Have you ever wondered what it takes to become a Real Estate Agent or a Loan Officer in California? First, you have to ask yourself what exactly you want to offer your clients once you have the appropriate licensing. You might just want to sell Real Estate which will only require you to have a California Bureau of Real Estate License. If you just want to be a Loan Officer you would have to take and pass the National Mortgage Licensing System (NMLS) test for both State and Federal. This is where it becomes confusing for new licensees with the NMLS license. If you just have the NMLS license and not a Real Estate License you can only work for a Mortgage Company that is regulated by California Department of Business Oversight (DBO) or a Bank. If you hold both a Real Estate License and an NMLS license you can go to work for a Mortgage Broker that is regulated by the BRE and you can practice both Real Estate and Loans. If you want to offer your clients a one stop approach where you can offer both the Real Estate Services as well as Loan services you want to hold both licenses and work for a company that has the appropriate licensing under the BRE, like MAE Capital Real Estate and Loan.
So, once you have decided that you want to get your Real Estate License where do you go to get your licensing prerequisite courses. The Bureau will require that you take an approved Real Estate Principles course, and Real Estate Practice then you can choose from a specialty course such as: Appraisal, Property management, Finance, Economics, Legal aspects, Accounting, etc. for more information on the specifics click here to go to the BRE license requirements page. If you have 4 year degree you may be exempt from taking all or some of the courses and you can go right to the Broker’s test if you wish as opposed to getting the Sales Person license first then wait the 2 years to get the necessary experience to take the Broker Exam. Now if you have not taken the college courses and need to take the prerequisite courses you can find approved Real Estate Schools online and they will generally walk you through exactly what you need to have to take the test and get your license. The school I recommend to my people is a school called First Tuesday they will look at what education you have already and let you know what you need to take to get the license, they also provide test preparation courses which I would strongly recommend. Once you have taken the online courses you need you can then apply to take the Real Estate Exam from the BRE. You can go to the BRE site to follow their instructions as you will need to be finger printed, and not have been convicted of a felony and pay the necessary fees and for sites where the Exam is held. Click here to see the detailed steps you need to take to get to the Exam. Then take the Exam when you are ready, it will require you to study hard as it is not easy if you are not prepared. Once you pass the exam you will be notified by the Bureau and when your license has been issued you can now work as a licensed Agent. But since you know nothing about how the real world works you will need to find a company like MAE Capital Real Estate and Loan to train you in the Art of Selling which will revisit in a minute.
Moving on to getting the NMLS license or Mortgage Loan Originator (MLO) License. The test will be the same whether you want to have both licenses and sell real estate and do loans. To get your NMLS license you will need to have 20 hours of prerequisite courses that can also be obtained from any California Approved Licensing Agency and again First Tuesday can also provide the necessary courses required to obtain the NMLS License. I would again, stress that you take an Exam Preparation course that has practice tests and if you use First Tuesday they also have these courses. You will need to follow the steps on the NMLS site as well as signing up online. You will also need finger prints and no felonies to apply. Once you have completed all the steps to take the exam make sure you are ready by taking preparation tests and classes if necessary and take the test. Once you have passed the test you will have to know what you want to do with your new license as you will need to be trained in the art of Mortgage Lending. If you only have the NMLS license and have no desire to offer both Real Estate services and Loan Services you will have to pick a Mortgage Banker regulated by the DBO. Then, in order to start work, you must pay the $300 to the DBO. If you have your BRE license already you have the option for working for a Mortgage Broker that can offer both Real Estate Services and Loan services, like MAE Capital Real Estate and Loan.
Once you have the licensing you desire you will need to be trained in real life practice. You will need to choose a company that offers training like MAE Capital Real Estate and Loan. We will train you as a Realtor and as a MLO, so if you have one or both licenses you can utilize both licenses to their fullest. It has baffled me as to why if you have a BRE license and an MLO license you would work for a company regulated by the DBO where you are restricted to only doing loans. If you have the ability to offer your client a one stop shopping experience where you can “Bundle” your services and save you client money and make commissions on both the loan and the Real Estate why wouldn’t you choose that rout. Yes, you will have to pay your dues to the Association of Realtors but that gives you the opportunity to know the inventory in your area and become more professional in both fields as they have to work hand in hand in most every Real Estate transaction. Your dues will give you access to the Multiple Listing Service (MLS) where you can view all the details of property offered for sale or what has sold. YOur dues also gives you access to Zip Forms that are the online Real Estate Contracts and forms. Even if you have a client that just is requesting a refinance you will have the ability to log on and determine the value of the home prior to ordering an appraisal taking the guess work out of the equation and potentially saving your client the cost of an appraisal. With both licenses working for a Mortgage Broker you will have more products to offer than working for one Mortgage Company under the DBO as a Mortgage Broker has the ability to use many different lenders that offer many different products. At MAE Capital Real Estate and Loan we also offer the ability to Broker Hard Money Loans, thus further opening the doors to more commission possibilities.
Once you have obtained both licenses and you want to be trained in both fields or if you have been a Realtor and just got your MLO license and need training what do you do? Training opportunities in Mortgage business has always been costly or self-done and there are very few companies that offer extensive training prior to going out in the field . Here at MAE Capital Real Estate and Loan we have developed a training programs from the over 30 years of mortgage experience. We combine mentoring with classroom and homework to get the details needed to be a professional Loan Originator. If you would like more information please click here to be directed to our employment page and complete the form or simply call us (916) 672-6130 and we will show the benefits and the opportunities that you may not have known about before. Our training program will take 4-6 weeks where you can be working at the same time. You will learn all the ins and outs of the business from how to take a loan application and write a contract to how to close out a transaction and get referral business and all the marketing that you will need to know. I hope this has helped with your quest to enter the Real Estate and Loan business we are here to help as MAE Capital Real Estate and Loan has developed a reputation of being smart and innovative and are always looking for individuals that want to have the opportunity to expand their career to limitless possibilities.
Are you planning on buying a home in the near future or currently looking to buy a house? If you are, you need to know to know how to save money. It is a little-known fact that here in California a Broker can sell Real Estate and arrange the financing of it. This may not sound that earth shattering on first look but if you find this article you found a company that has been doing this service for years. Some people in the industry believe that you can’t legally do both and those people would be wrong. There are very few of us that have the expertise to handle both functions and the licensing to do it. As a California Real Estate Broker you can act as an Agent representing buyers and sellers of real estate and represent them in the loan transaction if you hold the proper National Mortgage Licensing System (NMLS) license.
Why would this matter in a Real Estate transaction? It won’t matter if the company that holds these licensing does not utilize them to save their client’s money. Here at MAE Capital Real Estate and Loan we believe, first and foremost, that saving our customers money is one of the major reasons we even take on both functions. So how does that work you ask? Which is a great question. This works whether you are a seller or a property then a buyer of another one or if you are a first-time buyer. You see we will take the commission generated from the Real Estate commission and apply it towards you home loan to lower your interest rate thus lowering your monthly payment. We also will buy your home warranty on the purchase of your new home saving you thousands in potential work repairs.
Not only does this process work in saving you thousands of dollars you will only have to make one phone call or email to find out what is going on with your home and how the loan is doing. Traditionally, you will generally use a Realtor that does nothing but the Real Estate function and has no real ties with the loan company doing your home loan. This can cause communication problems and slow a transaction down trying to get a ahold your Loan Officer and or your Realtor. Under MAE Capital’s system you make one phone call and you can find out what is going on with the house and the loan and the sale if you are selling a home in addition. With all the functions under one roof the transactions will be far more efficient for all involved. If you were to ask an Agent their number one complaint with the business they would say the communication issues with Loan Officer and other Agents in the transaction. If they are all under the same roof everyone is held accountable to get the job done efficiently.
What makes this legal is that MAE Capital Mortgage, dba Mae Capital Real Estate and Loan is licensed under the California Bureau of Real Estate (BRE)not the Department of Business Oversight (formally the Department of Corporations, DBO). Most Mortgage Companies that you will talk to are licensed under the DBO which only allows Mortgage Companies to do loans, whereas, the BRE allows you to do many functions with your Broker License. So why are there only a few firms like MAE Capital that does both you ask? The answer is fairly simple, as a Loan Officer working under the DBO you can make up to 3% in commission per loan and under the BRE you can only make 3% as a company as a whole on the loan. That looks the same you say. It looks the same but is very different. You see a Mortgage company under the DBO allows a Loan Officer to make that kind of commission after the company has made their profit and if you are dealing with a branch of a larger company that branch will also have to make money to stay open so you have 3 to 4 layers of profit centers before it gets to you the consumer. With a Mortgage Broker we deal direct with the main company (No Branch) and no other loan officers so we cut out 2 layers of profit, making our interest rates points and fees far less than a large company. Then the large company cannot give you money towards the purchase of your home as that is not legal under the DBO but under the BRE you can give back to your customers towards costs and fees all day long saving clients thousands of dollars. This is why MAE Capital Real Estate and Loan came into existence to save our client money and make the process more efficient.
Here at MAE Capital Real Estate and Loan we call this “Service Bundling” designed to save our clients thousands of dollars and hours of time in their transactions. This is not a new concept it just has been refined by MAE Capital Real Estate and Loan. If you are looking Sell then Buy a new home in the Greater Sacramento area or Placer or El Dorado Counties we are here to help. For those professional that would like to explore the possibility of being more efficient you should contact us for a free overview. This is the best kept secret in the Real Estate Industry today and your Agent that doesn’t work for MAE Capital will try to change your mind as they work on commission. We are here to help those that have little knowledge of Real Estate and Lending. At MAE Capital we have over 50 years’ experience in both Real Estate and Home Loans and invite you to call us to today to learn more about how we can save you Time and Money. Call and talk with one of our licensed Agents today at 916-672-6130 we look forward to helping you with your Real Estate needs.
Most people think when you buy a new home in a brand-new subdivision you can’t use your Realtor. This is a myth; most major builders will co-operate with outside agents to get their inventory sold. This will help you as a buyer in that your Agent is driven to work for you not the builder, whereas the sales agent in the subdivision is looking out after the builder’s best interests not yours. Having representation with your own Agent will not cost you anything as the builder will pay your Agent at the close of the sale. It most cases, your Agent will be able to better represent your best interests in getting the best base price and will have the ability to negotiate on any improvements you might want.
It is very tempting to just stop into a builder’s sales office and look at the model homes they have staged to view. When or if you do this, you should tell them you are working with an Agent even if you are not. This will allow you time to get representation to negotiate the best deal possible. Communication with your own Agent will be far easier than trying to deal with the sales Agent that works for the builder as they don’t have the incentive that an Agent working for you would have to get the answers back to you in a timely manner. Real Estate Law states that an Agent must look after the seller’s best interest first, except if a buyer designates an Agent to work exclusively for them.
