Ben Blonder

Via Freddie Mac:

Here’s a closer look at rates for the week ending Feb. 2:

• 30-year fixed-rate mortgages: averaged a new record low of 3.87 percent, with an average 0.8 point, dropping from last week’s 3.98 percent average. A year ago at this time, 30-year rates averaged 4.81 percent.
• 15-year fixed-rate mortgages: also reached new lows this week, averaging 3.14 percent, with an average 0.8 point. Last week, 15-year rates averaged 3.24 percent and a year ago at this time 15-year rates averaged 4.08 percent.
• 5-year adjustable-rate mortgages: averaged 2.80 percent, with an average 0.7 point, dropping from last week’s 2.85 percent average. Last year at this time, 5-year ARMs averaged 3.69 percent.
• 1-year ARMs: averaged 2.76 percent this week, with an average 0.6 point, inching up slightly from last week’s 2.74 percent average. A year ago, 1-year ARMs saveraged 3.26 percent.

Step 8: Insurance

Series: 10 Steps to Home Ownership

No one would drive a car without insurance, so it figures that no homeowner should be without insurance. The essential idea behind various forms of real estate insurance is to protect owners in the event of catastrophe. If something goes wrong, insurance can be the bargain of a lifetime.

What Kind? What Cost?
There are various forms of insurance associated with home ownership, including these major types:

1. Title insurance: Purchased with a one-time fee at closing, title insurance protects owners in the event that title to the property is found to be invalid. Coverage includes "lenders" policies, which protect buyers up to the mortgage value of the property, and "owners" coverage, which protects owners up to the purchase price. In other words, "owners" coverage protects both the mortgage amount and the value of the down payment.
2. Homeowners' insurance: Homeowner's insurance provides fire, theft and liability coverage. Homeowners' policies are required by lenders and often cover a surprising number of items, including in some cases such property as wedding rings, furniture and home office equipment.
3. Flood insurance: Generally required in high-risk flood-prone areas, this insurance is issued by the federal government and provides as much as $250,000 in coverage for a single-family home plus $100,000 for contents. Your realtor can explain which locations require such coverage.

Home warranties: With new homes, buyers want assurance that if something goes wrong after completion the builder will be there to make repairs. But what if the builder refuses to do the work or goes out of business?

Home warranties bought from third parties by home builders are generally designed to provide several forms of protection: workmanship for the first year, mechanical problems such as plumbing and wiring for the first two years, and structural defects for up to 10 years.

Home warranties for existing homes are typically one-year service agreements purchased by sellers. In the event of a covered defect or breakdown, the warranty firm will step in and make the repair or cover its cost.

Insurance policies and warranties have limitations and individual programs have different levels of coverage, deductibles and costs. For details, speak with your realtor, insurance brokers and home builders.

Where to find it.
Realtors often provide home insurance and such policies are also available from insurance brokers.

How to get insurance.
The time to obtain insurance and warranty coverage is at closing, so speak with your realtor or insurance broker prior to closing. Be sure to ask about limitations, costs, deductibles and "endorsements" (additional forms of coverage that may be available).

Step 7: Make an Offer

10 Steps to Home Ownership

This step is often done in conjunction with Step 6: Finalize Your Financing but can be done after. Your realtor will help guide you through this process as smoothly as possible.

Realtor groups, working with legal counsel, have developed forms that are appropriate for realty transactions in specific communities. Such documents include numerous sale conditions and their wording should be carefully reviewed to assure that they reflect the terms you want to offer. Your Realtor can explain the general contracting process in your community as well as his or her role.

While much attention is spent on offering prices, a proposal to buy includes both the price and terms. In some cases, terms can represent thousands of dollars in additional value for buyers, or additional costs. Terms are extremely important and should be carefully reviewed.

How much?

You sometimes hear that the amount of your offer should be x percent below the seller's asking price or y percent less than you're really willing to pay. In practice, the offer depends on the basic laws of supply and demand: If many buyers are competing for homes, then sellers will likely get full-price offers and sometimes even more. If demand is weak, then offers below the asking price may be in order.

How do you make an offer?
The process of making offers varies around the country. In a typical situation, you will complete an offer that your Realtor will present to the owner and the owner's representative. The owner, in turn, may accept the offer, reject it or make a counter-offer.

Because counter-offers are common (any change in an offer can be considered a "counter-offer"), it's important for buyers to remain in close contact with their Realtors during the negotiation process so that any proposed changes can be quickly reviewed. This means vacations/travel may need to be put on hold depending on where you are going and your access to the world. Some documents require written signatures from both parties, so faxing or scanning is not an option.

How many inspections?
A number of inspections are common in residential realty transactions. They include checks for termites, surveys to determine boundaries, appraisals to determine value for lenders, title reviews and structural inspections.

