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May, 2007 Newsletter

+++++++++++ May 1, 2007 +++++++++++++++++++

Introduction: New Sales, Resales Fall From 2006
Mortgage Rate Update: Rates Steady
This Month's Tip: Ready, Set, Close

Introduction: New Sales, Resales Fall From 2006

Both new home sales and resales of existing homes fell
in March in comparison to a year ago. Sales of new
one-family houses in March 2007 were at a seasonally
adjusted annual rate of 858,000, according to estimates
released jointly on April 25th by the U.S. Census Bureau
and the Department of Housing and Urban Development.
This is 2.6 percent (±12.9%) above the revised February
rate of 836,000, but is 23.5 percent (±7.9%) below the
March 2006 estimate of 1,121,000.

The median sales price of new houses sold in March 2007
was $254,000; the average sales price was $330,900.
The seasonally adjusted estimate of new houses for
sale at the end of March was 545,000. This represents a
supply of 7.8 months at the current sales rate.

Activity in resales of existing homes took a substantial
drop in March. The National Association of REALTORS
reported that sales dropped 8.4%, the biggest decrease in
18 years. Sales were at a seasonally adjusted rate of 6.12
million units, which was a decrease of 11.3% from the rate
in March, 2006. The drop was attributed to a couple of
factors, including weather and a decrease in availability
of sub-prime lending.

Inventories of existing homes stood at a 7.3 month supply,
up from a supply of 6.8 months in February.

Sales activity in the next few months, since they are generally
the most active of the year, will likely give us a much
clearer picture of the trend for the remainder of the year.


Mortgage Rate Update: Rates Steady

Mortgage rates were generally steady during the month
of April. According to mortgqge company Freddie Mac,
30-year fixed-rate mortgages averaged 6.16% in the period
that ended April 26th. Rates began the month at nearly
the same rate, averaging 6.17%. The trend in 15-year
fixed-rate mortgages was a similar one, beginning the
month at an average of 5.87% and ending the period at
the same average rate of 5.87%.

Although there have been some minor variations, rates
are similar to what we have seen since the fall of
2006 and many analysts believe this trend will hold
at least for the near future.

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: Ready, Set, Close

Buying a home is a combination of many activities--
qualifying for a mortgage, selecting an Agent,
finding and comparing homes, negotating,
inspecting 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,
Attorneys, Insurance Agents and others--it helps to have
an effective Real Estate Agent coordinating 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,
* 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 legendary 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 do work themselves

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 coordinate 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 Tip: A Team Building Exercise


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

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

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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