Your Agent can generally provide you with more information on the project than the sales Agent working for the build can or will. A good Agent will be able to tell you the dynamics of the neighborhood and surrounding area better than the builder’s Agent as they don’t have any incentive to know what is going on around the builder’s project, they are there to move units like a car dealer. If there is a Home Owner’s Association (HOA) your Agent should be able to get you good information on what it pays for and what the goals of the association are. An Agent will also be able to take the time to research the schools and if there any new schools coming to the area and when they will be opening. Your Agent will have the time to devote to you to research school bonds, Mello Roos, and other items that may affect your payment when purchasing a new home.
If you have never purchased a new home before you will notice that the model homes have tags on several items in the homes that may say “optional” or “upgraded item” these items are not included in the base price of the home. Potential home buyers will sometimes miss these items and expect them to be in the home they purchased when it is completed. Then when it becomes time to do the walk-though they are not in there and this can bring confusion and disappointments to new home buyers where if they had representation their Agent would have known to put those items in the initial contract. These upgraded items can raise the price of a new home significantly so it is important that you know exactly what the end price will be with all the upgrades you want. MAE Capital Real Estate and Loan’s Agents know how to negotiate for these items for you and you would be surprised how much money you can save by having that representation.
You will also see that when you are dealing with a builder’s sales Agent that they will steer you towards their lender in the form of giving you incentives to use their lender as opposed to an outside lender. This is an illegal activity specifically called steering, however, they still do it. At MAE Capital, we have a system that will be able to work around the builder’s lenders, in most cases, and still get you the best interest rate and the lowest costs even if the builder is offering $10,000 in incentives to use their lender. This actually works in the form of “Bundling” our services. We have proven this to work and save our client’s money and maintain control over their own transaction. This helps our clients in that they only have to make one phone call to find out about the house and the loan. This not only saves time but will save thousands of dollars.
To recap, when looking to purchase a New Home in a New Subdivision you should really try to have your own representation. This will work in your advantage in many ways. You will, generally get a better price with the upgrades you want, you will get more financing options, you will get more knowledge of the area and feel more comfortable that you have someone working for you towards the purchase of a new home. Your Agent will go through the walk-through with you at the end and if anything is not up to your standards your Agent can deal with it for you with the builder directly. This is a big undertaking so if you are looking to purchase a new home in a new subdivision you should get some advice from a professional Agent prior to making an offer to purchase and you could be saving thousands of dollars just by having a conversation that doesn’t cost you a thing. Here at MAE Capital Real Estate and Loan we are here to help guide you through this process and save you money. Give us a call today at 916-672-6130.
I know you have heard the ads on the Radio or TV and probably are wondering what all the hype is about with certain loans or Loan Companies. I know most of you have heard of Rocket Mortgage and some of you may have even tried it to find out that it is not as easy as it sounds. You may have heard of loans that can qualify you with just bank statements or “Income Solving Loans”, as advertised. You may have heard of Down Payment Assistance programs that are designed to help you with your down payment so you don’t have to come out of pocket to buy a house with very much money. These are all programs designed to get your attention and some are very viable programs and others you soon find out are a whole lot of work for very little.
So, let’s start with Rocket Mortgage and getting a mortgage with a push of a button. This is a bit of a pipe dream, so to speak, as in order for this to work you have to input all you information into their system before it can work and in some cases it won’t work and you end up having to deliver the traditional documentation anyway to get approved for your mortgage. Rocket Mortgage is a division of Quicken Loans which has emerged as one of the largest Mortgage Companies in the nation after Mortgage Melt down of a decade ago. The way their system works is based on a software platform that is designed to interact with different employer’s payroll systems and different banks. The software sets up, with your permission, an interaction with web based companies like ADP, Paychex, Talx and other payroll associated companies to verify your income information. The software also gets your permission to get your online banking information, as well, to verify that you have enough money for the down payment and closing costs associated with the loan. It will interact with credit reporting agencies as well. Once you have inputted all your information into their system the software can run income, bills, and cash to close to accurately give you an approval. However, if your job or bank does not interact with any of the online systems you will have to provide traditional documentation anyway. The major problem with this system is that you don’t have a human to be able to tell you how to fix any issues with your employment or deposits or any other reasons why their system is declining you for a home loan. This system is only as good as the information that is inputted from you the borrower and if you are confused as to what to put into the system you may make a simple input error and that could cost you the decision of an approval. When you work with a traditional Loan Officer they generally do all the input for you based on the documents you provide them and it is in their best interest to get your loan approved and closed as their income depends on it. This automated system might work for the perfect borrower who has perfect credit and has had one job, one bank account and works for the government. This, unfortunately, is not the real world, but it is a system that will be refined and eventually something like this will be the way mortgages are delivered in the future, but for now we still need human interaction to deal with problems or glitches that may arise.
Now down payment assistance programs (DAPs) have been around for a long time. The problem with these programs are that they have become so regulated over the last decade now since the Mortgage Meltdown that there are very few programs available. In California we have the California Housing Finance Agency or CalHFA for short and they offer an income limited program that is called MyHome Assitance program. This program will offer up to 3.5% second mortgage on the purchase of a home and the money is ued for the down payment on the first mortgage and closing costs if necessary. For the MyHome program you need to be a first time homebuyer (not claiming mortgage interest on your primary home for the last 3 years). You must occupy the home as your primary residence, and complete a homebuyer education course and you must fit into the income limitations. This assistance program can be used with an FHA or Conventional loan. For more detailed information and help with doing this loan please contact MAE Capital directly and one of our licensed and qualified Loan Officers can walk you through this process. CalHFA also offers, though approved Lender’s and Brokers like us the Mortgage Credit Certificate or MCC that is designed to help first time homebuyers receive and additional tax credits from homeownership and this program is also limited by the amount of household income that is made and does not help with the down payment it is only a tax credit program. This is really your only options for Down payment assistance in California. It all boils down to being able to get a down payment of 3.5% which is the minimum amount for an FHA loan. With an FHA loan, the 3.5% can come from a DAP or it can be a gift so it is very flexible as to where the funds to close come from. Here at MAE Capital we can hold your hand though this process and provide different options as they arise.
Lastly you may have heard of the Cash Call ”Income Solving” loans for owner occupied homes. These loans are being presented for those folks that may have trouble showing their income to a lender because they are self-employed or write off too many expenses on their Federal Tax Returns. The commercial on the radio states to call them if you have been declined by a lender for lack of income. Back in the day we used to be able to do stated income loans for those that write too many expenses off their tax returns if it made sense to for the client. These loans have been made illegal with Dodd Frank Act of 2008 which states that lenders must prove a borrower’s ability to repay the loan they are requesting. This has been interpreted to mean that you must get Tax Returns, and Pay statements in order to prove the borrower’s ability to repay a loan. There have been serval institutions that have looked at the law and came up with alternative ways of proving the ability to repay. One of the best ways to show that a borrower is actually making enough money from their self-employment would be to look at the deposits they make into their bank account every month. The Bank Statements will also show how a borrower is spending the income that is made from their business. If a borrower can show that their business is making good deposits every month and they are saving money after paying their usual bills then why would they not be able to afford a house payment. It is these bank statement loans or “Income solving Loans” that have been becoming more popular with self-employed people as they have a tendency to write-off more expenses than a typical salaried person would simply because they can. When we analyze a person’s bank statements for the last 24 months you can see trends and habits of good paying individuals or poor paying individuals. That coupled with a good credit score and savings habits will generally get a loan approved. These alternate income qualifying or Income Solving products are all different and different lenders will handle them differently, so it is important to use a Mortgage Broker for these products for no other reason than they can find the lender that will approve your loan. The Cash Call Loan is not the only alternative it is only one of many lenders that offer this type of solution. Don’t give up if you have been trying to get a bank statement loan from a mortgage banker or a Bank and it is declined chances are there is a lender out there that will probably approve the loan if it makes sense and it will generally be from a lender you have not heard of before.
The bottom line with regards to loans and specialty financing is that you should be dealing with a Mortgage Broker that knows the ins and outs of these products to get you hooked up with the right lender the first time. The myth that it will cost you more money dealing with a Mortgage Broker I just that a myth. In most cases a Mortgage Broker can find you the best interest rate scenario for you as opposed to a Bank or a Mortgage Banker as a Mortgage Broker is paid by the lender in the form of Lender Paid Commission. So not only could a traditional loan cost you less working with a Mortgage Broker but these specialty loans might only be found to be offered by a company you may never had heard of before but your Broker knows of them as it is our job to know where to find the right loan for our clients. With specialty loans and down Payment Assistance Programs and even software programs here a MAE Capital we can walk you through the maze of ever changing finances and trends and get you the answers you need to make informed decisions. We know that you are an expert in your trade or occupation and so are we, and it is our job, and our pleasure, to help you with all of this confusing stuff. With one phone call you can get the answers you need to Buy, Sell, Finance or Refinance all types of Real Estate. We look forward to guiding you to your next Real Estate transaction. Give us a call today at 916-672-6130 and ask to talk to one of our qualified Loan Officers. If you are selling a home and buying another one ask about our special bundling packages that can save you thousands in Real Estate commissions and fees.
Some of you are hearing that we are in a “Seller’s Market”, but have no idea what that really means. It is interesting times right now and every Real Estate Market in America is different. I am writing this article from Northern California in the Greater Sacramento area, but the definition of a “Seller’s Market” is good for any market. The factors that make a Seller’s Market are many but the biggest factor is the lack of supply of housing for sale in the affordability range. The affordability will differ from town to town is based on the average income for the particular area. In in Northern California You can see the highest priced Real Estate Market in the world with Silicon Valley and the San Francisco Peninsula and drive 2 hours to the east and see some the most affordable housing in California in the Stockton and Central Valley. Real Estate markets are driven by supply and demand with a higher supply of housing the lower the pricing and the lower the supply the higher the price becomes with the same amount of demand.
Although the rules of supply and demand work in any market place, in Real Estate it is especially prevalent as people generally don’t have choice to buy or rent they always need a place to live. With most goods and services people have a choice as to purchase and item or not based on price, but if your job is in a Real Estate Market that has a low supply of housing and a high demand for that housing you will be forced to take housing at elevated prices. Even if you are renter you will be forced to pay higher rents in markets with a low supply of housing. Some markets with high demand for housing have implemented rent control to try to keep rents low in certain areas so people can afford to live there. This concept, although with good intentions for potential renters, is a horrible way to try and combat high rents as it will force corruption and landlords that can’t get market rents will tend to not do the necessary maintenance that would be necessary in an uncontrolled market to save money. You have seen this in areas in major cities that have tried this and what you end up with are areas that are run down and crime ridden. The solution is a supply problem and if you can build more housing and move the jobs away from high concentration areas you will fix the problem.
