative policy by the Federal Reserve
has lowered the cost of financing and doing
business, which will help the economy
to grow at a slow but rising rate," he said.
"Indirectly, that policy will help mortgage
interest rates to stay below 7 percent through
next year and contribute to favorable housing
affordability conditions." He expects the
30-year fixed mortgage interest rate to rise
slowly from record lows in the current quarter,
but to average only 6.5 percent in 2003.

+++++++++++++++++++++++++++++++++++++++++++++
Mortgage Rate Update: Rates Up Slightly

Mortgage rates rose slightly from their multi-decade
lows in the week ending November 22, according
to Mortgage Company Freddie Mac. 30-Year
fixed-rate mortgages averaged 6.03%, up slightly
from the 5.94% average seen the week before.
Rates for 15-year fixed-rate mortgages also rose,
averaging 5.44% from the previous week's average
of 5.32%.

"Mortgage rates moved upward a little following the
current volatility in the financial markets this week,"
said Freddie Mac Chief Economist Frank Nothaft.
"Economic reports are mixed and this will keep
mortgage rates bouncing up and down, but remaining
within the range of 5.95 percent to 6.25 percent,
throughout the rest of the year."

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

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Get a Copy of Your Credit Report

IPlace.com, the largest supplier of credit reports
on the Internet, has a number of options to quickly
get a copy of your report. You can get a single
report, your credit score, a full 3-bureau report or
even a free copy of your credit report, quickly and
easily. See more information at:
Sources of Credit Reports

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

This Month's Tip: Buy or Rent?

One of the first issues to be addressed by a prospective
home buyer is one of the most important: The decision
whether or not to actually make a home purchase--
whether buying or renting is the most advantageous
for their situation. Do not simply assume that home
ownership is a given. Yes, for most it is the wisest
decision, but for others it could be a potential
mistake.

When making the decision whether to buy or rent
one of the first considerations should involve
your time frame. If you are going to be in the
home for 2 years or less (due to job or other
considerations) buying a home is probably too big
a risk. Given historical rates of appreciation
and the necessity of expenses (closing costs on the
purchase and selling expenses on the sale) it is
highly unlikely that you will be able to break even
in less than 2 years. This means that you would
need to bring a check to the closing table when
you sell (to cover negative equity, closing costs
or both). This is a situation that many find
unacceptable (you are supposed to MAKE money
when you sell a home, not LOSE it!)
A much wiser move would be to rent for this short
period and purchase when you have a longer time
horizon.

Others who may be more comfortable with renting
are those who desire to have a firmer grip on
what their annual housing costs will be. As a
renter, you know precisely how much your housing
expense will be for at least the term of your
lease. You will not be surprised by unexpected
expenses (such as leaky water heaters or failing
roofs) nor by increases you don't expect (like
tax and insurance hikes).

Those who are looking for more flexibility will
also want to strongly consider renting--you are
only obligated to the end of your current lease,
unlike homeowners who must wait until they
receive an acceptable sale on their home before
moving on.

As to money matters, renting will be advantageous
in the short term (due to less money up front as
well as less cost in maintenance) but ownership
is almost always more advantageous, money-wise,
in the long term. As an owner, you will, on a
monthly basis, be building equity in your home,
something that will never happen if you rent. In
addition, tax laws are structured to give breaks
to those who own rather than rent. Although you
should consult a tax advisor before making a
final decision between buying and renting, these
tax breaks can often significantly lower the
actual cost of ownership.

In addition to the financial aspects of ownership,
there is the less tangible but very real "pride
of ownership" that comes with purchasing a home.
Although many people are completely comfortable
renting their home, they will never have that
pride and joy that only ownership can bring.

For a table listing many of the advantages and
disadvantages of both buying and renting, see
the section devoted to that subject:
Buy or Rent?


Looking for the Complete Picture on Homebuying?
Check Out The Home Buyer's 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:
Email Us
or access our feedback page at:
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 Holiday Season and good luck in your home buying process!

The Team at the Home Buyer's Information Center

buy a home or rent a home?

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