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January, 2003 Newsletter

+++++++++++ January 2, 2003 +++++++++++++++++++

Introduction: New Home Sales Up, Existing Home Sales
on Record Setting Pace
Mortgage Rate Update: Rates End Year at Low Levels
This Month's Tip: Getting a Grip on Pricing and Values


Introduction: New Home Sales Up, Existing Home Sales
on Record Setting Pace

Happy New Year from the Home Buyer's Information

2002 ended on a number of positive notes, with mortgage rates
at new lows (see story below), new home sales at record levels
and existing home sales setting a record for the year. The U.S.
Government reported that new home sales rose 5.7 percent to
a new record in November, sales of newly built homes rising
to a seasonally adjusted annual rate of 1.069 million units
from an upwardly revised 1.011 million in October.

The market for existing single-family home sales slipped from
near-record levels in November but are on track for a record
year, according to the National Association of Realtors®.

Existing-home sales declined 3.5 percent to a seasonally
adjusted annual rate of 5.56 million units in November
from a pace of 5.76 million units in October, which was
the fourth-highest pace on record. Last month's sales
activity was 5.9 percent above the 5.25-million unit
level in November 2001.

David Lereah, NAR's chief economist, said some correction
was expected. "Our projections indicate existing-home
sales should be fluctuating at a pace in the range of
5.2 to 5.4 million for the coming year, so it's no
surprise to see sales coming off of the spike in October,"
he said. "For all of 2002 we'll easily surpass the record
of 5.3 million sales in 2001, with sales topping the
5.5-million level."


Mortgage Rate Update: Rates End Year at Low Levels

Mortgage rates ended 2002 at lows for the year (and
lower than several decades!) Mortgage Company Freddie
Mac reported that, for the period ending December 26,
average rates for 30-year fixed-rate mortgages stood
at 5.93%. 15-year fixed-rate mortgages
stood at an average of 5.32%. Neither of these rates
included points, paid to the lender up-front.

As a guide, one year ago, in the period ending
December 27, 2001 30-year fixed-rate mortgages
were averaging 7.16%. 15-year fixed-rate loans were
averaging 6.65%

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

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: Getting a Grip on Pricing and Values

Unlike most other commodities, resale homes do not have
sticker prices, retail values or Manufacturer's Suggested
Retail Prices. A seller can place any listing price they
want--from the fair to the absurd--on their home. It is
up to the buyer to determine what is reasonable. The
true value of a particular house is determined by where
the buyer and the seller meet--the actual sale price.

So what tools does the buyer have at their disposal
to determine what a fair price should be? The two most
common tools are a Comparative Market Analysis (CMA)
and an appraisal.


A Comparative Market Analysis (CMA) compares prices of
homes in the immediate neighborhood of the "subject
home"--the property for which the value is requested.
The CMA will compare the prices of homes that
have recently sold as well as those that are currently
on the market. Obviously, the most important component
of the CMA is the SOLD section, not the FOR SALE section,
since the sold prices are prices that indicate exactly
what a buyer is willing to pay (and what a seller is
willing to sell for) in the current market.

The most common source of a CMA is through the Agent
with whom you are working, if that Agent is representing
you as a Buyer's Agent. The Agent will have access
to the Multiple Listing Service statistics on all
current prices of homes sold and listed by Agents
in the area.

The Appraisal

An appraisal is, simply, an "opinion of value" by a
professional appraiser who visits the home and inspects
the size, condition, quality and function of the home.
The appraiser will generate a detailed report and will
generally use comparisons to the sale prices of similar
homes in the area to determine a value of the home that
is being appraised--known as the "subject property."
Comparisons can be made to square footage, appearance,
amenities and overall condition.

An individual home's value can be adjusted up or down
in relation to what properties are actually selling for
in the neighborhood. For example, a home with 4 bedrooms
will generally carry a higher value than a home--in the
same area and in roughly the same condition--with only
3 bedrooms. A home that needs exterior painting will
carry a lower value than a similar home that has been
recently painted.

Although an appraisal will be ordered by the lender
before a mortgage is approved, one can also be
requested (and paid for) by a buyer who wants an
estimate of value during contract negotiations. This
can be a powerful bargaining tool, for example, if
the buyer and seller are far apart in negotiations.
An appraisal, with its determination of value, works
to bring buyer and seller together.


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
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 start to the New Year and good luck in your home buying process!

The Team at the Home Buyer's Information Center

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