As for a “Seller’s Market” in Real Estate market you will generally have a high demand for housing and low inventory to choose from. Here in the Greater Sacramento area we are experiencing just such a market. What this does for a seller of Real Estate is insure that they will get the highest price possible for their Real Estate. As for buyers in this market they will be forced to make full price offers or even above full price offers to get the seller to sell to them. As a buyer, it becomes frustrating to look for a home to buy and every house you see in your price range has multiple offers and some are cash offers. If you are a Veteran and want to try to use your benefits you will have a very tough time to purchase, as if a seller takes a VA loan offer on their home they will have to clear the termite report and take the house to VA standards. If a seller has multiple offers on a house they will generally take the path of least resistance to them and the highest price. For example, if a seller has 3 offers to purchase their home and one is a cash offer (meaning they are not seeking a loan) and one is a conventional loan, and one is a VA loan and even if the VA loan is offered at more than the asking price the seller will look at the type of buyer that they will make the most off the sale from. With the cash offer, with no repairs being asked for verses a conventional loan buyer that may have no repairs requested either at the same price and a VA loan buyer offered above the asking price with repairs, it would generally be the cash offer that wins every time as it would be known that the cash buyer can perform whereas the conventional loan still has to go through the process and the VA loan buyer just becomes more of a hassle. Thus, putting the seller in control of who they sell their house to.
With the seller in control of who they sell their house to it becomes an art for a Buyer’s Agent to make an offer that will get accepted. Here at MAE Capital Real Estate and Loan our Agents are trained in the art of deal making and have special ways to convince a seller to accept the offer we provide. We are one of only a few Real Estate firms that can bundle our services thus sweetening the offer we can make to a seller. If we work with you on your home loan and represent you in the Real Estate Transaction we can reduce our fees and make the seller’s bottom line sweeter where other Agents will not have this as an option to help potential buyers. If you are a seller in this market and we list and sell your home and bundle our services with the purchase of the next house or home loan or both we can really save you thousands of dollars.
Back to what a seller can expect in this market when selling their home. Since the seller is in the driver’s seat, so to speak, they will be able to take the highest and best offers presented. Some techniques that are happening in this market is to set a date where the offers will be reviewed by a seller so the seller can pick the best one. Generally, when the house is listed on the MLS there will be a note to other Agents stating that offers will be reviewed on a certain date usually 7 days after it is put into the system. So if a house is listed on a Friday the Agent may suggest to the seller that the following Friday evening they will get back together to go over all the offers received during the week. If some of the offers are the same the Agent will suggest doing a “Multiple-Offer Counter Offer” where the Agent will send to all offers one final chance to send a higher or better offer than they originally sent in. Once those are back the seller will then pick the best offer out of the bunch. This technique is good for a seller but potential home buyers get really frustrated with this type situation as they find out that they didn’t get the house and they offered the highest they could. This should be explained to all potential buyers prior to even going to look at homes so they are prepared to battle for what they really want.
Another problem that arises in a Seller’s Market is the lack of tolerance from a seller. Although, it should be a given to be as courteous as possible in a Real Estate transaction a Seller doesn’t really have to be tolerant of the home buyer’s problems. So if a home buyer’s lender has requested that they want the seller to comply with work or to participate in closing costs, the seller might not have the tolerance for that and cancel the transaction and move to the next buyer and if a few weeks have passed then they might be able to sell the house for even more. This is especially prevalent with builders as they are professional sellers and have zero tolerance. In fact, most big builders have their own lending institution so they will steer you to their lender by offering incentives to use their lender as they make money from the sale and the loan. This is illegal per the Consumer Finance Protection Bureau (CFPB), but it is still common practice with builders.
So bottom line, if you intend to sell your home or property in the next 6 months to a year in a “Seller’s Market” picking your Agent is the most important part of the transaction as they will pay for their services over and over not just from keeping it legal but getting the best price and you not having the hassle of showing your home and answering all the buyer’s questions. MAE Capital Real Estate and Loan is here to help you list and sell your home, Land, or Commercial property. We can also bundle our Real estate Services with our Loan services to save you big dollars so weather you are a seller or a Buyer we are here to save you money. Give us a call at 916-672-6130 or click here to email us.
After one of the rainiest winters on record the sun is finally shinning and you are thinking it is time to put your home on the market. So you ask, Is it time to sell your home? For everyone that realization comes at different times. Maybe you just got married and its time to sell that bachelor or bachelorette pad. Did you have another child and don’t have enough rooms. Has your company decided to relocate you? Do you just want to move up? Kids out of the house and want to move down? Whatever your reason is you have come to the conclusion that it is time to sell. Now what? Can I sell it myself or do I need a Real Estate Agent to help me and how much that will cost me.
These are typical questions that most everyone has had when they decide it is time to sell their home. So let’s discuss the purpose of using a Real Estate Agent and the cost of using one. It has appeared to most sellers that they could probably put a post in the ground and put the listing in Zillow and sell their own home. What they have not thought through is how to show the house when they are away, and do the legal paperwork for a potential buyer. In addition, they may not have the ability to accurately figure a price to put on their home, and if they have come up with a price, will it appraise. Then there is all the legal aspects of selling a home in today’s world, and are Sellers up to date on what they must provide to a potential buyer by law? If these are questions you are having then you will naturally look to a Real Estate Professional for help, but who and how much will that cost?
A typical Real Estate commission is between 4-6% plus fees, you may ask yourself “what am I actually getting for that fee?” The truth is, you are buying piece of mind that your will house will sell and you will not be liable for it once it is closed and you have good proceeds from the sale. A good Agent will not only give you that piece of mind they will be able to map out how the transaction will go before you even put a post in the ground. At Mae Capital Real Estate and Loan our Agents have the experience in both years in the business also in the volume of transactions seen in those years. What our experienced Agents will bring to the table is a team of professionals that are proven in their field whether that is in lending, Title, appraising, or legal. Not to mention we have been consistently selling home for at or higher than most seller’s expectations are.
A good Agent will pay for themselves multiple times over in time savings and negotiations. It starts with the initial marketing of your home or property. It is like the difference between buying a used car from a dealer or a private party, which one do you feel would stand behind what they just sold you? That’s right, a dealer, as they will stand behind their product and have a team of mechanics, lenders, and support staff, so you pay a little extra for that piece of mind. The same applies in Real Estate, as most buyers will feel more comfortable with a team of professionals that will stand behind their work other than an unlicensed person trying to sell their home by themselves. It is proven that a potential home buyer will pay a little extra for the peace of mind that comes with professional help. Generally, a home buyer will pay up to 10% more for that peace of mind. So when we say that “having an Agent represent you will pay for itself”, we are not kidding, it does. So that covers the argument of an Agent costing the seller more, to add to that, if you were to have a lawyer draw up a contract it would cost you considerably more money, but an Agent covers that cost as well. If you were to forgot to disclose something upfront and the buyer sued you after the sale that would cost you exponentially, an Agent will assure that you won’t bear that cost. Your Agent also bears the costs of marketing your home. At MAE Capital Real Estate and Loan we get your listing out to the MLS so other Agents see your home listed but we also get the house listed on Zillow, Redfin, Realtor.com and over 70 other search engines that potential buyers will be looking at.
Now that we have rationalized why you should be represented by a licensed Real Estate Professional lets figure out what comes after that. Your Agent will help you to prepare your house for sale, offering showing ideas and how to stage your home for sale. If you are selling your primary residence you should have your home inspected by a licensed termite inspector before listing the home so you know what might come up from a potential buyer. Most buyers will ask to see a termite report when they make an offer to purchase your home, so if you have it done in advance your home will become more attractive to potential buyers. Spruce up the yard, your Agent will tell you that “curb appeal” is important to buyers that may be driving around looking at houses. Remember, if your home makes a good first impression to potential home buyers it will generally sell fast and at a higher price and it doesn’t take much to make your home appealing to others.
The inside of your home should ready to show, as well. This is a little trickier, as you are living in the home at the same time you are trying to sell it. A good idea will be to ask your Agent what you should do to the inside of your home to make it more attractive and stage it for potential buyers. This process may be a simple as de-cluttering your home of personal items or a complete make over. If you are person that has collectables and like to display them for your family and friends you might want to pack those away to make the house look less busy. You have to remember that you are not showing your house off with all your things, you are trying to sell it without your things in it. Homes always look better without personal affects in plain view, so take down your family pictures and collectables and pack them away for your next home. Look in the kitchen, all those appliances that you love to cook with that you leave on the counter, store them away, you probably don’t use them every day anyways. Bedrooms, probably the hardest thing to keep show ready, but it is important. You should get in the habit of putting your clothes away every day, go to the kid’s rooms and get those clothes of the floor every day. Again, take down personal affects like pictures and fill in holes in the walls, paint them if necessary. Potential home buyers want a “fresh” feeling when they walk into a home that they are planning to live in, so get rid of anything that is not essential, remember you already made the decision to move so start the process of packing your stuff you don’t need. Clean the windows, that may sound obvious, but you would be surprised that is one of the most overlooked items. People want to see though clean windows even if the view is of the house next door. If you don’t feel comfortable “staging” your home, ask your Agent, or call in a professional stager and they can be honest with you on what you should do. It won’t cost a lot of money preparing your house to sell, it will mostly take your time and energy. It is worth it I have seen houses sell for top dollar by just cleaning up and make a house feel “fresh”.
Now when it comes to marketing your home, your Agent will most likely have that handled. Your Agent will, at a minimum, put your home into the Multiple Listing Service (MLS) so other Agents can see it is for sale. At MAE Capital Real Estate and Loan we will not only do that for you but we will build a personal website for your home and syndicate that website to over hundreds of different search engines like Zillow, Realtor.com, Homes.com, Trulia, Redfin, and many others. In addition to that, we will make sure that we have an open house schedule pre-set, if you want those. Putting a plan together is very important to do upfront so you know what is happening at all times. You should also be pre-approved for a price on your next home, so you can plan you transition smoothly. You will also need to know what you will “net” from the sale of your home, so you know how much money you have to work with for the purchase of your next home. These are the necessities to know when you are selling a home. Without the proper guidance, your ignorance could cost you thousands of dollars.
This article may have brought up things that you may not have thought of and I hope this has helped you with the rationalization of having proper representation when selling a home. Over the last 30 plus year I have been in this business I have seen sweeping changes to the industry. In the last 7 years alone I have seen more changes than all the other years combined. So if you have sold a home by yourself in the past and think you know how it is done, you may need some help to know the new laws. There are also potential buyers out there in today’s world that would love to prey on unsuspecting sellers. I have seen this happen too many times where I have had to come in and fix a big mess at the seller’s expense where that could have been avoided from the start and they potentially could have sold their home for more money and less costs. So we would love the opportunity to give you a free value estimate of your home and show you how to sell your home. If you are looking to sell your home please talk with one of our qualified Realtors. Call us today at 916-672-6130 or click here to email us your questions.
