2018 started off with relatively low interest rates but in the last few weeks interest rates have been on the rise. The stock markets have hit record highs and the economy has added over 200,000 new jobs. Although the Stock has corrected and has become volatile in the last week or so it is still trending over 24,000 points, the highest in it’s history. So with the strong stock market and new jobs interest rates are rising to slow inflationary pressures, a kind braking system to the economy. In order to understand this affect to the equity markets (Stock Markets) and why it signals coming inflation, we have to break it down to why it is happening. As people make more money and buy more things that puts a pressure on the supply of goods and services and when there is a stronger demand for goods and services prices will tend to go up. As prices go up for goods and services the Federal Reserve will raise interest rates to slow the demand down as the higher prices for credit (higher interest rates) will slow people from purchasing goods and services, in theory.
The theory of fighting inflation by raising interest rates has been a policy of the Federal Reserve Board since the 1970s. So, when the interest rate markets see any possibility of inflation they will tend to start the process of raising interest rates in anticipation of the Federal Reserve raising them. This is what we have been seeing since the first of the year. Several events have happened to signal possible inflation in the future and as they unfold we see the markets adjusting to stay in front of what the Federal Reserve will do with interest rates when they meet at their monthly meetings. One of the major events that is signaling inflation is the lowering of the corporate tax rate to 20%. It seems people in the media and some closed-minded folks think that by lowering corporate taxes helps the rich some how when, in fact, it helps the American middle class people far more. This is simple economics that is not taught in our public schools.
To fully understand this, you must first look at corporations as tax pass through entities. When a corporation pays higher taxes they just pass that cost through to the consumer in the form of higher prices for their goods and services. Higher taxes also mean a big corporation will limit how much money they keep as profit in the U. S. as opposed to taking that profit in a country with lower taxation rates. The money saved by the lower tax rates will tend to keep the money in the US and will be re invested to hire more American workers and keep dollars in the US. Thus; more money in our economy for the American people to spend and eventually driving up prices causing inflation and forcing the Federal Reserve to raise interest rates to slow the economy down. You see, if the economy grows too fast then there will be a higher demand for goods and service than they can be provided and that will cause prices to go up. The theory has been to raise interest rates so the flow of money slows down with the higher cost of money. This is a confusing topic for most people that don’t have a degree in economics like your author, but if you understand these basic principles you can not only save yourself money, but you can make money by knowing what is coming.
So how does this relate to Real Estate you ask? Knowing the economics behind the economy you can make better decisions as to when to buy home for investment or when to lock in your interest rate on your home or when to refinance and save on your monthly payment. What this tells me about this year in Real Estate is that it should be a hot year for Real Estate Investment on both the Residential side as well as the commercial side of Real Estate. A smart investor will note the economy is starting to improve and more people will have more disposable income to invest thus driving up Real Estate prices. We have seen this happening in the residential sector for a few years now but it did not have to do with a strong economy as so much as the lack of supply of homes. We have seen builders come back into the markets where they can build, and the supply of homes has increased to offset demand. In the markets where builders can not build, due to lack of land, we have seen prices increase to astronomical levels. IN some markets the Government has kicked around rent-control which would limit the amount of rent a landlord could collect in a certain area. The result of rent control would be more run-down real estate, lack of new investment and corruption. The Government should let the free markets figure out where rental prices should be as well as values. As you can tell I am a firm believer in free markets and less government involvement as history has shown that when governments intervene in economics it causes markets to tighten as people and companies have to spend more for compliance of the government regulation that enviably hurts the very consumer they are trying to help. I know the what the argument is from the other side is but it makes no economic sense as every result of more government is higher prices to people, bar none.
