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January, 2000 Newsletter

The Home Buyer's Information Center Newsletter

+++++++++++ January 12, 2000 +++++++++++++++++++

Mortgage Rate Update: Good News and Bad News
Site Update: Good News and Bad News, Part II
First Time Buyers
This Month's Tip: Smooth and Painless Closings

Welcome to the January edition of the Home Buyer's
Information Newsletter. Y2K has seemingly come and
gone (see note below) and there appears to be a
jump in housing activity early in the month when
compared to the final weeks of 1999. This may be
a response from buyers who have some concern about
the future trend of mortgage rates (see the mortgage
rate update below).


Mortgage Rate Update: Good News and Bad News

The good news involves the overall effect of Y2K
problems: Virtually none. The bad news is that
with little economic impact expected from Y2K, the
economy continues to gain steam, which means current--
and future--interest rate pressure. In the first week
of January, U.S. 30 year fixed rates were in the 8.1%
range (with 1 point), the highest in over 3 years. In
Canada, 3 year closed fixed rates were averaging
close to 8.3%
The future? A cloudy crystal ball. The Federal Reserve
Board meets the first week of February, and almost
everyone expects some sort of a rate hike. Although
this action will not have a direct effect on long-term
mortgages, it sends a signal that almost always has a
ripple effect on all rates. The jury is still out,
however, on many other indicators that directly influence
mortgage rates.
If you have been sitting on the fence waiting for a
rate softening, now may be the time to do your
preparation work so that you can lock-in quickly if
necessary. If rates DO soften, you will be ready,
especially if the situation is short-lived. If
they continue to rise, you can lock-in before too
much damage is done.

Additional mortgage information, hints and questions
can always be found at:


Site Update: Good News and Bad News, Part II

The good news is that on January 9 we moved the Home
Buyer's Information Center to new higher capacity and
faster servers. The bad news (although temporary) is
that even though the addresses of the site have not
changed, it takes the Internet a little time to update
its "road map"--meaning that some users may have
difficulty accessing the site for a short amount of
time. We felt that, although it may mean brief
outages, it will allow us to continue to add more
features and content to the site as well as making it
quicker to use.

First Time Buyers

If you are in the process of buying your first home,
don't forget the section devoted to topics of
specific interest to you, located at:

Sponsor: LendingTree

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This Month's Tip: Smooth and Painless Closings

It is the day you have been aiming for--you've
looked at dozens of houses, found one that you love,
compared mortgages, had an inspection done and made
moving plans. Now its time to make that house your
home--closing time. Whether known by the terms of
"escrow," "settlement" or "closing" your weeks or
months of effort come together in one short meeting
at a closing table.

Ask most Real Estate Agents about closings and the
vast majority will have stories--some horror stories,
some involving 11th hour heroics and some, unfortunately,
will be stories of closings that never occurred. To a
large degree, though, most of these "glitches" can be
avoided with a bit of planning--and monitoring of
progress--prior to the closing day. Due to the number
of people involved--sellers, lenders, title companies,
Attornies, Insurance Agents and others--it helps to have
an effective Real Estate Agent co-ordinating the process.
Still, the more you keep an eye on things on your own
the less chance there will be of problems erupting at
the last minute.

The most important components that you will need to
monitor, starting from the time of contract acceptance,
The Purchase Contract
Loan Documents
Title Documents
Homeowners Insurance

The Purchase Contract
Most contracts for purchase have a number of provisions
that can affect the closing. Possibly the two most
important--and subject to disputes that can delay or
stop a closing--are Date of Possession and Items to
Convey. It is important to clearly define in the contract
exactly when possession will take place. You may not
think it can happen, but stories are legend of sellers
who, after the buyer has closed on their home, have no
intention of vacating for days or weeks later. You've
made moving arrangements, transferred the children to a
new school and have utilities switched over to your name--
and nowhere to move! Remember to get the specifics
in writing in the contract: "Buyer to take possession
of property on Month/Date/Year." Leave no room for
Another potential closing snafu concerns items in the
home that are contractually intended to remain. It can
be a disheartening--and legally drawn out--situation when
you arrive in your new home to find the beautiful window
treatments and chandelier that you had agreed to in the
contract are missing from the house. Make certain that the
contract states PRECISELY what is included (even if you
have to designate make and model) and make sure that you
do a final walk-through prior to the closing date. More
information on final walk-throughs at:

Loan Documents
From the point of your loan application onward, your lender
will be requesting various documentation from you. These
may include letters of employment, pay stubs, declarations
from you concerning prior credit problems, copies of Income
Tax returns and more. You can save yourself a great deal
of aggravation if you quickly get this documentation to the
lender and, just as important, MAKE COPIES OF EVERYTHING
YOU SEND. These documents somehow often find a way to get
lost or go to the wrong person and will still be required,
even if the misplacement is not your fault. Have backups
ready if needed!

Title Documents
Title searches and Title Insurance are important--and
necessary for closing--because they protect your (and the
lender's) interest in the property. Depending on your
locality, these Title Documents may be requested by the
seller, yourself, or the closing Agent or Attorney. It is
always a good idea to have the closing Agent notify you
when the Title Insurance Policy is finalized so that you
will be aware of any encumbrances or potential defects
on the title PRIOR to the date of closing. Major title
problems will stop the closing (the lender won't allow
them) but minor problems (for example, a utility easement
right where you planned to place a new garage) can be

Homeowners Insurance
Casualty Insurance will be required both by your lender
and by common sense. In most cases, you will be responsible
for securing your own policy prior to the closing date, so
it makes sense to begin your comparison process early. Be
aware that although standard Homeowners Insurance policies
will cover many calamaties--fire, theft and vandalism--there
are situations where additional policies or riders, such as
flood insurance or earthquake insurance, may be required or
desirable since they are otherwise not covered. More
information on Homeowners Insurance at:

Additional Hints
* Make your arrangements for a Closing Agent as soon as
the contract has been approved by all parties. Closing times
are often scheduled many weeks in advance, and it gives you
time to co-ordinate work and moving schedules around the
closing time.
* Get a copy of your Settlement Statement (known as a HUD-1
form) from the Closing Agent as soon as possible--ideally,
3 or 4 days prior to closing. Not only will it give you
the amount of cash you will need (in certified funds) at
closing, it will also show you complete breakdowns of fees
and closing costs. Waiting until the day before closing
always turns into a mad scramble!

You will find more information on closings, an example of a
HUD-1 form and links to more information at:


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 to:
or access our feedback page at:

Have a great start to the New Year!

The Team at the Home Buyer's Information Center

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