The Federal Reserve has raised the Federal Funds rate by 50 basis points or .5% last year 2016, so what does this mean? Although the Federal Reserve does not control interest rates on homes, it does control interest rates that banks lend to each other called the Fed Funds Rate. During the same period interest rates on home loans rose by 50 basis points as well. The policy of the Federal Reserve Bank has been to use interest rates to quell inflation. This policy started back in the mid 1980’s with Paul Volker as Fed Chairman. The concept or policy is that if the Central Bank (the Federal Reserve Bank) senses that inflation is threatening the economy interest rates are raised to slow the flow of money thus keeping inflation at bay. This has been the Fed’s policy and it has been working, for the most part for the last 30+ years. The question should be asked if this should be continued or modified as our economy has gone more global than ever before and coupled with a National debt over 20 trillion dollars, does this policy still work for the American economy?
Let’s first look at what the effects of higher interest rates are in the American economy and then what it presents to a worldwide economy. In America in a higher interest rate environment it becomes less desirable for large projects to start as the higher cost of the money will have impacted the profitability of the project. For example; if a large development project is evaluating the costs to build and what the profit margin is going to be at the end of the project the cost of the money to complete the project will directly effect profitability. I addition, if they are going to borrow money at say 6% and the interest rates rise to 6.5% on a $100 million financed the difference in annual payments would be $500,000 a year. As you can see this dramatically impacts the profitability of the project. So, in theory, less projects will start in a higher interest rate environment thus less employment and less money flowing into the economy to push prices on goods and services higher. So, what you get is a general slowing of the economy under this theory that has been used by the Fed for the last 30+ years. What higher interest rates do to potential home buyers is cut the buying power for potential home buyers. With a .5% rise in interest rates the buying power of a home buyer will decrease by $30,000 on the average. So, with the new interest rate being .5% higher a potential home buyer will qualify for $30,000 less of a home. This combined with slower job growth from large projects not starting will slow the economy thus inflation.
Now what happens worldwide when America raises interest rates? This is the part of the equation that I believe has not been fully evaluated by the Federal Reserve system. It used to be if America raised rates other countries would follow thus keeping the dollar on par with other currencies around the world. Also, our debt was believed to be under control back then so other countries would just follow America’s lead. What has happened, and has not really been taken into consideration from our central banking system, is that more outside countries hold our debt and more outside countries have joined the European Economic Union, that did not exist in the 1980’s and some important countries have now left that as well. China has become a superpower as well. All the while, in America, our basic concepts of raising and lowering interest rates to the effects of our economic numbers has remained the same. My question to the Federal Reserve would be why have you not changed with the times?
With my degree in economics I have used these concepts to anticipate interest rate movements for the last 30+ years and I have been pretty accurate over the last 30+ years in doing so just from knowing these basic economic policies of the FED. I have also observed over the years that the numbers that the Fed uses to predict inflation have become more abstract than ever before. The Federal Unemployment number has been the bench mark for the Fed's analysis of interest rates and when to raise them. The unemployment rates, traditionally, show the percentage of people that are collecting Federal unemployment. The theory has been that if unemployment is low, under 6%, then America has been deemed to be in a healthy economy with a higher probability of inflation. Remembering that the concept of inflation is that if people are making more money they are spending more money thus putting upward pressure on prices of goods and services or inflation. The Fed has consistently used the unemployment number as a barometer of future inflation. Problem is that since our recession of 2008-2011 these numbers have not been accurate and the actual term or length of unemployment benefits that an out of work worker can get has gone up to 99 weeks from 26 weeks. What we have seen that, since the recession is people have gone back to work but at a far less wage then they had prior to the recession. This lowers the unemployment number but is not an accurate depiction of how that same worker may spend the wages they are now receiving. We have also seen a shift in family dynamics with one spouse staying home with children to combat the high costs of day care, thus taking that person out of the unemployment number entirely. So, although we have seen a significant decrease in the unemployment number we have not seen family incomes rise to the pre-recession levels and we have not seen the kind of inflation that should happen under a full employment economy.
With a rise in interest rates over the last few months we have seen the refinance market slow to levels that were pre-recession. It appears that most people have been able to refinance to the lower interest over the last 6 or seven years so the demand to continue to refinance has diminished. With higher interest rates it has become less attractive to refinance. One of the consequences of the higher interest rates is that the flow of income slows to the lending industry and will eventually lead to layoffs in the mortgage industry as it has been a strong market for so long that lenders have staffed to fill the old refinance volume needs and now with less volume they don’t need the staff. These folks will increase the unemployment number by May or June of this year as there is always a time lag when there are changes in the economy, hopefully the Fed does not do another increase in the meantime as that will lead to more layoffs. Although rates have risen interest rates on home loans are still in the 4’s which is still great, so if you have not refinanced and your current rate is in the high 4’s or fives, or if you need to take cash out of your house to pay for bills or college there is still time to lock into a good interest rate.
I am just scratching the surface with regards to the factors effecting interest rates and inflation in this article. I am a believer that in a global economy and the changes that have taken place over the last 30+ years we should be looking at interest rates from a different set of rules. Our Government has traditionally been reactive to changes in the economy as opposed to being proactive operating on a policy of ”it works until it doesn’t”. The result is government intervention to fix it, which has never worked and just has put America further into debt and burdened with a larger government with more and more government agencies than ever before. I don’t want to get political here but what has made America an economic superpower in the past was that people were free from government intervention to create new ideas and new products and services. With this freedom came the knowledge that if you fail, big or small, no one including the government would bail you out. This has changed radically with people looking to the government for solutions where they should be looking to themselves and realize that win or lose it is up to the individual to make things right, not government. We need to become more self-reliant than a dependent society. These factors also need to be factored into the Fed’s analysis of inflation and how to combat it.
So if the current Federal Reserve policy is to use the unemployment number as the main factor in determining whether or not they should raise interest rates we will be heading into an economy where we will see higher volatility with interest rates and the economy as a whole. With the Fed and Janet Yellen (Current Fed Chairperson) looking to raise interest rates again this year we will be looking to an economy that might be cooled off too much. Some inflation in a healthy economy is not a bad thing so long as wages can keep up with it. We can look too see home refinancing slowing down this year with the higher interest rates and hopefully home purchases don’t slow too much as that could put America right back into a recession. It is a balancing act for the Fed to change rates as they really don’t know what the end effects will be and if they have gone too far. As always this is just an opinion of a guy who has been in the mortgage industry for 32+ years and if you wish to comment feel free and if you have not refinanced we would love to assist you with that at MAE Capital Real Estate and Loan. You can call our offices directly at 916-672-6130 or email us at email@example.com. Post Script 3/20/2017 The Federal Reserve (The Fed) raised the federal funds rate by .25% which was anticipated by the markets. Since the Markets liked the only .25% increase the DOW Jones rose to new highs. The important part of the announcement was that they would be monitoring the unemployment rate and inflation throughout the the year and if they see any increases in inflation and significant decreases in the unemployment number they would then raise rates again. We can only hope the Fed doesn't raise rates anymore or it could significantly reduce the availability of housing and affordability. Key indexes that you need to watch to see if there is any inflation; one the stock markets, as this will increase wealth of individuals and they may pull it out and use the funds to purchase other items that could cause inflation. Watch the unemployment numbers and watch them per the season, as spring and summer should have seasonally lower unemployment but not too low where there is a higher demand for workers than there are workers to fill the demand, I don't see that happening but that will cause inflation. I see a steady healthy growth during the year if rates are not increased anymore.
A mortgage Broker in in today’s world has been dramatically redefined from just a decade ago. A decade ago there were no real rules for a Mortgage Broker. There was no licensing, no Consumer Finance Protection Bureau (CFPB), no Loan Estimate forms, no Closing Disclosures, no TRID (Truth in lending integrated RESPA disclosure) and no underwriting regulation, and no real accountability. All these additions to the Mortgage Brokering industry over a decade is a lot to swallow. What that means to a consumer is simple, more red tape to wade through when applying for a home loan. Is this regulation good for the industry, the consumer? In many ways it is but in many ways it is not. And what about loan programs that a Mortgage Broker has to offer in today’s world? Well those are limited as well.
A Mortgage Broker a decade ago had no licensing requirements to go through to become a Mortgage Broker. One day you were a shoe salesman and the next a Mortgage Broker. That has all changed with licensing and the National Mortgage Licensing System (NMLS). You will notice that all Mortgage Brokers now will have to post their license number on all of their marketing material and advertisements. You will see MAE Capital’s at the bottom of this page and if you look up our staff you will see all Loan officers will have their NMLS number posted prominently so you can check them out, if you so desire. My opinion of licensing is a positive one as it makes the field I have chosen to be my career for the last 32 years more professional and accountable. This single one change has kept the riff raff out of the Mortgage Broker business for the last 7 years and I believe that to be positive.
An individual Loan Officer now has a choice where they wish to work or more specifically what regulator they would like to be under. What this means is that a Licensed Mortgage Originator may also possess a California Real Estate License and with both a NMLS and a Real Estate License they now have a choice of where they could to work. If a Loan Officer holds both licenses they can work for a Broker like MAE Capital Real Estate and Loan where we are regulated the California Bureau of Real Estate (BRE) allowing our firm to offer both Real Estate Services as well as Mortgage Brokering services. Having both licensing makes an individual Loan Officer more well-rounded in the information they have of the industry. I would argue that one could only be a Mortgage Broker if they were licensed under the BRE. The other licensing a Loan Officer could have would be one under the California Department of Business Oversight (DBO). Under this regulator, a Loan Officer can only originate loans even if they possess a BRE license they still could not act as a Real Estate Broker. An individual Loan Officer working for a company regulated by the DBO does not have the ability to “Broker” loans to other companies like a BRE regulated loan officer. Not having the ability to look at a multitude of companies to deliver loans to limits a Loan Officer to only offering products that their specific company can offer. A Loan Officer under the BRE with both licenses can look to hundreds of different sources of money across the nation to fulfill their customer’s needs. MAE Capital Real Estate and Loan is a true Mortgage Broker in that we offer products from different companies all across the nation and we can offer Real Estate services.
A Decade ago a client would go to a Mortgage Broker for a loan and they had no idea who they were talking with and if the person they were talking with could be trusted. A Mortgage Broker today has to account to the NMLS their activities every quarter. This means that a Mortgage Broker must know where their business is coming from and certain tracking items must be in every file. A decade ago a Mortgage Broker was not limited in the commissions they could make on a transaction. Today a BRE Mortgage Broker cannot make more than 3% total on an owner-occupied loan transaction and the commission cannot be tied to the interest rate at all. If you go to Loan officer that is licensed under the DBO you don’t know how much money that company is making off your transaction as they do not have to play by the same rules as those of us regulated by the BRE. The disclosures are different when you deal with a true Mortgage Broker like MAE Capital as we must show you, the consumer, more information than a DBO Loan Officer. We provide you with a Mortgage Loan Disclosure Statement form as well as the Loan Estimate, both show you what we make and what the costs of the transaction are to you so you know where every dollar is going.