In conclusion my advice to potential new home buyers is to lock in their interest rate as soon as they can when they are buying a home in this market. If you have been contemplating refinancing your home my advice would be to do it sooner than later as you will be facing higher interest rates. If you are looking to invest in Real Estate, again do it sooner than later as you will not only get a lower interest rate today than you will tomorrow, but the prices of the Real Estate Investment will be lower today than tomorrow. Interest rates will be common place to be in the 5%-6% range for residential homes in the next 30-60 days from February 7, 2018. For more questions on buying Real Estate or Refinancing or even commercial Real Estate give us a call and we will help you with all your Real Estate investment needs. Again, MAE Capital Real Estate and Loan 916-672-6130. Update to this article 2/22/18- Rates continue to rise due to all the factors listed above and now the Federal Reserve has also said they need to counter inflation by raising rates. I will predict that interest rates will be consistently in the 5's by mid summer. So if you are looking to refinance to take cash out to consolidate bills, pay for college, or home improvement I would suggest that you push up your time frames and get it done now so you can lock in a lower interest rate. It is simple, call one of our qualified Loan Officers and lock you interest rate in today.
As a Real Estate Broker who has been in the industry for the last 33 years I have learned several tricks and secrets that other Brokers don’t want you to know about. I want to share them with you as I have learned to save my clients money using the secrets other Brokers don’t want you to know about. In Real Estate everything is negotiable and that is the first secret I will share with you as that will be theme of this whole post. We will cover how Agents are paid and how loan officers are paid, as knowing this will help you negotiate and choose the best firm and Agents to work with. We will explore the various other aspects of Real Estate like how the financing works and how you can bundle the services from one company to save thousands of dollars.
Let’s start with selling a house. If you are considering selling your home, you should know that when you talk to an Agent about listing your home that he or she’s commission is negotiable. The Agent will tell you that the going rate is 6% or 5% but the dirty little secret here is that there is nothing written in stone. If you did a little research you could find a company like MAE Capital Real Estate and Loan that can that can save you thousands by bundling Real Estate services you will need anyway and receive a discount on the commission you pay to sell your home leaving you with more money to buy your next home. If you are dealing with a “Big Box Real Estate Firm” you may not be offered this option as they are not allowed to negotiate like that and may not offer all the same services, but the smaller firms can. Another little secret is that when you list your home for sale whether it is with a small Brokerage or a large Brokerage the way your home is marketed is exactly the same. Your home is listed on the Multiple Listing Service (MLS) that is a digital service that every Realtor has to belong to. So, if you think your home will be seen by more Agents if you list it with a large firm you would be mistaken. In fact, smaller firms generally have strong roots in the community and those Agents that work for these firms understand that they have more ways to serve their clients and save them money. Another secret is that when listing your home and you know you will buying another one the same Agent who listed your house for sale can sell you your next home and when doing so can now accept a lesser of a commission on the sale of your giving you more money to buy your next home. Here at MAE Capital Real Estate and Loan this practice is common place.
This brings us to Buying a home. Did you know that you don’t pay your Agent to represent you when you are buying a home? It’s a fact, the seller pays commissions to the Listing and the Selling Agent as per the listing agreement already completed before you ever saw the house. This is why, as the seller, you will have to pay something to sell you home or you won’t get anyone to show the house. So as a buyer, either moving up or a first-time home buyer, you should always have representation. Did you know that if you go directly to the Agent who has the house listed it won’t save you any more money as a buyer? This is a common myth when looking to buy a home, as what you don’t know is that the Agent who has the house listed for sale has already made arrangements with the seller for their commission, in fact, in that scenario it might end up saving the seller money and not you as the buyer. In Real Estate in California the Agent has to look after the seller’s best interests first, that is the law. So, knowing this will put you at the advantage as, if you remember, everything is negotiable and if you have the right Agent they should be able to negotiate a better deal for you than the Agent representing the seller could by law. The trick is when you are selling a house and buying another is to work with a MAE Capital Agent as they will bundle their services and take less when they sell your home leaving you with more to buy the next home if they also represent you when you buy your next home, this is called service bundling.
