Interest rates expected to increase in 2010

What is the worst thing that you can do to hurt yourself in real estate dealings?  The answer is procrastinate.  I have heard the story over and over again.  People find a property that is what they want, they research it, compare it to other properties, call an agent, view it, and then....wait.  Wait for what?  The seller to get desperate, everything to feel right, the moon to shift phases, whatever.

It happens to sellers, too.  They are ready to sell.  They have done their due diligence, and even contacted an agent.  Then....they stop.  They wait.

The result?  Many times buyers lose the property.  It sells or goes off the market.  For sellers, their neighbors sell and move away while our potential sellers stay behind wringing their hands on what they should do.  Something else that can put on some pressure for both?  Interest rates increase.

That is a really likely scenario to become reality in 2010.  Don't take my word for it.  How about a quote from one of Freddie Mac's economists:

"The Federal Reserve's scheduled phase-down of it's multi-billion dollar purchases of mortgage backed securities, plus expected moderate growth in the economy, will force rates at least a percentage point higher."
-Amy Crews Cutts, Deputy Chief Economist with Freddie Mac

We have become accustomed to four percent interest rates:  4.5%, 4.75%, 4.875%.  This will not last forever, folks.  The interest rate is tied to the economy.  The economy is improving (no matter what your friends tell you).  This is a good thing.  We want a strong economy.  However, the incentive to hold interest rates down is slipping away.  They are beginning to edge up right now.

If you are ready to buy, do it.  If you are ready to sell, do it.  If you aren't ready for either, then don't do either.  But, please don't allow procrastination and worry to stop you from making a good decision.

Rural Development to the rescue!

Been trying to figure out how to take advantage of the tax credit for new home buyers but having trouble coming up with the down payment?  A Rural Development loan may be your answer.  The USDA/RD describes RD loans this way,

"Section 502 loans are primarily used to help low-income individuals or households purchase homes in rural areas. Funds can be used to build, repair, renovate or relocate a home, or to purchase and prepare sites, including providing water and sewage facilities."

Here are some of the details that you will need to know about RD loans (also known as Section 502 loans).  First, there is no down payment required with an RD loan.  However, there are income restrictions based upon the area where you wish to live.  You can see those income limits for Arkansas here.  You must also have a "reasonable" credit history.

Second, your lender must be approved by the USDA to process RD loans.

The following is taken from the USDA website:
    Approved lenders under the Single Family Housing Guaranteed Loan program include:

• Any State housing agency
• Lenders approved by:
• HUD for submission of applications for Federal Housing Mortgage Insurance or as an issuer of Ginnie Mae mortgage backed securities
• the U.S. Veterans Administration as a qualified mortgagee
• Fannie Mae for participation in family mortgage loans
• Freddie Mac for participation in family mortgage loans
• Any FCS (Farm Credit System) institution with direct lending authority 
• Any lender participating in other USDA Rural Development and/or Farm Service Agency guaranteed loan programs.

In addition, there are restrictions on the property you buy.  Here is a quote from the USDA website regarding approved properties:

"Under the Section 502 program, housing must be modest in size, design, and cost. Houses constructed, purchased, or rehabilitated must meet the voluntary national model building code adopted by the state and HCFP thermal and site standards. New Manufactured housing must be permanently installed and meet the HUD Manufactured Housing Construction and Safety Standards and HCFP thermal and site standards. Existing manufactured housing will not be guaranteed unless it is already financed with an HCFP direct or guaranteed loan or it is Real Estate Owned (REO) formerly secured by an HCFP direct or guaranteed loan."

For more information on RD loans or to view properties that may qualify for this type of loan, give me a call at 501.514.2319 or send email to Rodney@RodneyGetsResults.com