As a Mortgage Broker for the last 7 years with these new regulations it has been tough to have to tell my clients that they will have to work harder to get a loan than ever before. This is where we all have hope in the industry that the new administration will fix those things that need fixing to help consumers be able to get financing easier. I am not talking about the recklessness that was the Mortgage Crisis but rather, I am talking about common sense things. Currently if you are self-employed it is nearly impossible for you to get a home loan the way things are today with having to verify every little bit of a person’s income before they will be granted a loan. It just makes sense to view individuals differently based on their jobs, their education, their credit and their ability to be able to deal with it all. I know some of you reading this think that we are all created equally and that is true on the rights we enjoy but it is not true in the way we chose to lead our lives. Those that are entrepreneurial should not be discriminated against because their tax returns don’t show enough income in the right areas to qualify for a home loan, these people should be looked at in different ways than someone who works a salary at a State job. As a Mortgage Broker we have found companies that can help these folks but these companies are under fire from the CFPB for not playing by the rules they created. So hopefully this new administration can bring back some make-sense underwriting criteria and loosen up the rules for people to be able to purchase Real Estate. As a Mortgage Broker in California we are here to find new and innovating ways to serve our customers.
As a Mortgage Broker licensed under the BRE a Mortgage Broker has more loan program options to offer clients. The loan products we have to offer as a Mortgage Broker ranges from conventional FNMA and FHLMC loans, FHA, VA, CalHFA, USDA, to Alternative loans like Bank statement only and W2 only programs for owner occupied loans. It becomes real interesting when we see start talking about the options we have for investors buying investment property. An investor can choose whether they need short term funds or long term funds, from a qualifying mortgage with low interest rates to no qualifying loans with higher interest rates. Private Money or Hard Money, as it is otherwise known as, is also an option we have for investors that want to take property under an LLC and may not have a track record a Bank will require or the credit score a bank will require. We can fund land, and commercial property as well as single and multifamily homes with private funds. A Loan Officer working for a company that is under the DBO as their regulator does not have this ability.
MAE Capital Real Estate and Loan is a Mortgage Broker and a Real Estate Brokerage firm allowing us to bundle our services and provide better deals for clients. With all the laws and regulations that we must comply with, we sincerely hope that you will use our Mortgage Brokerage services as well as our Real Estate services and for doing so we will work to lower your overall costs and we will purchase a home warranty for you, so when you move in to a house you know if there are any problems it will be covered by the warranty for the first year. We look forward to assisting you with your Mortgage and your Real Estate needs. We can lend all over the great state of California and our Real Estate area would be Sacramento and Placer counties. Call us today for information on Pre-Approval and free home searches or go directly to the site for more information at www.maecapital.com or call at 916-672-6130.
So 2017 is the year you are going to buy a home. I would say that is the best financial goal anyone could have. Aside from the tax advantages owning your home changes the way you look at life. As a home owner, you are entitled to fix your home as you please, paint it any color or colors you like, and when you nail the first picture on your wall in your home it suddenly becomes real that you are about to put a hole in your home, so the once simple task of nailing up a picture has changed to add a little more thought to the process. Home ownership also gives you an inner sense of achievement that only other homeowners feel. But before you get to enjoy all the good that is owning a home you first have to go through the process of qualifying for a home loan and looking for a home in your price range. It’s like my father would say to me when I was growing up “anything worth having is worth working for”.
If 2017 has been the year you have designated to purchase your first home, there are some important steps you must go through in order to get your goal. The first step should be figuring out how much money you should have saved to buy this home. It’s not too late it is still early in the year and you have time to save. The minimum down you would need to have saved without any kind of down payment assistance would be only 3.5% of the sale price unless you are a Veteran and we can get you into a home with no money out of pocket (Thank you for your service). So, if you have been looking at buying a $350,000 home you would need to be able to show $12,250 (3.5%) and that could come from savings or a gift from a parent or an employer, again zero if you are a Veteran. Now if this amount is too hard to save up for there are some programs that can assist with the down payment and closing costs. Most of these programs will require that you attend a class either on line or a traditional classroom setting. These programs can help with the money it takes to acquire a home, but there are some limitations. The biggest limitation is income you can make. You see if you make too much money you don’t qualify for the programs and each program will have different income limitations. You would have to call and speak with one of our qualified loan officers to get the correct income limits per program.
After you have figured out how much money it will take to buy a home you should also know if your credit is good enough to qualify. Generally, you can have a Credit Score (low mid score for a couple or mid score for single people) of no lower than 550 and that would be for an FHA loan or a VA loan. If you were putting 10% or more down and you were looking for a conventional loan your score would need to be above 640. If you are not sure what your score is we do run your credit as part of the Pre-Approval process.
Before even looking at homes that might be outside of your price range we recommend that we get you Pre-Approved before looking. The Pre-Approval process is fairly simple, we gather some documents from you, analyze your finical position, and we will give you a Purchase price that you would qualify for, and you could purchase any home up to that limit. We would have you either apply online or you could call in and we can take you application over the phone or we can meet in person. The idea is that we are here to help you. We have an online checklist of the items we would need you to provide us with. The basic items we will need you to provide are: 1. Current Pay-Stubs for the last 30 days; 2. Your last 2 months Bank Statements; 3. Your last 2 years W2’s; 4. Your last 2 years Federal Tax Returns. We would ask for divorce documents or child support information if you paid or received any support. If you are retired, we would ask for your retirement information. If you have a complex financial situation we can figure out how to be able to show it documents. Our job, when qualifying our you, is to be able to paint your financial picture to someone who has never met you with your financial paperwork and letters from you to fill the gaps so the lender can see you as a good credit risk. This is an art and has taken many years of experience to be able to do this efficiently and we are here to get it done for you.
Once we have taken your application, ran your credit report, reviewed your income documents, and determined you have enough funds we then issue the Pre-Approval Letter. This letter is essential to be able to be given to a potential seller of a house to show them you have already gone through the process and are ready to buy. This letter can put you at a competitive advantage as other people wanting to purchase the same house may not have the same letter, thus making your offer more attractive and more apt to be accepted. At MAE Capital Real Estate and Loan we work with you on the loan side and the Real Estate side so you only have to go to one place to get you needs fulfilled. When you work with us with the loan and as your Realtor we will bundle our services and reduce your fees and we will buy you a home warranty. This could save you thousands of dollars upfront to do with as you please.
Now comes the fun part, looking for the house you are now qualified to purchase. We have a free online toolkit to get you organized in your planning of the wants and needs of the home you want to buy. We recommend that you use these tools as it will help you organize what you want in the house and our Realtors can use your lists to search for the homes that fit your wants and needs. Our Agents use the Multiple Listing Service (MLS) to search for homes as well as word of mouth from other Agents in the industry. Having your list of items you want in a home such as number of bedrooms and bathrooms, size, location, whether it has a pool or not, whether you want land, horse property, can all be inputted into our system and we can only show you the homes that fit your parameters saving you time money and energy.
Also in our toolkit are comparison sheets so when you are out looking at the houses you can write down what they have and don’t have and be able to easily compare what you just looked at. Don’t get discouraged it is rare that you find your dream home the first time you go out looking. It is our Agent’s jobs to show you everything you would like to see on the market in the areas you want to be in. This process can take weeks and sometimes months as you may want to wait for other homes to come on the market in the specific area you want to live.
Once you do find a house that meets your expectations and you want to buy it you will need to make an offer to the seller to buy their home. Our Agents are experienced in the art of negotiating the sale price for you. Negotiation techniques will vary based on the type of market we are in (i.e. a buyer market or a seller’s market). If it is a buyer’s market usually there are more homes on the market than there are buyers to buy them and sellers have to be aware of this and be willing to negotiate on their price or pay cost for potential buyers. In a Seller’s market, there are generally more buyers interested in buying homes in the area than there are sellers to sell them, thus prices are generally firm and there might be multiple offers on the same house. Each type of market your Agent will know and advise you accordingly before you even start looking. As a first time buyer, you also want to make sure the house is sound when you purchase it. Our Agents make sure home inspections, pest reports, and any other inspections are complete so you know exactly what you are buying and the condition of it. Again, our Agents will buy you a home warranty at the close of escrow so if anything goes wrong with the house in the first year after purchasing it you will be covered. The warranty covers, appliances, plumbing, and the heating and air, giving you peace of mind that you have been taken care of by MAE Capital Real Estate and Loan.
We here a MAE Capital Real Estate and Loan strive to help our clients have a smooth and easy experience. We will walk you through the process every step of the way. We will make sure you are compliant with the paperwork and we will take care of the title company that will act as a disinterested third party to bring buyer and seller together to sign at the end of the transaction. We look forward to working with you in your 2017 goal achievement of purchasing a new home.
It is the time of year where we wrap up the prior year and look forward to the next year. This year’s wrap up is about the same as the last several years with Real Estate in California and the Sacramento Area enjoying steady increases. We have already gone past the highs in the Real Estate Market before the bust in 2008, which is a good thing, however, does that signify a coming change or correction to Real Estate Values? Or are we going to keep with a steady rising Real Estate Market? Residential Real Estate has been the cornerstone of the recovery over the last 5 years, with commercial Real Estate staying constant unless you happen to be around new growth areas such as around the Golden One Arena in Sacramento or other special developments projects. In addition, the Stock Market has been hitting record highs and that could send capital away from bonds thus raising interest rates and possibly creating inflation in the short term. There are a lot of things to consider when evaluating the economy and the future of Real Estate in 2017.
With the new regime change in Washington D.C. we could see some radicle changes that will affect the Real Estate Industry, but don’t expect to see the results of any changes right away. Even with the most rapid and radicle changes it will take time to implement and for the Real Estate markets to adjust and adapt. So, although it is my belief that we will some positive changes in the Real Estate Industry with regards to de-regulation these changes will take time to see any real changes. It is too early to speculate on the changes that will come out of our Government, but my belief is that less Government intervention will ultimately be good for the American economy. There are a lot of things the new leaders in Washing DC will have to address and in what order they want to attack them in may have consequences to all Markets. The Government will have to make major changes to the Obamanation of a Health Care system that has been imposed on the American people as a first priority, as middle class America cannot afford the current health care system nor can small to medium sized companies. That will have to be fixed first and could cause ripple effects i the economy.
