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May, 2002 Newsletter

+++++++++++ May 1, 2002 +++++++++++++++++++

CONTENTS:
Introduction: New and Existing Home Sales Decline
Mortgage Rate Update: Rates Stay Under 7%
This Month's Tip: Preparing for Settlement
++++++++++++++++++++++++++++++++++++++++++++
Introduction

Welcome to the May edition of the Home Buyer's
Information Newsletter.

Although both were historically strong
new home sales and existing home sales declined
in the month of March. According to the Commerce
Department, new home sales fell 3.1% from February
levels to an annual rate of 878,000.

Existing home sales fell a larger 8.3% in
March for an annual rate of 5.4 million units,
according to the National Association of
Realtors.

For sellers this may not be wonderful news
but for buyers it can only work in their
favor. Less demand generally equates with
either lower prices or a lower rate of
price appreciation. Coupled with 30-year
mortgage rates below 7% (see following
story), this can be a good combination
for those looking to buy a home this spring.

+++++++++++++++++++++++++++++++++++++++++++++
Mortgage Rate Update: Rates Stay Under 7%

Rates for 30-year fixed-rate mortgages
declined to 6.88% for the week ending April
25th, according to mortgage company Freddie
Mac. This is the third consecutive week of
rates below 7%. 15-year fixed rate mortgages
averaged 6.35% for the week, declining from
6.42% a week earlier. Traditionally, rates
below this 7% benchmark are a positive
market generator.

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: Preparing for Settlement

Buying a home is a combination of many activities--
qualifying for a mortgage, selecting an Agent,
finding and comparing homes, negotation,
inspection and more. All of these activities,
though, will be in vain if the purchase does not
go to closing. Whether known by the terms of
"escrow," "settlement" or "closing" (the
nomenclature varies across North America) your
weeks or months of effort come together in one
short meeting at a closing table.

Virtually anyone involved with the Real
Estate industry can tell you stories about
closings--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,
are:
* 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
confusion. If it becomes apparent that there may be
problems as the settlement day approaches, handle
them immediately, rather than waiting and hoping
that "things will work out." They rarely work themselves
out!

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:
Final Walkthrough

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 or a neighbor's
fence that is 2 feet on your side of the property line)
can be troublesome during your time of ownership.

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:
Homeowners Insurance

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:
Closing and Settlement

Next Month's Topic: Understanding Appraisals

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:
HomeBuyers 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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