FW: CONDOChicago June 2005 Newsletter

Home Sales Forecast to Set Record in 2005

WASHINGTON (June 8, 2005) - Lower-than-expected mortgage interest rates will push home sales to a fifth consecutive record in 2005, according to the latest forecast by the National Association of Realtors^®.

David Lereah, NAR's chief economist, said long-term interest rates look very favorable. "Not only have mortgage interest rates declined, but an expected rise in the second half of the year will be slower than in earlier projections," he said. "As a result, we now expect to set records for both existing- and new-home sales this year."

Lereah said the 30-year fixed-rate mortgage should rise slowly to only 6.1 percent in the fourth quarter, and reach 6.5 percent by the end of 2006. Last week, Freddie Mac reported the 30-year fixed rate dropped to 5.62 percent.

Existing-home sales are forecast to rise 1.6 percent to a total of 6.89 million this year from a record 6.78 million in 2004, while new-home sales are seen to grow by 3.2 percent to 1.24 million in 2005. At the same time, housing starts are projected to increase 3.4 percent to just over 2.02 million units, the highest level since 1973.

Credit scores, along with your overall income and debt, are a big factor in determining if you'll qualify for a loan and what loan terms you'll be able to qualify for.

1. Check for and correct errors in your credit report. Mistakes happen, and you could be paying for someone else's poor financial management.

2. Pay down credit card bills. If possible, pay off the entire balance every month. However, transferring credit card debt from one card to another could lower your score.

4. Wait 12 months after credit difficulties to apply for a mortgage. You're penalized less for problems after a year.

5. Don't purchase big-ticket items for your new home on credit cards until after the loan is approved. The amounts will add to your debt.

6. Don't open new credit card accounts before applying for a mortgage. Having too much available credit can lower your score.

7. Shop for mortgage rates all at once. Too many credit applications can lower your score, but multiple inquiries from the same type of lender are counted as one inquiry if submitted over a short period of time.

8. Avoid finance companies. Even if you pay the loan on time, the interest is high and it will probably be considered a sign of poor credit management.

This information is copyrighted by the Fannie Mae Foundation and is used with permission of the Fannie Mae Foundation. To obtain a complete copy of the publication, "Knowing and Understanding Your Credit," visit http://www.homebuyingguide.org/.