When the New Leadership evaluates the housing markets and the changes that were made during the last regime, they will see the need to address changes here as a high priority as well. Over the last several administrations we have seen monumental spending increases from the Government with the guise to help the citizens of these United States of America, but our Nation Debt is over 20 trillion dollars and growing every day. We must change this radically or our once great country will be viewed as bankrupt by the rest of the world. If this happens America and the US Dollar could lose world currency status, which could be so detrimental that America could fall as the world Economic Leader, thus causing a worldwide depression. That may not be as far fetched as it sounds if we keep spending recklessly with no repayment plans. These are some big issues that the new administration must address quickly. Be aware if the debt issue is addressed first there could be a recession as a result, in the short term. There would be no way of avoiding that, as when the Government Beast stops or slows spending, those people and companies that have been dependent on that spending will be no longer receive federal funds and thus will go out of business sending many to the unemployment lines. Unfortunately, this is what has to happen in order to fix the growing problem, or the rest of world could just forgive that fact we owe more than we are worth, but I don’t think China would just say “no problem, we will just give you back all the treasury bonds and securities we bought from the US”. That said, there will have to be a strengthening of our private industry first to stabilize income and private jobs. There needs to be incentive to go to work from the government back to the private sectors and this must been done before there can be cuts to the government. It has has to start by lowering taxes, and providing non-monetary incentive to business’ to not only produce their products in the US but to expand in the US. These actions would bring business back to America and increase employment and thus create more taxes as more people are employed and businesses are making more money in the US thus paying US taxes. You see this concept is where most people are fooled or ignorant on how things work. With a lower tax rate on people and business’ and incentives to live work and produce in the US there will be more tax dollars going back into the system. Simple math, less people paying more in taxes is worse than more people paying less in taxes and having more people and businesses employed in the US. For example; would you rather own 2 rental properties that you receive $10,000 a month on, valued at $500,000 each, or would you rather own 10 properties valued at $100,000 each where you receive $1,000 a month on each? The theory here is multi fold, although you have the same value of real estate if you have a vacancy on one with the high value properties you lose half of your income, where if you have a vacancy in one or two of the lower value properties you are only missing 10-20% of your potential income. Also, the chances of the $100,000 properties increasing in value at a faster rate than the higher priced properties is greater as there is more demand for affordable housing than luxury housing. Same holds true in the labor markets if you create a demand for low cost labor and you can’t get enough you then need to pay more to entice labor to work for you, thus higher taxes and higher employment and the Government receives more income proportionately with more people and business working within the US in the private sector. With higher wages in the private sector government could cut back and thus lower the debt. Simple math that gets confused by some believing that you should tax the higher wage earner and business’, the very people and business’ that employ Americans, rather than lowering their taxes and provide incentives to employ and hire and expand within the US.
I digressed a bit, but feel the education is necessary as it may be obvious to most folks others may have never heard of this concept. So as the new administration makes changes to to bring business back to America and incent them to stay in the US we will gradually see a real demand for employment as business will need more folks working for them here in the US. This will not happen overnight and there will be a lot of resistance, believe it or not, as some people actually believe that the Government can spend your money better than you can. None the less, it will take time for any of the changes to take affect, but what you will see is a raising of interest rates in anticipation of a rising inflation due to a more game fully employed America. This will slow housing in the short term until the average American sees the increases in pay from all of the positive incentives for businesses to do business in the US. We saw this with President Reagan, his whole first term was dedicated to lowering taxes and providing incentives to businesses to expand. The US economy didn’t see the effects of the changes until his second term and Reagan was almost not elected for a second term simply because of the time lags in the economy.
So the long term outlook is great for the Real Estate industry, however, the short term will be a slowing down in Real Estate. California, in the short term, will see an overall slowing of housing appreciation and demand will slow with higher interest rates. The short term will be over the next 1-2 years. We will not see a devaluing of Real Estate like we saw due to the mortgage industry implosion in 2088 through 2011. We will see builders catching up with the pent up demand, however, interest rates will slow their growth as less people will be able to qualify with the higher rates. Unfortunately California has implemented high taxes on companies and employers that companies will continue to move out of California as it will not be profitable to do business in California. The California State Government seems to follow the doctrine of over regulating and taxing business in this state to the point where good businesses are leaving the state in droves in search of a friendlier environment to do business. Until this State figures out basic economics the State will continue to go backwards. So long term Real Estate trends for California I feel are going to be different for different parts of the state with the bigger Cities and their bedroom communities maintaining their values and a having steady demand, however, not as high as they have been enjoying over the last several years with low interest rates. The central valley of California will be slow but steady with some depressed Cities like Stockton down to Fresno seeing a relatively flat Real Estate market as these would be the areas in the state that growth could occur but with high taxes on businesses the businesses that would consider moving into the state will seek other states to do business in. Real Estate is always the best long term investment anyone can make, it is a hedge against inflation and over the long haul they aren’t making any more of it so it will have to enjoy growth. To make America Great again will take the efforts of the whole not just the people educated in economics.
This election was shocking to just about every American after being spoon fed from the media that the results were a foregone conclusion. Newsweek had to recall its welcome Madame President issue as they went to press with a certainty of the winner. The stock market had to make adjustments and now entire households are adjusting the new norm. The social issues that this election has brought about has forced changes and probably changes in the way we get our news and who we trust to deliver it. All that aside we now have to ask what will Donald Trump do with Real Estate and what were his campaign promises with regards to change. Myself, being the Real Estate and Lending industry for the last 32 years and seeing more changes to the industry over the last 8 years then the last 32 combined. I have to say with this new administration there will be an abundances of new changes. Mr. Trump spoke of repealing then soften to fixing the Dodd Frank regulations imposed on consumers in 2010. The Dodd Frank Act basically made mandatory waiting periods for consumers when they apply for a loan, put caps on interest rates that could be charged on primary residences, and put such restrictions on lenders that if they were to make a mistake they could be fined millions of dollars. The Act made loan officers take a test or tests depending on the State to become licensed before being able to originate Qualified Mortgage Loans. The Act made it so lenders had to disclose fees a minimum of 3 times during a transaction on a person’s primary residence. The Act made it law that the a person’s debt to income ratio could not exceed 43% of their income. The act limited the amount of money a Mortgage Broker could make, and It basically took away the ability of a person that has less than perfect credit to obtain a loan on a primary residence. The act has become so restrictive that real growth in the real estate field has only come from the lack of housing and new construction and the demand for existing housing has pushed up real estate values.
There is a lot here to forecast the future with and I am optimistic as Mr. Trump been in the Real Estate game all his life and has seen firsthand what has happened to the Real Estate Industry with the new laws. With that said and his promises to re-visit the new laws and make changes should be beneficial to consumers. Here is what I see as some logical changes our new President can accomplish with a controlling House and Senate. Mr. Trump will have to start with the mutli-Trillion-dollar Agency created to oversee and fine lenders, the CFPB or the Consumer Finance Protection Bureau. The CFPB has been tasked with interpreting the laws the way they chose fit, without due process of law. All the while imposing regulations above and beyond the law that they can also enforce as they see fit. This Agency is supposed to help consumers from big bad lenders. In fact, they do the opposite by scaring lenders to the point of not lending to those that should be able to attain financing. I would argue that the whole Agency is discriminatory by nature. I can say this by the fact that current lending laws and regulations enacted by the very agency designed to help consumers have severely hindered consumers in the limitation of credit to certain groups of people. I know this as I have been in this industry for over 30 years and before this Agency’s existence and before the whole mortgage debacle there was common sense in the lending industry and with the new laws this common sense has gone away. It would appear that only those that have had generations of ability to attain credit in the U.S. would have had more experience and education with regards to attaining credit. It was not until 1968 that the civil rights act became law that allowed all races, religions, sexes, obtain credit under an equal set of credit standards. Until then the ability to obtain credit was pretty mush only white men. After the Civil Rights Act all of a sudden all groups were allowed the same opportunity. However, without education of how credit works people did not know how to handle credit so when it was offered to them they could not handle it, simply because they were never educated on how the system works. So only a generation later we are still faced with entire groups of people that their parents were not afforded the same opportunities as them so they could not have taught their children how to handle credit. Before all of the laws designed to protect these very people from lenders we had a system that could take this into consideration and give people a chance with credit. In today’s world those groups of people are discriminated against more than ever by the very laws designed to protect them. So our new President has to address this issue, and the only way I see to do this is to give the lenders back the power to make decisions based on merit not on law.
The next thing Mr. Trump will have to do, is to allow those institutions to fail that make bad credit decisions and get rid of the too big to fail attitude. Mr. Trump should employ people that are in the business of Real estate and Finance to assist in the fixes and changes. Mr. Trump should tone down the powers of the CFPB to give lenders a chance to lend to more people. This will be a daunting task as the CFPB should be overhauled from top to bottom, which by the way, would be a long time coming. We also should remember that in the history of government there has never been agency shut down, they have been re-assigned or re-named so don’t expect the CFPB to go away. Not to mention the jobs that agency employs, however, if it were me I would get those people back to private industry now that they have been armed with compliance techniques. Other changes that should be made to the CFPB are giving the loan officers back the ability to negotiate interest rates and the ability to give to their clients a portion of their pay if they need to make a deal work. This is a simple economic fact that consumers have a choice where they can get their mortgages and generally will gravitate to the lowest interest rates and lowest fees. Currently a Loan Officer has a compensation plan with their employer and this cannot change even if the Loan Officer wished to contribute a portion his or her commission to make the deal work. A prime example would be if a Loan Officer’s compensation is set at 1.2% for all loans the close they cannot lower their commission to those who wish a high loan amount. That 1.2% commission might be good for Loans up to $500,000 but after that they should be able to lower their commission and thus lower the costs to the consumers. This kind of common sense needs to come back to lending. Mortgage Broker Compensation should not be limited to 3% on Qualified mortgages. The argument for this change is not so Mortgage Brokers can make more money but so they can make more on the smaller loan amounts to entice them do them, and be able adjust to a smaller commission on the larger loan amounts as the work is the same for small loan as it is for a large loan amount. These are just some common-sense adjustments that need to be made. I would keep the Loan Officer Licensing as that keeps the riff raff out the business.
These are some common-sense changes that I feel are necessary to insure a healthy Real estate industry. Mr. Trump soon to be President Trump will have a big agenda when he gets sworn into office in January. The media has put so much attention on his immigration policies and changes he wants to make to Obamacare that are missing some of the positive changes that he will be making in the housing industry. He can take advantage of the fact the media has not paid attention to anything other than the left wing high profile agenda items, that he can make these changes without too much negative media attention. It not only my hopes and prayers that changes are made it is echoing throughout the entire Real Estate industry. So let’s make America Great Again and American Real Estate has been a pillar in the economy for as long as America has had an economy so let’s get working again without the fear of the Government.
