Alas, yes. Wait a minute, did you say USDA? As in, United States Department of Agriculture? We’ve heard of USDA Prime Steaks, but USDA Sub-Prime Loans? What did you say?

We’re talking about a formerly almost unheard of and little-used program founded in 1949 to support the progress and sales of homes in mostly rural parts of the country by, see if this sounds familiar, not requiring any down payment on the loan.

Just like the “low-doc” and “no-doc” and “interest only” loans of the mid-2000s, over which we still have overshadowing us and which have certainly contributed to the record number of foreclosures we’re seeing, any loan which requires no down payment means nothing at risk for the borrower except the possibility of bankruptcy or having a foreclosure on their record, and lots of people don’t know how bad those can be unless they’ve been through it.

{When the program was first founded it made a lot of sense, but even in the current market, where lots of plans to increase business by not requiring down payments has all but completely blown up in the past two years, this program was bound to be discovered and amplified in a way that was never intended, so that since we began the financial crisis which seems to be trying to end, the program has attracted interest way beyond what it ever had before. Through September of this year, we’re looking at almost four times the number of USDA-guaranteed loans than were approved for all of 2007}.

What does all of this boil down to for us? DON’T DO IT! Clearly if you live in an expensive part of the country it will take longer to save for a down payment. If you go bankrupt, it takes ten years before that’s no longer on your record, too.

That’s all you need to be familiar with in relation to USDA loans. Instead, decide right now to live within your means, which includes saving and investing 20% of your gross income in a combination of your 401K and other market investments, some of which might eventually be in real estate investments if they are appropriate for you.

An Example of that may sound something like this: “I’m a long-term investor. The stock portion of my portfolio is spread over several mutual funds, a few ETFs and a few individual stocks. Each and every one of these holdings was carefully chosen, after thorough research. I believe in these stocks and funds. I consider them as my best bet in growing my money – LONG TERM”.

If your means aren’t enough, please be patient. A good investor knows will tell you it is going to take time to make money. Most Likely that doesn’t make for a very good show!

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