Justin Messer USDA Rural Housing Loan

USDA Rural Housing Loans are running out of money! Now what?

The President has signed the Agriculture Appropriations Act for fiscal year (FY) 2010. Since October 1, 2009 we have operated under a Continuing Resolution (CR) with carryover funds from FY 2009 and funds allocated under the CR. Once the bill is signed into law a lapse of three to four weeks occurs before program levels receive funds under the bill from the Office of Management and Budget (OMB).

Due to a high demand for purchase funds, it is anticipated CR and FY 2009 carryover funds for PURCHASE transactions will be exhausted by October 27, 2009, if not sooner. Refinance funds under the CR and carryover from FY 2009 remain available. During the lapse of funding for purchase transactions, Rural Development will continue to process and issue Conditional Commitments “Subject to receipt of Congressionally appropriated funds.” Business will be conducted as usual.

As you can see from the following, USDA Rural Housing is currently using carryover funds from 2009 and expect to have all of those exhausted by next Wednesday, October 27. There will be lenders who will not be able to close and fund USDA Rural Housing mortgages for a few weeks.

NORTHSTAR MORTGAGE GROUP IS NOT ONE OF THOSE LENDERS! I want to make sure that you understand that we will still be able to close and fund mortgages for purchases under the USDA Rural Housing Program even when they are issuing conditional commitments and waiting for the funds to be released. This is huge due to the timing with the expiration of the First Time Home Buyer’s Credit!

If you have a client that is doing a USDA Rural Housing mortgage and closing in November, make SURE you ask the lender TODAY if they can fund with a conditional commitment while USDA is securing the 2010 funds; if not, you need to have your client move their mortgage so that they do not lose the opportunity to receive the first time home buyer’s credit, as it expires on November 30 and with the Thanksgiving holiday right there at the end, they should be closed on or before November 23 to make sure that they get it!

I hope that you remember us if your clients’ current lender is unable to do their mortgage!
Visit the USDA Loan Expert website to get started!

This week in the economy, we’ll get a look at the health of the housing industry. But the real market mover could be the Stock market again.

Reports to Watch

The information below is a highlight of the reports due out this week. For more detailed information and insight, view the Economic Calendar, the Daily Market Update, and our exclusive Market News. And don’t forget, you can easily download the Economic Calendar to your Outlook Calendar to make sure you don’t miss important economic releases. Just click here to read instructions for downloading to Outlook.

• On Tuesday, the Producer Price Index (PPI) will be released. This report provides information about inflation at the wholesale level. Last month, the Labor Department reported that the Producer Price Index rose 1.7%, which was more than double expectations. This week, the index is expected to be reported at 0.1% for September.


• Also on Tuesday, we’ll get a read on the housing market with a report on Housing Starts and Building Permits. In last month’s report, Housing Starts rose to 598,000, which was the highest level since last November. Building Permits, on the other hand, came in a bit shy of expectations at 579,000. All in all, it was a decent report and suggested that the worst in the housing market may have passed. We’ll see if that line of thinking continues this week when Housing Starts are expected to be reported at 607,000 and Building Permits are anticipated to hit 590,000.


• The Fed’s Beige Book--officially known as the Survey on Current Economic Conditions--will be reported on Wednesday. This report is published eight times per year and contains anecdotal information on the current economic and business conditions. It reflects data from bank reports, as well as interviews with key business contacts, economists, market experts, and other sources. Although some people consider the Beige Book to be a lagging report, it can serve as a helpful indicator of the Fed’s policy decisions.


• Thursday will bring another Initial Jobless Claims report at 8:30 a.m. (ET). This weekly report continues to be important to watch as the job market plays a key role in our economic recovery. In last week’s report, Initial Claims fell 10,000 to come in lower than expected at 514,000. But that number still represents an enormously high amount of new people filing for jobless benefits in what continues to be a weak labor market.


• The week ends with a look at Existing Home Sales on Friday. Last month, Existing Home Sales were reported at 5.10 Million, which was less than expectations of 5.35 million and the first decline in five months. However, there was some good news in the report, as inventories of unsold homes fell to an 8.5-month level…the lowest inventory level seen since April 2007. This week’s report is expected to climb back up to 5.38 Million.

The X Factor

There are no Treasury auctions this week, except for the regularly scheduled T-bill auctions. However, on Thursday, the Treasury Department will announce next week’s auctions. Depending on the size of the auctions and how the announcement is received, this could add volatility to the market later this week.

In addition, corporate earnings could play a big role in the markets this week. The earnings report season ramps up even more this week with perhaps the biggest week of reports due out. These reports will determine the fate of Stock prices, which could in turn move Bonds. So keep an eye on the earnings reports and market reactions as we go through the week.