This topic is a real zinger for most people this year. In the past, it was generally thought that the President is just one of the 3 branches of government covered by a system of checks and balances. Over the last 8 years we have certainly seen otherwise with the continuing uses of the executive order that only a sitting President can do for more personal agenda items than ever before. As of the date of this article, President Obama has issued 256 executive orders. This is not an outrageous number by comparison to other Presidents over the history of our great country, as Franklin D Roosevelt issued 3,721. However, the orders he has issued, have been more politically motivated than ever before and has pushed right up against the Constitution, such as imposing stricter gun control laws and imposing a higher minimum wage for workers and contractors that work for the Federal Government. These are just a few things that the current administration has imposed for political reasons, not for national security or other immediate actions needed for the times. The worry is, what will a future administration impose on the people of this great land and what freedoms will be lost for political gains. One will also have to look at the Presidential Power to appoint Justices to the US Supreme Court. This could have implications for future generations, as the Supreme Court Justices are appointed for life. We already know of one seat that needs to be filled from the loss of Justice Scalia and with the aging Justices that currently sit on the highest court of the land, there is estimated to be up to 3 more appointments during the next administration. The supreme court is already over 50% leaning in the socialist direction. So, with one party potentially controlling 2 of the 3 branches of Government, the next president will have more control than any other. This could change the course of America. But what about Real Estate you ask? Well, this is probably one area where we will see a huge impact as one candidate wishes to impose more restrictions on lenders and borrowers and one wants to loosen the restrictions up.
So, let’s break down the basic philosophies of the candidates. Trump comes from a Real Estate empire and knows firsthand of the effects of regulations and controls imposed on the industry by a Government. Clinton, on the other hand, firmly believes that the Government can do a better job of policing the Real Estate Business than a free market could. Clinton believes the Dodd Frank Act., and all the restrictions that it has put on potential homebuyers, is a good thing and should be tightened up even further. Trump, has already said several times he would loosen the restrictions of the regulations imposed on potential Homebuyers and borrowers by re-vamping the Dodd Frank Act to something more reasonable. The basic philosophy of Trump is that America was built on Capitalism and should stay that way with free markets and less Government Restrictions. Clinton, on the other hand, believes that the American people are not capable of doing business without the Government telling private industry how they should act and putting laws in place that restricts business and commerce to the point some companies leave this country.
Now, let’s take a look a Free Markets versus Socialism, something the media refuses to do as they know nothing about the differences. In a Free Market Economy, businesses are free to create and market their products to the consumer without government involvement. In a Free Market Economy, there is healthy competition between companies offering the same products and services. This competition creates lower prices as consumers will generally gravitate to the lower cost of a good or service. In a Free Market Economy, companies are incented to create the most efficient and cost-effective way to get their products or services to the market thus creating an incentive to inovate new products to be more efficient. Those companies that can’t adapt quick enough or are too greedy from the top down (paying high wages to their ownership or Presidents) will go out of business and the most efficient companies will service and employ good people with the right education to do their job, again promating education. In a Free Market Economy, if you make a bad business decision you will fail with no government assistance. The incentive is to make good business decisions to stay in business and employ those with free market wages. Free market wages are those wages that a worker will work for in any particular market. Example, if the demand for skilled nurses is high they can command higher wages as the demand for skilled nurses exceeds the supply of skilled nurses, so hospitals will pay more to get the better-skilled nurses. On the other hand, Walmart employees do not generally have to have a high skill level to do this type of work, unless it is the pharmacy or management where it does take a skill to do the job and the wages should reflect that. The unskilled workers in a Free Market Economy would set the wages by the rules of supply of labor to fill those positions. So, in the Walmart case if the supply of unskilled workers exceeds the demand for them, or more workers applying for fewer jobs, in a free market economy, the employer would pick those workers that would work for the least pay with the best skills and they would be replaceable if they did not do their job satisfactorily. Then when a worker has earned value in the employer’s eyes by working better than his or her co-workers they then would be rewarded with higher pay and more responsibility. In employment markets where there are fewer workers than jobs, then the wages will have to go up to entice those workers to work for a company. This is a simple free market economy; companies will go where they can get workers to work for them and workers will go where their skills are needed for the highest pay the can get. This is where education comes into a free market economy, the higher educated and skilled the workers are, the higher wages they can command so the incentive is to get educated under a free market economy. In a true free market economy, there are no handouts so you are incented to work and get educated to attain a higher lifestyle. In a true free market economy if you do lose your job there would be no unemployment or welfare so families would be incented to help each other thus creating a stronger family unit and a system of friends that would be committed to helping each other while not being forced by some government entity to pay into a system that they may never need. This would also lead to a lower crime and less discrimination as skills would be the only driving force for workers to advance.
In Hillary’s America or a Socialist America things would be controlled by an elite group of Government officials with extraordinary power. In an economy controlled by Socialism, it would be an economy where prices are set by the government as they see fit, allowing for no competition between companies or workers. Russia has had this in place for the last 100+ plus years and just in the last 10-20 years they have started allowing a freer economy allowing companies to make profits from producing goods and services where in the past all profits were sent to the government for the elite few to distribute. In a socialistic society, there is no incentive to improve yourself with education as your wages would be set by the Government, not by a free market. Therefore, Obama's and Hillary's idea of socialistic health can never work. Example: A doctor must have a least 10 years of higher education to be allowed to practice on their own. The time it takes to get the education is just part of the equation; they must also pay for that education. If a doctor goes through the time and expense of becoming a Doctor, they should be paid as the market would allow as there is a high demand for the little number of Doctors we have currently. With socialism, we would have even less doctors as there is no incentive to pay for the education and take the time to get the necessary education if there is no monitory reward for advancement over time. With the government telling hospitals what they can pay their employees (i.e. doctors,), doctors have no incentive to work hard or do a good job as they will never be able to advance in their field. In the countries that have tried this it has failed as the doctors, that are good, migrate to America where they could traditionally get higher wages. In Australia, where they have had socialistic health care for decades the Government is now incenting private citizens to move towards a more traditional private health insurance model to improve their health care system to get better health care. Socialistic Health Care causes poor care for patients as health care workers will only do the bare minimum as they have no incentive for advancement in pay or position. This too will happen in America the more we move to a socialistic health care system. Socialism will create a lower wage system across the board with no incentive for a worker to better themselves or become educated at a higher level. The uneducated will be paid the same as the educated when it comes to jobs with no incentive to obtain a higher education as it will not better their financial position. With wages stagnated in a socialistic system, there will be fewer people able to qualify to buy a home. In a true socialistic economy, there would be no home ownership as the government would control that as well, as seen in Russia. Socialism gives too much power to to few people not allowing for competition and a stagnation of any economy. The ignorance in society today is people think the government can just print more money to pay everyone the same wages. If this were to happen we would have ramped inflation, high interest rates, job loss, and a possible collapse of America, similar to Germany in the 1930’s. Discrimination would be ramped as employers would only want those workers like them creating a divisive system. So if you are voting for the candidate that wants for a more socialistic government you will actually be voting for discrimination and divisiveness exactly the opposite of a Free Market economy.
I ask the question; what do you want America to look like? Do you want to continue to go down the rabbit hole into socialism where your fundamental freedoms are stripped away by an elite few or would you like to see your freedoms restored and be incented to get an education and get a good job. Would you like to see companies NOT “too big to fail” or would you rather bail out poor decision makers just because an elite few hold stock in those companies? When buying Real Estate, would you like more options to finance it, or do you feel we need more restrictions on lenders and borrowers, these are the fundamental questions you need to ask as you prepare to cast your vote this November. This election is the most important directional choice for America we have ever seen. Don’t vote on looks or attitude vote on Philosophy as that is what is going to move America into the future, you don’t have to like the President you just should like the philosophy and what fundamentally they stand for. Don’t believe the media as they are straight-up wrong, they have not studied economics in any way nor do they report from an economic viewpoint, they are all about the social aspects and for their own profit. What they don’t see is how Socialism will affect even them in the long run. If you work for the government and you waiting for that cushy government retirement and benefits for life ask yourself how it will be paid for, it can’t be paid for if everyone works for the government and if that is the case the dollar has just lost world currency supremacy status and America could become dependent on other countries such as China. All said you lose that cushy retirement in the long run and at a time in your life when you can’t go back to work. People have to wake up and learn about economics and see how things work and not trust your elected officials to do the right things as they will only do what their election funding alleys say to do. Question the authority of your elected leaders that is what our country was founded on. Remember, why our founders came to America in the first place; to escape the oppressive rule of the Crown and the taxation imposed on them. Remember why the Boston Tea Party happened, that’s right in protest to England’s taxation on the Tea. Then remember what happen shortly after that, the Revolutionary war. History tends to repeat itself as proven time and time again. We as voters have a huge choice to make and I pray you make the right one for the whole of America, not for the “easy way out” or the popular choice in social media, which could end up being our demise.
What is a home buyer program you ask? It can be either a down payment assistance program or it can be a Mortgage credit of interest for certain income groups, or it can be a low down payment program to get home buyers into homes. Home buyer programs can be classified as first time home buyer programs that will only be offered to those who have not claimed mortgage interest on a primary home on their Federal Tax returns for the last 3 years and programs that are designed to get a certain groups of people, generally lower income groups, into homes. If you have not heard of these programs it could be beneficial for you to learn all you can as programs offered by the government or the private sector could end up saving you tens of thousands of dollars. Some programs have been a staple in lending for years and helped millions get into homes over the years.
Let’s explore some of the programs that are offered for home buyers to get into homes. The first and the oldest program for potential home buyers is the FHA loan. This loan has been around since 1933 and was designed to get folks into a home with a low down payment. It came out during the depression to stimulate the economy and has been around ever since. Today you can get an FHA loan with as little as 3.5% for a down payment. The flexibility with FHA, allowing for the 3.5% down payment to come from a gift, an employer, the government, non-profit agencies, and home buyer programs. FHA will also be more flexible in the underwriting standards than a privately insured conventional loan. FHA will allow people to get into homes with less than perfect credit as FHA believes that everyone deserves a chance to own a home. FHA loans will most likely be the underlying loan when coupled with other first time buyer or other home buying assistance programs. FHA loans are only insured by the Federal Government private companies such as MAE Capital Mortgage can originate these loans and offer them to you.
Most home buyer programs are designed to be for lower income people, although FHA has no income limitations, other programs that piggyback to the FHA loan will. These other programs may also have income limitations, meaning that you can’t’ make more than a certain amount of money annually to qualify. When looking at these programs, you should take into consideration your income when trying to qualify for a specialty home buyer program. The income limitation will vary from county to county so make sure you do your research before getting your hopes up to get one of these programs. Generally, the income limits are 115%-140% of the medium income for the county. For example, if you were trying to get a CalHFA loan the limits for Sacramento county would be $74,550 for a one-person household and $85,200 for 2, $95,600 for 3 and $106,250 for 4 and so on. If you make more that you would not qualify for the program. Your Loan officer would be able to do all the research for you for all programs that you would qualify for.
The programs available in today's are as follows:
There are programs that come in and out of the market all the time and some local counties may also offer special grants to low income home buyers. These programs would be known by one of our trained loan originators and can walk you through the maze of the different programs and the different qualifications needed to obtain one of these programs. Don’t be discouraged if you make too much money to qualify for one of these programs chances are we have a creative way to get you into home. Although, every one of these programs fall under the new lending rules that have been tightened up over the last several years. Be prepared to have your escrow go up to 2-4 weeks longer using one of these products as there are multiple agencies in some cases that must view and approve your loan or qualification for the program. All in all, these are great vehicles to you into a home where you might not otherwise have qualified. Here at MAE Capital Mortgage we value our clients and want to get them the best deal possible when applying for a mortgage. Feel free to call us today to see if you fit into one of these or other programs that may be out there 916-672-6130.
