February 3rd, 2025 Tariff News & Impact on Loans - Navigate with Nikki!

Tariffs!? What is going to happen to the Real Estate Market??...

Also, tons of great information about USDA loans!
Another must watch/listen Monday Market Update!

Listen to this 15-minute call for up-to-date information on the market! 

Things are shifting - be sure to be in the know!

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Stay informed! Check out our latest Real Estate Market Update with Nikki as she discusses navigating changes in interest rates, new and /or improved loan programs and valuable insights on how to adapt and overcome in today's evolving market. Don't miss out!

Transcript

Speaker 1: 0:38

Thank you, nikki, for joining us always. Hello, good morning everyone, and as usual, we'll let you take it over.

Speaker 2: 0:45

Awesome. Well, good morning everyone. Obviously, the big news over the weekend has been the tariff impact for Canada and Mexico, and what has that done to mortgage interest rates? So, as we saw the market open up today, the stock were actually trading at lower than what they had been in the prior week. This is because of the reaction to the tariffs and the anticipated impact within the US economy. What basically that means is that the stock prices took a dip, which in turn helps mortgage interest rates take a dip. So we're going to see a lot of volatility in the next week incoming couple weeks two, three weeks as we kind of see what the reaction is and what happens with the tariffs and everything from the economic standpoint. So right now, mortgage interest rates are, I guess, benefiting from the situation and we are seeing interest rates in the mid to high sixes on 30-year conventional loans.

Speaker 2: 1:41

I do have a TikTok out there already and a reel out there already. That's shareable. That gives a very non-political, very plain update for the week and kind of what is to be expected. It doesn't go into much detail, but it's a very generic thing that I think that it could be helpful for people to share out there if they don't want to take a political viewpoint. It's very, very, very neutral. So I just encourage you, if you do want to comment on the market right now, you can share that TikTok and real, as I know that, like a lot of times in our positions and a lot of times with what we do, we cannot really risk being on one side or the other, and so this should that should help, and that's my goal pretty much with all my posts is to remain nonpolitical so you guys can feel comfortable in sharing those updates as they happen, because we all know that the political side of things does affect the market. But trying to remain neutral and factual is really what the goal is there with those updates.

Speaker 2: 2:37

One thing I did want to talk about today is kind of we don't talk about this very often, but I did get a question last week when there was the announcement made about cutting spending with DEI initiatives and things of that nature. I got an interesting text from a client of mine who asked specifically about rural housing loans and if the budget for rural housing was going to be affected by these cuts. The short answer is no, but it did bring up an interesting opportunity for me to talk about rural housing loans, usda loans. Not a lot of people are very familiar with this product. It did have a lot of popularity back in the early 2000s and kind of just faded away a little bit, and now is back, coming back with more opportunities. The lines have been the lines for what's eligible from a rural housing standpoint have been redrawn, and so I just wanted to talk through the benefits of that program for anyone that you have that's looking in kind of more of a rural area, and when I say rural, the ruralness of a location, of a property, is determined by population and so therefore you may have some cities where they're right outside the main metro but still can qualify for that rural housing loan.

Speaker 2: 3:56

So a couple of key highlights is that it does not require a down payment, so this is 100% financing for the property. The interest rates are typically lower than what you would find on a conventional 30-year fixed mortgage. So for example, I did a little bit of a comparison and 30-year fixed rates today if we were to choose 6.875 for an interest rate, the rural housing loan would be at 6.375. So about a half a percent interest rate improvement. It does have an upfront fee of 1%, but that is lower when you compare it to the FHA loan, which is at 1.75. And it does have mortgage insurance but the mortgage insurance rate is at 0.35 compared to 0.55 for FHA. So it does have those benefits of having lower interest rates and lower fees associated with it and no down payment. So it's a great opportunity for people.

Speaker 2: 4:47

There are income limits for the program, however. Those income limits are at 115% of the area median income. So when you think about that, a lot of other subsidized programs that we have that have to do with down payment assistance or just a subsidized interest rate program go off of 80% and sometimes even 50% of the area median income. So this rural housing is a very, very, very flexible program and also gives you a benefit depending on how many people you have in the household. So, for example, if you have a family of four and the income is total is $100,000. You get a discount on your annual income or a credit towards that annual income amount to bring it down further to help you qualify for the program based on those other three individuals living in the household. So it's a huge flexibility from a program standpoint and it really is there to encourage people to move into those more less populated, more rural housing situations.

Speaker 2: 5:46

To give you an example for the Minnesota crowd that may be watching this, this is just one example of where you have rural housing maps. I'm going to share my screen here real quick so I can kind of show you guys what a map looks like from a rural housing standpoint. So this is when you go onto the rural housing website you can pull up any property to see whether or not it's eligible for rural housing. So that can help you guys in your listings. It's a very simple website. If you just Google USDA rural housing property eligibility lookup or I can post the link to it in the chat as well and you can really search any property in the United States and it'll tell you whether or not that property is located in an eligible area. So the maps will look like this the yellow area is not located in rural housing areas but anything else is considered rural housing and just particular in Minnesota, for example, you have these densely populated kind of Minneapolis and surrounding suburbs area. But if you go a little bit closer and you look into Prior Lake, just south of Prior Lake, credit River, spring Lake, sand Creek, jordan, those are all areas that have rural housing eligibility and in particular in Jordan.

