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June, 2004 Newsletter

+++++++++++ June 1, 2004 +++++++++++++++++++

CONTENTS: Introduction: Resales Up, New Home Sales Down
Mortgage Rate Update: Rates Continue to Climb
This Month's Tip: Credit Issues

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Introduction: Resales Up, New Home Sales Down

Welcome to the June edition of the Home Buyer's Newsletter,
brought to you by
The Home Buyer's Information Center
Sales of existing single-family homes rose for the third consecutive
month and were at the second-highest pace on record, according
to the National Association of Realtors®. Existing-home sales
increased 2.5 percent in April to a seasonally adjusted annual rate
of 6.64 million units from a level of 6.48 million units in March. Last
month's sales activity was 15.1 percent above the 5.77-million unit
pace in April 2003 and was just 0.6 percent shy of the all-time high
of 6.68 million posted in September of last year.

David Lereah, NAR's chief economist, said a strong month was expected.
"Given the favorable economic backdrop and strong sales momentum,
a big number was expected for April home sales and it's likely we'll
see another big month in May," he said. "Part of what we're seeing now is
'fence-jumping' from people wanting to buy a home before interest rates
move higher. Even with an additional rise in recent weeks, the good
news is that mortgage interest rates now appear to be leveling-out in
the 6.3 percent range."

Sales of new one-family houses in April 2004 were at a seasonally adjusted
annual rate of 1,093,000, according to estimates released jointly on May 26th
by the U.S. Census Bureau and the U.S. Department of Housing and Urban
Development. This is 11.8 percent (±6.9%) below the revised March rate of
1,239,000, but is 6.4 percent (±9.9%) above the revised April 2003 estimate
of 1,027,000. The median sales price of new houses sold in April 2004 was
$221,200; the average sales price was $270,400. The seasonally adjusted
estimate of new houses for sale at the end of April was 387,000. This represents
a supply of 4.3 months at the current sales rate.

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Mortgage Rate Update: Rates Continue to Climb

In Freddie Mac's Primary Mortgage Market Survey, the 30-year fixed-rate mortgage
(FRM) averaged 6.32 percent, with an average 0.6 point, for the week ending
May 27, 2004, up slightly from last week when it averaged 6.30 percent. Last
year at this time, the 30-year fixed-rate mortgage averaged 5.31 percent. The
average for the 15-year fixed-rate mortgage this week is 5.69 percent, with an
average 0.6 point, up a little from last week when it averaged 5.67 percent.
A year ago, the 15-year FRM averaged 4.73 percent.

"Although new home sales fell in April, existing home sales rose to the second
highest level on record as homebuyers rushed to close in the face of low, but
surely rising, mortgage rates," said Frank Nothaft, Freddie Mac vice president
and chief economist. "Current mortgage rates are now a full point above where
they were last year, and almost half a point higher than they were last month.
"Housing will, however, continue to be a pillar of strength for the economy in
the coming years. In fact, we expect demand for housing will require production
of about 2 million new housing units per year over the next decade, thus fueling
growth in the various industries that support housing."

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: Credit Issues

Not that long ago, those home buyers with less than stellar credit often had
rather large hurdles to overcome when trying to purchase a home. Although
credit issues still have a great deal of impact on how (and even IF) you can
buy a home, there are infinitely more options available today for those with
some blemishes on their credit history. From the onset, though, it is important
to understand that if there are credit problems, even if they are relatively minor,
you will need to be somewhat accomodating in the mortgage process. You may,
for example, need to make a bit larger downpayment. Or, the rate that is
available to you may be somewhat higher. Or, you may need to pay extra "points"
in order to secure the loan. With the potential for these extra costs in mind, then,
it makes sense to have as clean a credit record as possible when it comes time
to apply for a mortgage loan. First off, you'll need to get a clear picture of your
current credit report. If you have been denied credit recently, you are able to
secure a copy of your credit report from the bureau that supplied the report to
the lender who denied you credit. Or, you can access your credit report in
a number of other ways, some of which we have detailed here:
Sources of Credit Reports

No matter what the current state of your credit report is, it is imperative that you
do no damage--either new or further--to it. This means making certain that all
payments on loans, credit cards, etc. are paid on time--and on time means
at or before the due date, not a few days after. Lenders are anxious to get
late fees, and rarely cut you any slack these days. In addition, acquiring
new debt shortly before you apply for a mortgage is equally unwise--buying a
new car and financing it could be just enough added debt to torpedo your
mortgage application. Likewise, keep a lid on credit card spending. The higher
the balance and the higher the monthly payment, the more negative impact on
your mortgage application. If possible, instead of ADDING to credit and loan debt,
you should be working diligently to LOWER your balances.
This means paying as much beyond the minimum payment as possible (if you are
only making the minimum payments on credit cards, AND you do not add any new
debt, it can take as long as 20 to 30 years to pay the balance to $0, depending on
the credit card terms!) You should be especially diligent in fully paying down the
smaller balances, since the less open accounts with balances on your credit
report, the better your credit standing will be and the easier the application and
approval process. For more discussion on finances, see the articles on the site:
Your Finances

If your credit is badly damaged, do not despair. It may take a few years, but as
we mentioned above there are options for those with bad credit who are making
an effort to improve it. It is not very likely that you will be able to buy a home if
your credit continues to deteriorate, but if you are making a sincere effort to improve
your situation, there will most likely be avenues available to you. Banks and mortgage
companies, in a drive to book more loans, are more flexible than ever when it comes
to dealing with previously tarnished credit. We have a number of resouces on the
site that can assist you in the process of taking control of your credit. Looking to
save money in your daily expenditures and purchases?
See the pages devoted to that subject:
Saving on Your Purchases
Want to set up a budget? See the discussion and forms available:
Setting up a Budget

Next Month's Topic: Mortgages: More Than Just Rates

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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),
rop us a quick line here:
Home Buyers 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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