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June, 2010 Newsletter

+++++++++++ June 1, 2010 +++++++++++++++++++

CONTENTS:
Introduction: Sales Surge in April
Mortgage Rate Update: Interest Rates Continue to Ease
This Month's Tip: Mortgages: The Whole Picture
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Introduction: Sales Surge in April

As expected, sales of both existing and new homes rose strongly
in the month of April. In addition, increased sales meant a
decrease in supply, the most necessary component of any
housing recovery.

Existing-home sales rose, with buyers motivated by the tax credit,
improving consumer confidence and favorable affordability conditions,
according to the National Association of Realtors®.

Existing-home sales, which are completed transactions that include
single-family, townhomes, condominiums and co-ops, increased
7.6 percent to a seasonally adjusted annual rate of 5.77 million
units in April from an upwardly revised 5.36 million in March,
and are 22.8 percent higher than the 4.70 million-unit pace in
April 2009. Monthly sales rose 7.0 percent in March.

Lawrence Yun, NAR chief economist, said the gain was widely
anticipated. “The upswing in April existing-home sales was
expected because of the tax credit inducement, and no doubt
there will be some temporary fallback in the months immediately
after it expires, but other factors also are supporting the
market,” he said. “For people who were on the sidelines, there’s
been a return of buyer confidence with stabilizing home prices,
an improving economy and mortgage interest rates that remain
historically low.”

Sales of new one-family houses in April 2010 were at a seasonally
adjusted annual rate of 504,000, according to estimates released
jointly on May 26th by the U.S. Census Bureau and the Department
of Housing and Urban Development.This is 14.8 percent (±19.5%)
above the revised March rate of 439,000 and is 47.8 percent
(±26.0%) above the April 2009 estimate of 341,000.

The median sales price of new houses sold in April 2010 was
$198,400; the average sales price was $249,500. The
seasonally adjusted estimate of new houses for sale at
the end of April was 211,000. This represents a supply of 5.0
months at the current sales rate.

The real key will come in the next 90 days when the effect,
if any, of the expiration of the federal tax subsidies takes
hold. If buyers stay in the market, then some stabilization
should begin to take hold. If, however, the lack of incentives
slows activity, the future trend (and potential new incentives)
is much less clear.

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

Mortgage Rate Update: Interest Rates Continue to Ease

Mortgage interest rates continued to improve during the month
of May. According to mortgage company Freddie Mac, 30-year
fixed rate mortgages averaged 4.78% at the end of the month,
a decrease of .28% since the period that began the month.
The 15-year fixed-rate also fell in May, decreasing from an
average of 4.39% at the beginning of the month to an average
of 4.21% in the final period. In general, these are among
the lowest mortgage rates in decade.

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: Mortgages: The Whole Picture

When a home buyer begins to consider a mortgage, generally the first
point of reference that they will examine is the interest rate. Quite
naturally this is as it should be, since rates will determine, to a large
degree, the total cost of the mortgage. It makes sense, then, to make
comparisons. In addition, though, there are a number of other factors
which need to be considered, since they will affect the cost of the loan,
the satisfaction with the lender or both:

+ What are the application fees?
+ How many points are with the loan?
+ What are the TOTAL closing costs?
+ How long has the lender or broker been in business?
+ How much experience does the lender have in the type
of loan in which you are interested?
+ Does the lender have a wide variety of programs available?

By focusing only on the rate and downplaying the above factors,
you run the risk of acquiring a mortgage that appears to be the best deal
but may not be the most advantageous.

What are the application fees?

There can be a big variance here from lender to lender. Application
fees can run the gamut from no charge to $100, $300, $500 or more.
This application fee must be disclosed specifically as that or it could
be disclosed as an additional "point" which is 1% of the mortgage loan
amount.

How many points are with the loan?

"Points" are a form of upfront interest charged by most lenders. A
point is equal to 1% of the total mortgage amount. For example, 1
point on a $250,000 mortgage would be $2500, 2 points $5000, etc.
These points are paid in cash at the closing or settlement and
become part of your total closing costs. Obviously, their cost can
add up and have a big effect on your total mortgage cost. As in the
above example, if 2 lenders are offering the same loan rate but
one lender has 1 point and the other has 2 points, there is a
$2500 difference in the total cost between the two lenders, before
any other factors are considered.

What are the total closing costs?

Points (see above) are a big component of the total costs that
are associated with closing, but there are a number of other factors
that will vary from lender to lender. These charges can either be
legitimate (title searches, title insurance, deed transfers, etc.) or
exorbitent "junk fees" (ridiculously high courier fees, underwriting
fees, processing fees, etc.). It is wise to get a clear picture from
each prospective lender as to what the total closing costs will be
to make a fair comparison.

How long in business?

The real estate "boom" of the early 21st century saw a huge growth
in the mortgage industry with thousands of new mortgage companies
and brokers spurting up. Some were staffed with employees with
many years of experience and others employed those that were
brand new in the mortgage business. Usually, the more
experience that is on tap, the better the knowledge of mortgage
procedures, laws and the like.

How much experience in your type of loan?

Although many lenders offer a wide spectrum of loans, others
concentrate on specific programs such as FHA, VA, Conventional,
low- or no-document loans, etc. Having a lender who specializes
in the type of loan you are securing works in your favor, as long
as you want and can qualify for that type of loan. Otherwise,
you will probably want a lender who offers...

Wide varieties of loan programs

A lender who has a wide availability of loan programs can be
a big advantage should you need to switch from one program
to another (for example from a conventional loan to an FHA
loan).

Summing Up

Although the interest rate should be the very first point of
reference when searching for and comparing lenders,
it should not be the end-all of your comparison process.
Take some time to get a clear and TOTAL picture of
competing lenders.



Next Month's Tip: New Market Realities
++++++++++++++++++++++++++++++++++++++++++++++

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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