The next aspect of the Real Estate transaction is the financing. This is probably the part of the transaction that you will be least knowledgeable about as you can’t see a loan like you can physically see a house. This part of the Real Estate transaction is the part most people are afraid of and have no knowledge of how it all works. I’m not going to teach you how the financing works, but I will teach you the secrets that your Loan Officer doesn’t want you to know about. Again, going back to our theme of everything being negotiable, you guessed it, the financing is also negotiable. Most people don’t realize this as the laws have changed to where Loan Officers and companies have to set their fees up in advance of disclosing to you. This is where you have the advantage as you can easily shop an interest rate and fees to get the best deal. Going back to small shops verses large shops, the same holds true for Mortgage companies. The large Mortgage shops are far more restrictive when it comes to negotiating fees and interest rates than smaller shops and the reason for this is the regulators who the companies report. A dirty little secret is that most of that larger Mortgage Companies in California are licensed under the Department of Business Oversight(DBO) which means they don’t have the same restrictions that the smaller companies that are Regulated by the Bureau of Real Estate (BRE). The secret is that if the regulator is the BRE the Mortgage Company under them can only make a total of 3% in fees and commissions whereas the Mortgage company regulated by the DBO can make unlimited amounts of money on your loan thus they are generally higher in interest rates and fees. Choosing a Mortgage Company under the BRE that can provide multiple services translates to you not only having a lower mortgage payment but also lower costs to get that loan. At MAE Capital Real Estate and Loan, we are regulated by the BRE and thus ours rates and fees are less than any of our DBO competitors before we discount anything. Here is a secret that will save you thousands, and you can quantify it. If you use MAE Capital to Sell and Buy your next home and use our financing without any discounts you would be better than our competition in fess and costs and monthly payments, however, the reason for sharing this is to show you how we do use discounts to save you additional money. Having the ability to have Listing, Selling and Loan Agents under one roof will not only save you time it will save you money, we are here to help.
I understand you have choices when you need a Real Estate Service or services, I wanted you to learn some secrets and tricks to save money whether you use MAE Capital Real Estate and Loan or not. I am a firm believer in empowering my clients to make informed decisions. If you are reading this blog then you are one who researches and fills your brain with knowledge before you make any big decisions. You are the smart one as most people follow the leader like sheep and you know where that leads you (to the slaughter house). Here at MAE Capital Real Estate and Loan we pride ourselves on serving our customers and they keep coming back so we must be doing something right. When you talk about experience and the ability to think outside of the box that is what we are and sharing the secrets of the trade is just one way of keeping our clients informed. If you need further assistance with one or a bundling of our services, we would love the opportunity to show you how we do this Real Estate and Loan Business. www.maecapital.com 916-672-6130
Welcome to 2018. I
think it is a good time to review all the available loan types in today’s
lending world and what they are uses for.
Although there has been changes in the industry There are still options
for people to get financing for both their primary homes and their investment
property. There are creative options for
those that are self-employed that don’t show all their income on their tax
returns. Of course, we have the basic
home loans like FHA, VA and Conventional loans that are still priced really
good for an economy that is starting to build steam. On the end of the spectrum we have Hard MoneyLoans available for those investment properties that banks may have said no to
for one reason or another. All these
loans have their purpose in today Real Estate Markets.
Let’s start a look at the most basic of loans that are used
for purchasing and refinancing primary residences. These loans are, what we in the industry call,
“A” paper loans. These loans also fall
under, what the government calls, Qualified Mortgages or QM loans. These loans are full of regulations designed
to protect the consumer from lenders that may not have their best interest in
mind. One of these loan types is the
Convectional loan and is the most widely used type of mortgage. The Conventional Home loan will allow buyers
to purchase home and put as little a 5% down.
A Conventional home loan is privately insured which means if you put less
than 20% down you will be required to purchase mortgage insurance from a
private institution. The same would
hold true for a refinance, you would need greater that a 20% equity position in
order to refinance a Conventional loan without Private Mortgage Insurance
(PMI). Because the insurance is private
the underwriting guidelines are a little tighter than that of the Government
insured loans like FHA. Traditionally FHA insured loans have had the
full faith of the Federal Government backing these loans making them more
desirable for banks to sell the loans to each other. Thus, interest rates on these loans are
little lower than their Conventional counterparts and the underwriting criteria
for FHA loans are little easier as well.
