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Rates Slip Again
Freddie Mac reported fixed
interest rates on 30-year, conforming mortgages
averaged 5.77% the week ending Aug. 25, down
from 5.8% the week before and 5.89% on Aug. 11
when rates last stopped rising. Rates last began
to rise after June 30 when they hit the year's
lowest level at 5.53%.
But that's
not the first time rates see-sawed this year.
The first rate report of the year put the
average rate at 5.77%. By Feb. 10, that had
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fallen to 5.57%,
only to turn up to the year's high point of 6.04
by March 31. By June, the average was back down
to 5.53%.
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Benefits Of Buying At
The End Of The
Year
 In addition to low interest rates,
there are other benefits to buying at the end of
the year, including:
Tax savings. Closing on your new home by Dec. 31,
2005, means you can deduct mortgage interest,
property taxes and points on your loan on your
2005 income tax return. These deductions are
significant, especially in the early years of your
loan when you are paying off so much interest.
Many sellers will
also be anxious to sell by the end of the year so
that they, too, can enjoy tax savings on the next
home they purchase. That means you may have more
leverage during negotiations. However, if you're
in a strong seller's market, you'll want to be
conservative -- and always heed the advice of your
REALTOR®. |
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Avoid Surprises: Know Your Homeowner's
Coverage
The typical homeowner's policy
includes coverage for perils and losses due to
fire, lightning, tornadoes, windstorms, hail,
explosions, smoke, vandalism and theft. Just as
you would scrutinize the terms of your medical
insurance, the nuances and details of your
homeowner's policy should be examined seriously.
Too often, homeowners
sign up for a policy and go on autopilot regarding
its terms and coverage without taking new
acquisitions, risks, and increasing value of their
homes into consideration.
Most insurance agents
recommend a regular insurance "check-up" for
consumers, so that homeowners are not left "high
and dry" when disasters and losses strike.
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Despite
Big Numbers, Increase Still Predicted
 Overall, homebuying conditions are still
remarkably favorable. Mortgage interest rates are well
under six percent. And the National Association of
Realtors (NAR) reports that housing is still on target
to hit new records this year.
In fact, the NAR recently
reported that out of 149 metropolitan statistical areas,
67 showed double-digit increases in housing prices for
single-family homes. Only seven areas posted price
declines, and those were generally modest.
The national median
existing single-family home price was $208,500 in the
second quarter, up over 13 percent from the second
quarter of 2004 when the median price was $183,500. The
median is a typical market price where half of the homes
sold for more and half sold for less. In all, 94 metro
areas saw increases above the U.S. historic average of
over six percent.
Since
1968, prices generally have risen 1 to 2 percentage
points faster than the overall rate of inflation, so a
13 percent increase in prices is incredible.
The Mortgage Bankers
Association is predicting that housing won't cool off
until 2006. The MBA's Chief Economist Doug Duncan says
interest rates should remain low. "Despite a moderate
increase from a currently low rate environment, interest
rates will still be quite low by historical standards,"
he says. |
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