Speaker 2: 7:02

For example, for a single person, the income limit is $140,600 per year.

Speaker 2: 7:09

So there's a lot of people that can potentially qualify for this USDA loan that aren't taking advantage of it, and you can kind of see even in parts of Shakopee up here, which is considered a suburb, you can see that there are areas that are also eligible for USDA.

Speaker 2: 7:24

So it's not as restrictive as a lot of people think it is and it can. Depending on where the area is and where your client is searching, it can be super beneficial for them to try to qualify for it. It does have some restrictions on housing, so, for example, your debt to income ratio for housing can't go above 28%. But that's what we really tend to look for anyway when we're qualifying clients is that that housing payment is no more than 28% of their gross income, and so it's definitely an opportunity and an option for people to take a look at and consider if they want to move to a less densely populated area or are considering moving into a more rural option. So definitely I can put the link to the income. Let me just scan it here and I'll put that into the chat. It's something that you guys can use. Save it on your favorites and then you can use it to take a look and look up any sort of opportunity for your clients.

Speaker 1: 8:28

I love that and it is. It is a kind of a forgotten loan in a way, because I have worked with a lot of people out West in the past and, yeah, you know it's it's. It's very, very close. So, even if they're looking in a certain area, I think a good thing for us to do as agents is pull up that map and you can search anywhere. So, regardless of where you're an agent at, pull that up, because if you have a client who's on the border or you can move them over one or two miles and offer this or at least give them more options, that's where we really show up and advocate for our clients and go the extra mile and really elevate ourselves to what do we do when so many people are just like, what do real estate agents even do? Well, you can find ways to add value and I think this is a huge one, regardless of if they use it or not. If they have the opportunity and the option and you can just give them more I always say options at the buffet to choose from, then why not?

Speaker 1: 9:33

I love that. Such a great.

Speaker 2: 9:34

Also, it's important to note look it up for your listings too, because it's important to note that when a buyer comes in with USDA financing, unlike FHA and VA financing that have the health and safety standards, from an appraisal standpoint, usda does not. They follow conventional appraisal guidelines when it comes to those things. So some of those health and safety things that you might find on an FHA loan or a VA loan are not going to be present on a rural housing loan. It is one of the most flexible programs that is out there for clients looking for, especially for their first home, and we all know that, especially for first-time homebuyers, they're tending to move outward, farther out, so that they can get housing that's more affordable, and this is just an opportunity, especially for first-time homebuyers. Now, mindy, you don't have to be a first-time homebuyer to use the program. There's no restrictions on how many times you can use the program, so if you've used in the past, you can reuse it. So it's it's one of those things that is a very flexible program.

Speaker 1: 10:31

Love it. Such a great reminder, so good. Thank you, Any questions from anyone? On the zoom that's here, I'll check the live stream to none over there, Since y'all show up. Figured, if you want to pick Nikki's brain about anything or a situation or Perfect, Okay. Well, and I wanted to just bring up something.

Speaker 1: 10:56

I was helping an agent yesterday, kind of a spot on coaching on Boxer, and it adds to a little bit, Nikki, what you just said and how we can go above and beyond and know a little bit more just add value. She has a buyer and again we're starting to get into a little bit more. Multiple offers or things that have been sitting all of a sudden are selling. So things are happening and moving, at least here in the Minnesota market, and I talked to her about, you know, going a little bit above and beyond. And so if you have a client that's lost out or didn't get the home or just isn't finding the right home, but they're to a specific area, whether it's a school district or it's just a place they want to be, I told her number one if it's not based on like school borders and needing to be there for busing and transportation, if you have a search set up for your buyers. What would it look like Again, if you just went a mile or two or three out when you set up their search? You should set up a separate search for yourself that brings that area out a little bit more and then, when things come and they hit your portal, you can share it with them and be like I know this is two miles outside of your ideal area and this just hit the market, you know, so that you can either search it every day or that's just a way that will automatically show up and you can add value.

Speaker 1: 12:26

And then we also talked and I let her know to go on your MLS and hit canceled or expireds that have happened in the last three to six months and then look them up and if they haven't resold, those are amazing opportunities for you to door knock or mail or find the number and give them a call.

Speaker 1: 12:46

If they're not, you know, always scrub all the numbers against the do not call list, but that would be a really good added value too. And then I took it another step forward and I said you know, and if it's still not for your buyer, now you have this engaged seller that either canceled or expired. If it's not for your buyer, then you potentially could have another listing If you go prepared and find out more about it, or if you it's like blaringly, glaringly obvious why it didn't sell. You know, have that and be prepared and be ready to have these high level conversations at any point in the process. So, yeah, I just wanted to share that that came up and she hadn't heard that before and she was like oh my gosh, that's amazing, you know, and so I thought I'd just bring it up here as well.

Speaker 2: 13:36

That's awesome, yeah. Anything that we can do to add value and, you know, get get the people looking in in different thoughts and different opportunities is awesome, yeah.

Speaker 1: 13:46

Good, well, wonderful. Anybody any questions? Last call? All right, everyone. Well, thank you so much again for showing up. Uh, we'll see you next monday, and in the meantime, let nick here myself know if you need anything at all bye everyone bye.