Structural inspections are particularly important. During these examinations, an inspector comes to the property to determine if there are material physical defects and whether expensive repairs and replacements are likely to be required in the next few years. Such inspections for a single-family home often require two or three hours, and buyers should attend. This is an opportunity to examine the property's mechanics and structure, ask questions and learn far more about the property than is possible with an informal walk-through.

What About the Appraisal?
An appraisal is usually done by the lender to determine whether or not the property is worth the amount you are paying. If your appraisal comes in higher than the contract, all the better for the buyer; however, if it comes in lower you may have to cover the extra cost yourself as the lender will only cover what the house is worth.

Step 5: Make A Decision

Series: 10 Steps to Home Ownership

There's no doubt that choosing a home is a big decision and you want to do it right. As a buyer, here's what actually happens. A home has been placed on the market for which the seller has established an asking price as well as other terms. In effect, this is an offer. At this point, you have three choices: accept the seller's offer and create a contract; reject it and not make an offer; or suggest different terms and make a counter-offer. If you choose this last option, the seller may accept, reject or make a counter-offer.

No aspect of the home buying process is more complex, personal or variable than bargaining between buyers and sellers. This is the point where the value of your Realtor is clearly evident. This is because he or she knows the community, has seen numerous homes for sale, knows local values and has spent years negotiating realty transactions.

Is it THE house?

A house is shelter, but a home is far more. It's where you live, relax, entertain friends, raise families, and work. A home is where you spend much of your life, and so choosing a house is an enormous decision.

Make sure you like the feel of the home. Does it fit all of your needs and some or most of your wants? Ask yourself if you can see yourself living in the home. What kind of life do you envision there?

How do you know if a house is THE one? Probably the best approach is to look at as many homes as possible on the Multiple Listing System (MLS) with your realtor, check prices, go online, take video tours and view extensive neighborhood information. Once your choices have been narrowed, you can then find specific information and options and go actually see the house.

Can you really afford it?

Remember Step 2 - the pre-approval process? Getting pre-approved means you have a very good idea of how much you can borrow, what loan programs will most likely work best in your situation and how much home you can afford.

How reliable is a pre-approval? While pre-approval is not a loan commitment, it's still necessary for lenders to check such items as appraisals and the latest credit reports. Despite fluctuating interest rates, pre-approval nonetheless provides a reasoned, careful analysis of what you can afford. After all, loan officers are routinely paid only when loans are originated. It doesn't make much sense for loan officers to suggest high loan limits that later can't be delivered.

Step 4: Decide What You Are Looking For

Series: 10 Steps to Home Ownership

A good number of new and existing homes are sold each year. There's no shortage of housing options, but with so many choices the challenge becomes finding the property which best meets your needs.

The housing market is complicated because the stock of homes for sale is always in flux. If it were possible to have a complete list of every home for sale at this very moment in a given community, such a list would become obsolete as soon as it was created as new homes become available and properties now for sale are put under contract.

Buyers are looking at a moving target in a marketplace that is never static. It is important to know as much as possible about the choices in preferred markets, and the way to do that is by working closely with your chosen Realtor who has a good lay of the land.

What are you looking for?

A home is more than just a collection of rooms you plan on using. Several properties -- each with four bedrooms, three baths, and the same price -- may well represent radically different designs, commute distances, sizes, taxes, interior dimensions, and exterior finishes.

Each of us is different and so it's important to list the features and benefits you want in a home. Consider such things as pricing, location, size, amenities (extras such as a pool or extra-large kitchen) and design (is it something you can grow into? Is it a home where you can easily age in place?)

Next, it's important to consider your priorities. If you can't get a home at your price with all the features you want, then what features are most important? For instance, would you trade fewer bedrooms for a larger kitchen? How about a longer commute for a larger lot and lower cost?

Lastly, consider your needs in several years. If you'll need a larger home, maybe now is the time to buy a bigger house rather than moving or expanding in the future. If you expect your income to increase, perhaps you should consider a more expensive home financed with a loan program where monthly payments increase in the future.

Where should you look?

Your Realtor will definitely be able to help you with this. In fact, they should help focus you on an area or two. All neighborhoods and communities have a special nature that gives them identity and value. One community may be well known for historic homes while another offers both suburban living as well as easy access to downtown office areas.

How do you find a house?

Many people prefer to have their Realtor suggest properties while others search online. Many buyers prefer both approaches.

Regardless of your choice, it's important to target your search. By using basic measures such as general location and affordability, you can refine your search and focus on homes that offer the most desirable features.

As a guide, you should maintain a file with information on each of the homes you like. Make sure you note houses you have seen, what you liked, what you didn’t. Take photos to help you remember pro’s and con’s. Have several sections including: Love, Like, Dislike and keep great records of them. You don’t want to see the same house several times f you don’t like it or have a major problem with it.