Tip of the week:  The USDA program to allows home repairs and closing costs to be included in the loan amount up to the property’s appraised value. This is ideal for people buying foreclosures/short sales which often need a little work and are bought below the appraised value. What’s more, there’s no limit to the amount the Seller can contribute and no down payment is required. Properties must be USDA eligible which is easily ascertained by going to http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do?pageAction=sfp&NavKey=property@11.

Economic Update: As expected, the Fed held the fed funds rate steady last week and made no indication that it will raise this rate any time soon. Its statement contained no surprises. Of note, it described improvement in the job market since the last FOMC meeting, as the "deterioration in the labor market is abating." The Fed expects inflation to remain low. Finally, the statement reminded investors that the $1.25 trillion mortgage-backed securities purchase program will conclude at the end of the first quarter of 2010.

The Wall Street Journal today expected 10YR Bonds to jump to 4.125% since the MBS purchase program will expire and spreads between the risk free 10 YR Bond and MBS is usually closer to 2% we should see rates over 6% later in the year (if the prediction holds true). Looks like now is the right time to lock your rate in for the long term.

The housing sector data released during the week was mostly favorable. November Housing Starts rose 9%, and Building Permits, a leading indicator, showed similar results. The December NAHB Homebuilders Sentiment index surprisingly dropped slightly, to the lowest level since June. Given the passage of the extension and expansion of the homebuyer tax credit, the index was expected to rise.

This week, a significant amount of economic data will be released.

Existing Home Sales and the final reading for third quarter GDP will come out on Tuesday. Wednesday will be the biggest day with New Home Sales, Core PCE inflation, Personal Income, and Consumer Sentiment. Durable Orders will be released on Thursday. In addition, the Treasury will announce the size of upcoming auctions on Wednesday. Mortgage markets will be closed on Friday in observance of Christmas