The Bottom Line

Last week, the Core Consumer Price Index was reported higher than expected, indicating that inflationary forces may be underway. In addition, Capacity Utilization was reported well below the 80-85% range, which would present inflationary pressures from the manufacturing sector.

We’ll see more news this week on inflation. But the bottom line is that even if it appears to be low now, inflation will likely grow in the weeks and months ahead--which means, we’re probably looking at the lowest rates for the foreseeable future.

Courtesy of Mortgage Market Guide.

USDA Rural Housing Loans are the best way for an individual or family to build wealth, earn the first-home buyer tax credit, and have affordable payments! Obviously, the real estate market has many great deals. For those that have the money, there are so many opportunities. So, are the wealthy the only ones that can afford to take advantage of all the fantastic deals out there. NO! Typically, for an investor to purchase a property at a foreclosure sale, or at the court house steps, they must have cash on hand to purchase the foreclosed property. Or, if an investor plans to purchase a home to flip or to create cash-flow as a rental, then they typically need 20-25% down to get a loan. For the general public that is interested in real estate investing but does not have the cash on hand to pursue it, then what can you do?

For those that are looking to get their feet wet in real estate, then now is the time. There are tons and tons of reasons to buy today. Add up all of those reasons and add one more thing to it. USDA rural housing loans in Georgia, Alabama, Florida, South Carolina and North Carolina are taking off.

With a USDA Rural Housing Loan, a buyer of a primary residence can buy a new home or foreclosure with zero investment. So, buyers and Realtors need to search for properties that have lots of equity in them. Believe me, they are everywhere. Once you find this particular property, I, Justin Messer, can help the buyer obtain mortgage financing for a 100% loan. With this type of loan, the buyer can finance 102% of the "appraised" value. They are not limited to the sales price. They can also finance all of the closing costs, all of the pre-paid items, and any necessary repairs.

EXAMPLE:

You and your real estate agent find a home that is for sale at $100,000. Well, this property has been for sale for over a year and has been marked down 4 times. The appraised value is currently $150,000. I can give you a loan for the full $100,000 to buy the house. USDA charges a 2% funding fee. This is 99% of the time financed. So, now you are up to $102,000. Say closing costs are $3500 and pre-paids are $1000. Lets also say that you would like to add a few touch-ups. The touch-up costs are $5,000. So, you are going to finance the full sales price, the 2% funding fee($2000), the closing costs ($3500), the pre-paid items ($1000), and the repairs ($5000). You, the buyer, are financing $111,500. Once you close on the home, you have instantly picked up $38,500 in equity for absolutely NOTHING. You have merely found a house you would like to live in, signed your name, and receive tons of equity.

This is only the beginning. For this loan, the current USDA mortgage rates are at 5%. The monthly payment via the mortgage calculators from www.JustinMesser.com are $565. If taxes are $150 and home owner's insurance is $35, then the total monthly payment is $750. It is extremely hard to rent a home for as cheap as $750. Also, there is ZERO MORTGAGE INSURANCE! In this market, sellers are usually willing to contribute something. The seller can buy your rate down for the first two years. So, the first year, your rate could be 2.5% with a payment of $625. The second year, your rate would be 3.5% with a payment of $685. The 3rd year through 30 would come back to the original $750.

Last, the real estate market is on the verge of bouncing back. History will prove that immediately after any downturn in housing, it always explodes higher. So, to make your ZERO investment even better, I would suggest keeping the home for a couple years. Now, you will be able to take advantage of yearly real estate appreciation and TAX FREE profits.

This is a fantastic way for a person that is looking to buy their first home or their primary residence to enter the real estate investment market and contribute nothing. My advice would be to follow this scenario, build wealth, and save your money and invest it somewhere. Live in the home for at least two years. Sell the home and collect your TAX FREE profits. Do it again. If you did this every 2 years, with the same numbers in the example, then you would earn around $115,500 in 6 years. This is approximately $19,250 a year. These profits would actually be much greater because I am not including any appreciation, any principle reduction from making your mortgage payments, or any tax write-offs.

I almost forgot, if you purchase a home as a first time home buyer by November 30, 2009, then you will get a $8,000 tax credit next tax season.

For more information on the USDA Rural Housing Loan, please contact me at www.JustinMesser.com/contactus. You may also contact me to see about refinance mortgage rates. Email me at JustinMesser@Northstarmg.com. This post may be viewed on www.Wordpress.com, or www.JustinMesser.com/myblog.

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MONTHLY PAYMENT

15% Down = $1,525

10% Down = $1,639

5% Down = $1,725

FHA 3% Down = $1,725