So, if you have a lower FICO score (550-660) FHA will probably be your
best bet as there are not additions to the interest rate with lower credit
scores with the FHA loans. FHA does come
with mortgage insurance, however, with the higher Loans to Value loans it still
is a lower payment than a conventional loan.
Both FHA and Conventional loans now
do not require a termite report and clearance unless it is asked for in the
Real Estate Contract making both loans flexible for home buyers in a tight Real
estate market or if buyers are willing to buy light fixers. The Veterans Administration loans or VA loans
are only for those that have served in the military and have the eligibility required
(usually 4 years in) to qualify. The benefits
of being able to use a VA loan are great, besides the fact that the Veteran
does not have to put any money down at all it is fairly easy to qualify for the
payment as interest rates are low for these loans, as well. VA loans will take Veterans with credit scores
as low a 550 with no money down and no mortgage insurance. These are all considered Qualified Mortgages
in the Government’s eyes and will require certain waiting periods to ensure
borrowers have the ability to shop and compare and make sure the loan being
offered them is good for their situation.
Another option for home buyers under the Primary Residence
type of loan is the Bank Statement qualifying loan. These types of loans are still considered
Conventional loans as they are privately underwritten. They are specifically designed to provide an
alternative way of qualifying as opposed to the traditional way of having to provide
Federal Tax Returns. These loans will require
a borrower to provide 12-24 months of bank statements from their personal or
business accounts or both. They will be
qualified by averaging their deposits and taking out a certain expense number
and that will be the income that will be used to qualify them. As it still falls under QM loans these loans
are required to make sure the borrower has the means to make their mortgage
payment that they are applying for. Due to
the fact that Private Mortgage insurance companies will only underwrite under
traditional income qualifying guidelines these loans will require a 20% or more
down payment. As they are considered “higher
risk” loans and interest rates are bit higher than Traditional Conventional loans and
Lastly, we need to cover a sector of the market that is
almost considered “Underground Funding” and that is Private Money Loans or Hard Money loans as they have been called traditionally. Private Money loans are for those investors
that don’t qualify for financing under traditional bank guidelines. Hard Money loans are used primarily on
investment property both Residential and Commercial properties. These loans are arranged by mortgage brokers
with private funds from private investors (individuals) and hedge funds. The borrower is not scrutinized as much as
the property is under this type of funding and the bigger the equity position
is the better chances are that an investor will fund the project. The minimal investment required to get a
Private Money Loan or Hard Money loan is 30% of the project’s value or purchase
price. whichever is less. These loans
can be used to purchase Residential, Commercial, Industrial, Mixed-Use, Land,
Construction projects, Churches and those properties that Banks tend to shy
away from. Hard Money loans can be used
to refinance an existing project, or provide funds for construction.
There are many different types of loans available today and
can be used for many purposes. Here at
MAE Capital Mortgage we have all these loans available. Not only do we have these loans available we
have experts in guiding you to the right loan product. As we are a Mortgage Broker we are also
limited by the government on the amount we can charge for certain products thus
making our loan interest rates and fees the best in the market. We work with direct lenders and get what is
called a wholesale interest rate which is lower than a retail interest rate you
would get from a Banker or direct lender and we pass those saving on to
you. We know you have options out there
and I would advise that you work with a team like MAE Capital Mortgage that has
decades of experience that will be passed on to you in the form of knowledge
and reduced costs and fees. Please call our offices is you have any
questions regarding these loans or Real Estate we welcome the opportunity to
help you with this process. MAE Capital Mortgage 916-672-6130 or www.maecapital.com.
Without a doubt this is the hardest time of year to try and
sell the family home. It is not so bad
for home buyers this time of year, but a seller has to always have their home
ready to show. With family coming and
going from the family home it can be nearly impossible to keep your home “show
ready”. If you are selling a staged
and remodeled home this may be the perfect time of year to sell as homebuyers are
always looking and inventory is traditionally lower this time of year. As homebuyers are always ”in the market to buy”
a seller may not be for obvious reasons.
