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October, 2002 Newsletter


+++++++++++ October 1, 2002 +++++++++++++++++++

CONTENTS:
Introduction: Existing Home Sales Slip
Mortgage Rate Update: 30 Year Rates Below 6.00%
This Month's Tip: Don't Forget the Extra Costs
++++++++++++++++++++++++++++++++++++++++++++
Introduction: Existing Home Sales Slip

Welcome to the October edition of the Home Buyer's Newsletter.
Although still at a strong pace, sales of existing homes dipped in
the month of August by 1.3%. The median price of existing homes
sold rose to $163,600, up 6.4% from one year ago, according to the
National Association of Realtors. New home sales, according to the
U.S. Census Bureau and the U.S. Department of Housing and
Urban Development, rose 1.9% from July. As we mentioned last
month, though, these figures should be taken with a large grain
of salt, since they are frequently--and often extensively--revised.
The median sales price of new houses sold in August 2002 was
$175,300 and the average sales price was $221,000.

+++++++++++++++++++++++++++++++++++++++++++++
Mortgage Rate Update: 30 Year Rates Below 6%

For the first time since mortgage company Freddie Mac began
tracking them, 30-year fixed-rate mortgages dropped to an average
of under 6.00% at 5.99% as of the week ending September 26th.
15-year fixed-rate mortgages averaged 5.47%. Neither of these
rates included points, payable up-front to the lender. Although it
was not a huge drop from the week before, the sub-6.00% rate is
a psychological milestone and the lowest level for 30-year rates
since 1971. Analyists attribute the lower rates to the current situation
in the bond market as investors fled from stocks to bonds,
lowering yields which tend to lower long term interest rates.

For current average mortgage rates, see:
Mortgage Rates
For more information on mortgages, visit the Mortgage
Section at:
Mortgage Information

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


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HomeGain
Looking to find a Real Estate Agent and don't know where to begin?
HomeGain has the perfect service for you where you can anonymously
browse for Agents in the area in which you are interested. Find more
information on their site:
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++++++++++++++++++++++++++++++++++++++++++++++

This Month's Tip: Don't Forget the Extra Costs

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:
Homeowner's 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
+ 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


The Home Buyer's 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 Buyers 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 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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