USDA rates for first-time buyers hit 4.375 percent

It’s now a little easier for potential homeowners to buy a house. This week, the U.S. Department of Agriculture announced housing interest rates for Rural Housing Direct Loans were dropping to 4.375 percent.
This means a qualifying loan applicant could buy a $129,000 house with no money down. Their monthly payments would be affected by their income, which would be assessed every year.
“This program is for people who couldn’t get a loan at the bank,” said Beverly Miller, area specialist at the Eldon USDA Rural Development sub-office.
Miller said those receiving the loan would never pay more than the 4.375 percent in interest.
There are limitations to the loans issued by the USDA. The maximum loan amount is $129,000, with a 33-year fixed rate, and only those who currently do not own a home qualify. Income can range up to $40,300 for a family of four. However, applicants must have an adequate credit history.
The loan must also be for a house within a rural community with a population of 20,000 or less, on a farm or in the open country and not associated with any neighboring community.
Home mortgage rates have been dropping across the nation. Currently, the National Average for 30-year fixed rate mortgages hovers around 5.85 percent, according to the financial publishing firm, HSH Associates.
But how is this affecting existing home sales?
According to a press release from the National Association of Realtors, existing home sales unexpectedly rose 6.5 percent in December.
But Andrew Conner, a certified mortgage planning specialist for Mortgage Resources, said the lower interest rates were likely a part, but not the entire reason for the rise.
“Mortgage rates being low is an enticement, but I’ve found when people need to buy, they buy, but when they don’t need to buy, they don’t buy,” Conner said.
Whether this was a unique spike or an upward trend is too soon to tell, Conner said.
“In the economic housing cycle, nobody can tell you if this is normal or not until you see January,” Conner said. “I would be afraid to say it’s abnormal because I’m betting on this being the bottom (of the recession).”
The lake area is seeing activity reminiscent of December.
“We’re kind of following the national trend,” said Ryan Gattermeir, 2009 president of the Bagnell Dam Association of Realtors. “I think a lot of people are thinking, if they can get the financing, this would be a really good time to buy.”
Gattermeir said activity at the lake usually starts brewing in the spring, which makes the current activity unusual.
“The combination of higher amount of inventory, higher amount of selection, low rates and the economic development down here, and if we could keep good weather, seems to really have started the spring market earlier than usual,” he said.