Traditionally, during the holidays there is so many extraneous
things going on in lives of people that they most often decide to wait to sell
their homes after the first of the year when things calm down and they have the
time to keep their homes “show ready”. Most folks that want to sell the family home,
decide not to list and sell their homes during the holidays as they may have
family coming and going or they may be going to family. They may also be shopping coming and going
from their home, decorating, or parties
or all the above. So, for these reasons some
people will opt to wait till after the first of the year to put their home on
the market. In January you will
traditionally see more homes come on the market as time has freed up for the
potential sellers to get their homes ready to sell and all the holiday
decoration have been stowed away.
Homebuyers, I have found, are always looking to buy so if there would be
a possibility to list your home during the holidays chances are greater that
you will sell your home during this time.
For investors listing and selling their houses, they won’t
have of the same pressures as they do not depend on the house they are selling
for their family. For an investor this
is a business of buying, fixing and selling homes so they don’t have the same problems
that a homeowner will have that lives in the home they are selling. So, for that reason you may see more
remodeled homes hitting the market place this time of year as investors are
smart and know that their houses will be in more demand this time of year as
the inventory of available homes for sale has shrunken due to the
holidays. For a smart homebuyer they may
get to take advantage of buying a newly remodeled home where other home buyers
may have opted to wait till after the first of the year to resume looking for a
There are pro’s and con’s to buying and selling a home this
time of year, but always remember that both Buyer’s and Seller’s can write
anything they want in the contract. If a
Homebuyer doesn’t want to move over the holidays they can always write a Close
of Escrow Date to be after the first of the year so they do not have disrupt
their living arrangements during the holidays.
The same holds true to a seller they can dictate when they wish to close
escrow as well. Some other factors
during this time of year to take into consideration is that the service
providers such as the Lenders, Title Companies, Escrow Companies, and even
Realtors may have travel plans with their families that may slow things up as
well. The toughest time of year to try
and close an escrow is the last day of the year and that should be taken into
consideration. This year is particularly
difficult as the 31st falls on a Sunday which makes December 29th
the last business day of the year and it is a Friday before a 3 day weekend,
people may be leaving town or trying to leave town which can slow or delay a
closing. Also, Christmas falls on the
Monday of the same week making that week only a 4-day week at best. There are a lot of things going on this time
of year that doesn’t usually happen other times of the year, so if you are
buying or selling a home I would say be flexible as you never know what may
happen to delay a close of escrow. Working with a team like MAE Capital that has figured this out ahead of time will aid in your negotiations this time of year. We always look forward to helping our Buyers and Seller's navigate this time of year and throughout the year. Click here to learn more about selling your home. Click here for more information on buying a home. Or call our office and we would be honored to help answer your questions 916-672-6130.
Wow, the DOW Jones Industrial Average is over 23,000 and to think just 10 years ago it dipped to 8,000. If you are invested in the Stock Market, chances are you have done pretty well. So, when is the right time to take money out of a hot Stock Market and invest in Real Estate? My contention is any time, as Real Estate over time has outperformed the Stock Market in many ways. I know it is tough to give up those double digits gains in your stock investments year after year, but as you know there has not always been those gains and when you take out management fees on mutual funds and 401ks you might only have only had single digit gains or none at all. Not to mention unless you are invested in income producing stocks (stocks that pay a dividend) you generally have just realized equity gains or value increases. Real Estate has also seen double digit gains but the difference with Real Estate Investments are that you also receive rents, so you have appreciation as well rents received.
Every Financial planner will tell you that you need to be diversified with your portfolio, but what exactly does that mean? Well simply put you should have investments in the Stock Market, Real Estate, Gold, Bonds, etc.. When you find yourself too heavily invested in one area you should spread out your wealth. If you can devise a way to sell some of your stocks that may have seen the bulk of their gains and are poised to have a correction and turn around and buy Real Estate, I think when the correction does come to the Stock Markets you will already have the hedge with Real Estate. When the Stock market corrects money tends to move towards Real Estate. If you are prudent and can see ahead, you will profit greatly when the correction does happen.