Well Its that time of year again when the days get a little shorter, there is smoke in the hot air from all dry fires starting all over California. The kiddies are starting a new school year. It is the “dog days of summer” and with everyone changing their attention to things other than Real Estate, we generally get a seasonally adjusted lull in the action. This is all perfectly normal and being in the industry now for over 32 years it is pretty normal. The only other time we have not seen the lull was in 2004, 2005 and 2006 when things were abnormally busy, due to an overheated Real Estate Market. Although the Real Estate Markets have been brisk over the summer it was more of a normal healthy market with move up buyers and first time buyers entering the market. Real Estate Prices rose but only in the price affordability ranges.
So why even write about the Real Estate Market you ask? Well as a business owner and an economist I like to share the trends that I see developing so my readers can be informed in their investment approaches. This is the time of year where California starts on fire and I am not referring to the Real Estate market I am literally talking about wild fires. In late August, September and October we generally have not seen any significant rain fall since May, which causes dry tinder conditions perfect for wild fires. This However, can’t be said for other parts of the country that have had record rainfall and severe flooding. I am sure California Fire fighters would love to have just one day of significant rainfall to help knock down our fires. If you have followed Real Estate trends for any length of time you will know that it is very cyclical and predictable if you know the signs to look for. Folks looking to move to California may take a step back during this time of year as they may think the whole state in on fire per the wonderful media that reports on all the fires. The truth is, although there are several fire throughout the state and the smoke can be seen throughout the state, on a percentage basis is is only a very small percent of the state that is affected by the fires (less than one percent). I can’t talk to the flooding in Louisiana but my guess is that there are parts severely affected and other untouched we just hear the bad.
Anyway, you ask what is ahead in the Real Estate markets in California for the rest of the year? I am here to tell you that whether you are a buyer or a seller of Real Estate that you will be able to find great deals if you are a buyer and sellers will be able to sell at prices that will stay steady through the end of the year. However, if you are buyer you might notice fewer homes hitting the market this time of year as most people don’t like to move when their children are starting school and they generally don’t like to move over the holidays. What this creates is slow down in supply of houses hitting the market. In economics, if the demand for housing exceeds the supply of housing prices will go up. Conversely, if the Supply exceeds the Demand then prices will go down. So, although we see less sellers putting their homes on the market, this time of year, we also see the demand to purchase taper off as well. So with both demand and supply tapering off till the end of the year there are still great opportunities out there for both buyers and sellers.
Interest rates will stay low through the end of the year as well. How do I know this you ask? From an economic point of view, you have to know what drives interest up. Interest rates will be driven up if we start to see inflation. Inflation is where prices of goods and services are increasing. We are currently at about a 2% or less inflation rate annually, which is lower than what would be considered a “normal” inflation rate. We can predict inflation rising by watching personal income levels and employment rates, as the more money people make the more they tend to spend which would raise inflation and thus interest rates. So I don’t see any great increases in personal income from now until the end of the year thus a steady inflation rate and thus no interest rate increases.
What will the election in November do to the economy? Well, again if you know economics, there are what are called time lags that occur when something major happens in the economy like an election. So no matter who is the next leader of the free world it will not affect housing at all this year. In fact, I don’t see any major changes occurring at the earliest the second half of next year. The markets will need that amount of time to see what the new administration is up to. What I am focusing on is the new laws from this administration that have choked down the ability for people to qualify to buy homes. These last 8 years have been the toughest 8 years in Real Estate in the history of Real Estate and Finance and Government intervention. Over the last 8 years we have seen the implementation of the Consumer Finance Protection Bureau (CFPB) and the re-writing of the all the lending laws that were in existence prior to 2008. We have seen Loan officer Licensing across the country. We have seen the regulation of underwriting standards when a person qualifies for a loan. We have seen the CFPB put fear into lenders of being fined so they don’t take any risks in underwriting loans. We have seen predatory attorneys taking advantage of people that feel they have been wronged by a lender simply because they can’t make their mortgage payment. In the past, the free markets were left to weeding out bad lenders and bad loans as those bad lenders writing bad loans would end up bankrupt and out of business. In 2008 we saw our government “bailout” those bad lenders deeming them “too big to fail” thus a new world of banking has emerged. Today we see those same Banks that were deemed “to big to fail” ruling the banking industry and with their profits sky rocking they have been able to buy their own legislation to carve them out as “to big to be regulated”. I could go on and on with the negative effects of Government intervention in a free market economy but that will be for another article. We just need to be diligent as voters and recognize that a bigger Government gives the people less freedoms. So Real Estate will continue steady until the end of this year but what happens next will be up to all of you to do your research and educate yourselves. I will not tell you who you should vote for if you value Real Estate Investing or if you are going to be in the market to buy or sell your home in the next 4 years you need to educate yourself on the market facts. As a voter don’t be fooled by all the social noise you hear in the media, you need to educate yourselves on the benefits of a free market economy and the problems that a free economy faces when Government intervenes. I wish all well and if you need help with your Real Estate endeavors I hope you remember us here a MAE Capital Real Estate and Loan as we would love the opportunity to work with you for either you Real Estate buying or selling needs in Northern California and or you lending need or both.
You may or may not have heard of the term “Hard Money Loans or Private Money Loans” before simply because you may never had a need for one. But what exactly are these loans and what are they used for? Well simply put they are used primarily to buy or refinance investment property and the loan comes from a private party or a group of private individuals. It might sound complicated but as you will soon find out is actually pretty easy. So why would someone lend a large sum of money to someone they don’t even know? The answer lies in the Real Estate the loan is placed on, as Hard Money lenders will require a large equity position before they lend. So why would I take a loan out with such a high interest rate and fees in a market where interest rates have never been lower? This answer lies in the lack of documentation that is reuqired and the speed at which it can be done.
So we have asked some very important questions about Hard Money loans. We asked what Hard Money Loans are used for, and we know they are used to purchase or refinance investment property and are provided by private parties. With the new laws within the Real Estate Settlement and Procedures Act or RESPA it has become illegal to lend money on a primary residence without fully income qualifying for the loan, but the same does not hold true for investment properties.. The loans on owner occupied properties must also follow strict disclosure guidelines and timeframes where this does not apply either to invesment properties. Hard Money Lenders are private individuals that see a benefit in lending their money at higher interest rates than the banks can offer in their savings accounts. So investors in Hard Money Notes do not wish to take on the new liability that comes with the Dodd-Frank lending laws and regulations, that come with owner occupied investments, so they will only lend on those properties that fall outside of these laws and will lend on investment propertyies only. As we have already said, we are in an environment where interest rates are at historic lows and that goes the same with saving accounts, so those folks that have a high net worth would rather act as their own bank and lend their money out at high interest rates then letting bank lend their money out at low interest rates. The Hard Money Lenders are also limited on what they can do on their own without the use of a Mortgage Broker to arrange the loans for them, and that is where MAE Capital Mortgage comes in. Our job as a Mortgage Broker, dealing with Hard Money loans is to put the borrower and the lender together with terms that are appealing to both the borrower and the lender. The people that need money to fix and flip homes will use Hard Money as it is quick and they don’t have to go through the banks strict qualifying procedures. Our Hard Money lenders will look at the equity position in the property first before they will lend money, as a bank will look at that and thier income and credit as well. Generally, Hard Money lenders will require a minimum of an 75% LTV but most of the time will require a 50% to a 70% nequity position, depending on the type of property they are asked to lend on. The higher the risk the property poses to the lender, the more equity a borrower will be required to have to get a Hard Money loan. An example would be land verse a single family home. Land is far tougher to sell if there were to be a default as opposed to a single family home, thus the equity required for a land loan will be higher than that would be required for a single family home.
The Property itself is the collateral for the loan so a Hard Money Lender will be more apt to lend money to a property that has a high equity position. This is exactly why someone would lend to someone they don’t know. As a Mortgage Broker it is our job to do the investigation on the property for the investors we represent, then it will be up the investor to decide whether or not they wish to lend on any particular property. Some ways we can make it more enticing to an investor to lend their money out would be the return they can get on their money verse other investments. The return is the interest rate for the lender. The higher the interest rate that the lender can get the more apt they are to lend their money. That is why interest rates are significantly higher for Hard Money loans than traditional financing. So If you are looking to borrow money and you have less than perfect credit, a bankruptcy, foreclosure, or can’t verify your income, and want to buy an investment property and have a large down payment then a Hard Money loan might be exactly what you are looking for, but be prepared to pay for it.
Again the risk drives the interest rates on Hard Money loans. The higher the risk the higher the interest rate and fees. On the other side of the Hard Money Loan is the investor. As a Mortgage Broker we have to find those investor sources of funding for those folks that have all different kinds of needs and different prperty types. It is our job to find sources of funding for 1-4 family homes, Construction, Commercial, Commercial, Raw land, Apartment loans, and loans that may blanket several properties, etc.. It is Our job here at MAE Capital Mortgage to know where to take potential borrowers and match them up to investors that would be interested in lending on these types of properties. Again the property is what secures the loan in the unforeseen possibility there should be a foreclosure. You see, if the borrower cannot make the payments, the lender will foreclose on the property that was put up for collateral. When a lender has to foreclose there are costs associated with the process and that is why the equity in the property is so important for a Hard Money Lender. In California, it will take 6 months to a year to foreclose so the time the property sits without any income being derived from it is also a cost to the lender, hence that risk factors we talked about earlier and the requirement for a high equity position.
As a potential borrower of Hard Money you should be prepared to show either a large down payment when purchasing a property or a large equity position when refinancing one. Remember, these loans are not arranged on property that is primarily used as your primary residence, as Lenders do not wish to comply with the Government’s Dodd-Frank laws. So investment property only for Hard Money Loans. There has been a few times borrowers try to tell us, here at MAE Capital Mortgage, that they are not living in the property they wish to obtain a Hard Money Loan on when they actually live in it. This is done as they don't qualify for a traditional loan for a owner occupied home for one reason or another. This is actually Loan Fraud on the Borrower's behalf. By signing to the effect that you do not live in a property and you actually do is considered loan fraud and you can be prosecuted for committing loan fraud, so don’t try this. Private Money or Hard Money Loans have their purpose in Real Estate financing today as they keep the flow of investment and renovated properties moving through the market place as well as filling the gaps where banks won’t lend. For the owner occupied Alternative Income Qualifying programs click here and we might have program that can help owner occupants or poetential owner occupants.. We would love the opportunity to go over all your Hard Money needs. Call us at 916-6782-6130 or if you have any further questions we have you can go directly to a Hard Money pages and use the online forms and information provided and upload your scenarios.