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January, 2011 Newsletter

+++++++++++ January 3, 2011 +++++++++++++++++++

CONTENTS:

Introduction: Sales Figures Improve
Mortgage Rate Update: Rates Make Big Jump
This Month's Tip: The Selling Price is Only the Beginning

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

Introduction: Sales Figures Improve

Happy New Year to all!

Existing-home sales got back on an upward path in November, resuming
a growth trend since bottoming in July, according to the National
Association of Realtors®.

Existing-home sales, which are completed transactions that include
single-family, townhomes, condominiums and co-ops, rose 5.6 percent
to a seasonally adjusted annual rate of 4.68 million in November from
4.43 million in October, but are 27.9 percent below the cyclical peak of
6.49 million in November 2009, which was the initial deadline for the
first-time buyer tax credit.

Lawrence Yun, NAR chief economist, is hopeful for 2011. “Continuing gains
in home sales are encouraging, and the positive impact of steady job creation
will more than trump some negative impact from a modest rise in mortgage
interest rates, which remain historically favorable,” he said.

In new home activity, Sales of new single-family houses in November 2010
were at a seasonally adjusted annual rate of 290,000, according to estimates
released jointly on December 23rd by the U.S. Census Bureau and the Department
of Housing and Urban Development.

This is 5.5 percent (±16.2%) above the revised October rate of 275,000,
but is 21.2 percent (±13.3%) below the November 2009 estimate of 368,000.
The median sales price of new houses sold in November 2010 was $213,000;
the average sales price was $268,700. The seasonally adjusted estimate of
new houses for sale at the end of November was 197,000. This represents
a supply of 8.2 months at the current sales rate.

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

Mortgage Rate Update: Rates Make Big Jump

As a number of analysts predicted with bond market activity in late November
and early December, mortgage rates followed suit with healthy increases during
the month of December.  According to mortgage company Freddie Mac, 30-year fixed-
rate mortgages jumped from an average of 4.46% at the beginning of the month
to an average of 4.86% with the final reporting period, an increase of 40 basis
points.  15-year fixed-rate mortgages fared similarly, raising to an average of
4.20% after beginning the month at an average of 3.81%.

Many reports at the end of the year gave indications that the overall economy
may have turned the corner.  Heading into 2011, those who have waited to make
a purchase decision based on prevailing mortgage rates would be advised to keep
a very close eye on the trend.  As was evidenced last month, rates can jump
nearly a half point in less than 30 days.
Mortgage Rate Update:
For current average mortgage rates, see the
rates page.

For more information on mortgages, visit the
Mortgage Section
++++++++++++++++++++++++++++++++++++++++++++++

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This Month's Tip: The Selling Price is Only the Beginning

No one likes surprises that cost money, especially when they are
in the midst of the excitement of buying a home. Many home buyers,
however, neglect to consider the extra costs that are involved when
they purchase a home. When it comes to real estate, the price
you think you are going to pay is not precisely how much you will
pay.

Besides the obvious cost of interest on a mortgage, there are
numerous other costs you will need to consider, even if you are paying
cash for a home. Yes, if you can write a check for it, you will own
that $250,000 home for a cash outlay of $250,000. Sort of. It won't
be insured, of course, and you'll probably need to pay taxes immediately,
as well as deed transfer fees and recording fees, and you will most
likely want to furnish the home, and pay someone to move you into
it, and....well, the list can be fairly extensive.

Some of these extra costs may seem obvious, others a little less
so. Some of the costs will be mandatory (such as government fees)
and others will be more discretionary. In any case, though, they
will need to be considered so it is a good idea to review and prepare
for the extra costs you will encounter as early as possible.

REQUIRED EXTRAS

+ If you are financing, interest charges, of course.
+ Homeowners insurance (and flood insurance, if required). One
year will be paid in full at closing (meaning a cash outlay at that
time) and 1/12th of the annual premium will be paid for monthly
(increasing the monthly outlay). See the discussion on insurance: Homeowners' Insurance
+ Property taxes. A portion of these taxes will be paid upfront
at closing, then 1/12th of the annual tax bill will be added to the
monthly payment.
+ Private Mortgage Insurance (PMI) or Mortgage Insurance
Premiums (MIP). Required on most conventional mortgages with
less than 80% down and all FHA mortgages, these insurances
protect the lender should you default. Can add $25-75 or more
per month to the payment. See a discussion on PMI here: PMI: Private Mortgage Insurance
+ Deed transfer taxes and fees. Will vary widely by municipality
and are paid at closing.
+ Other closing costs. Total closing costs often are 3-5% of the
selling price, depending on the type of mortgage secured and area
in which you live. Don't find yourself short-handed at settlement
time!
+ Moving costs. Even if you handle it yourself, you'll still need a
way to get from Point A to Point B. More on moving on the site: Moving Tips

DISCRETIONARY EXTRAS

The required extras will be fairly well documented, so if a buyer
pays close attention to the paperwork supplied by the Agent and
the lender, it is less likely that they will be totally blindsided by these
charges. Where many a buyer runs into trouble, though, is in the
area of discretionary items--those that are not 100% neccessary
yet are difficult to avoid. Examples:

+ Furniture for rooms that you do not have in your existing home.
For example, extra bedrooms, family rooms, dens, etc.
+ Window treatments. In a new home, this will really be a
neccessity. In an existing home, you may or may not have to
deal with draperies, blinds and the like. If you don't think the
cost of these are a big deal, try shopping for them, especially
if you will need custom sizes.
+ Tools. Buying your first home? Do you have a lawn mower,
rakes, a shovel, etc., etc.? You will most likely need them right
away.
+ Upgrades and updates. If the purchase is an existing home,
there will often be upgrading and updating that will need done,
none of which will probably be inexpensive. Plus, in an existing
home there are occasionally unexpected surprises that will need
to be addressed, so it makes sense to have some cash reserves
at hand.

SUMMING UP

To avoid money pressures when you least expect--or want--them,
spend some time with both your Agent and your mortgage lender
to have a clear picture of what you will need before, at and just
after settlement. In addition, make a list of the extras that you
may encounter after the move so that you can budget for their
expense. Looking for help on budgeting? You can find more
information on the site: Budgets


Next Month's Tip: Offers and Contracts
++++++++++++++++++++++++++++++++++++++++++++++

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
.

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.

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 all your endeavors!

The Team at the Home Buyer's Information Center

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