So what type of Real Estate Investing is for you? Most people know single family homes as they probably own one as the house they live in. But there are many other types of Real Estate Investment. Of course, you can invest in single family homes, but don’t throw out the possibility of investing in multi-family homes, Commercial property or even Notes. Single family homes are pretty straight forward in that you have one home one renter pretty easy to take care of. The only downfall is that when that renter moves out and you have the downtime to find another renter and fix up the damage from the previous renter. With Multi-Family homes you will still have income, however, if one renter moves out you have others still paying so you are still receiving income. In addition, with multi-family properties you generally get more rent per square foot over time. The Percent of appreciation you receive will vary from location to location on any property. With a commercial property you generally have better rents and better lease opportunities such as triple net leases where the renter(s) will pay their portion of taxes and expenses on their space. With a commercial property you get a different kind of use than that of a single or multifamily dwelling. You might have a retail building with shops that are only open during the day, or an office building that the tenants must keep up for their clients, or a warehouse, all of which bring in good rents but are very different in the up keep and maintenance and the ability to have the tenants pay for it.
You have to ask yourself if you are getting all the return on your money that is possible. If the answer is no then you should look towards Real Estate. It is a fact that the wealth of the top wealthiest people in the world have huge Real Estate holdings. Starting your investing in Real Estate can easy, first you have to come up with a budget for purchasing Real Estate. Unlike Socks (generally) you can leverage Real Estate to get the most for your money. As an Investor you don’t have buy property outright you can get a loan against it allowing you to purchase more thus leveraging your investment dollars. Investors should obtain an operating statement from the seller when purchasing commercial properties as you need to know what the income and expenses are of a property before purchasing. Then you can apply your new tax base and your loan expenses and get an accurate income estimate of the property prior to purchasing. This is far easier with a residential Single Family investment home as you will know what the expenses are prior to purchasing as the renter will pay for their own utilities and maintenance, you will have to pay taxes and insurance which you can estimate pretty close prior to purchasing. One more thing you have to ask when placing investment dollars is when will the next correction be in the stock market and can you weather that storm before it comes back. Here at MAE Capital Real Estate and loan we love to help investors obtain investment property as well as helping them finance those ventures.
The Income Solving home loan has been designed to fill the gap for those folks that can’t qualify when they have to provide their Federal Income Tax Returns. Current rules for obtaining a Conventional or FHA loan require the applicant to provide tax returns to prove they make enough income to qualify for a home loan. This traditional style of qualifying for a home loan can leave an entire segment of the population out for qualifying for Conventional, or FHA and even VA home loans. So, the market place has come up with a type of loan that will comply with the current laws and allow for those that are self-employed or on commission to be able to qualify for a home loan without having to provide Federal Tax Returns. You may have even heard them advertised as Income Solving Mortgages.
The current law states that a borrower must be able to show “the ability to repay” the mortgage when applying for an owner-occupied home loan. This does not hold true for properties that are being purchased as a rental or for business purposes. So how have lenders come up with ways to avoid providing Federal Tax Returns? First, you may want to ask why not show the tax returns? The answer is simple as people that are self-employed or on commission don’t get the luxury of company expense accounts, paid health care, and other expenses. So those folks may make more than enough money to actually make the payments they just have to write off so many other expenses that a normal salaried person may not need to. This, in turn, lowers the income shown on their tax returns and, in some cases, may take them out of being able to qualify for a traditional home loan with their tax return.
The solution to being able to show “the ability to repay the loan” comes in the form of showing the actual income made by the individual. Showing the income can be best done by showing the deposits made to a business or personal bank account. For example; a borrower may show $300,000 in deposits for a year and yet their tax returns after expenses only show an income of $25,000. If we are allowed to look at the deposit record and apply the actual expenses of running their business their income would be far greater and probably enough to qualify for what they wish to purchase. So, to prove deposits we would require a borrower to bring in one or two years of bank statements to support their “ability to repay the loan”. We may also ask for a year-to-date profit and loss with the true income and expenses minus any paper write offs like depreciation.
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 firstname.lastname@example.org. 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.