The Real Estate Market is still Hot in California but not as hot as it was so why? Rising interest rates has a lot to do with the lag or slight slow-down in the market as well as a few other factors. When evaluating Economics and economic trends you have to look at more than just the numbers and statistics, you should be looking around and talking with people in the industry to hear first hand what is happening. To fully understand what is going with Real Estate Economics there are many factors to take into consideration such as people and their tastes or appetite to purchase Real Estate which can't be found in published statistics. In California we have about as many different Real Estate Markets as we have climate zones. So to throw a blanket over the entire State’s Real Estate Markets would be doing everyone reading this a disservice. So for the interest of time I will cover the macro economics of Real Estate in California (or for those that follow Bernie Sanders Macro is a broad overview of the Real Estate Markets in the state). I know economics is not a class taught in High schools in California so I will try to break the theories down to a level that everyone should understand.
First let’s start with the obvious change since the beginning of the year in the world of Real Estate and that is the fact that interest rates have gone up. Interest have gone up from an average of 3.5% a year ago to 4.5% this year. This may not seem like a lot but when you equate it to qualifying for a home loan it can be significant. An example would be a couple that makes $100,000 annual income with about $800 a month in car payments and revolving debt. These folks would have been able to qualify for a $464,000 home loan last year at 3.5% and this year making the same income they will only qualify for a $411,000 home loan. The difference in buying power is $53,000. So as you can see their buying power was diminished by higher interest rates.
The next factor we have seen is that prices of home have gone up by 10-20% over the last year depending on the area in California you look at. What this means is that if you were looking at houses last year in the $400,000 range those same houses are selling today for an average of $480,000 at a 20% increase and to $440,000 with a 10% increase. So if your income has not gone up as fast as home prices you just lost buying power. Some Home buyers are feeling this coupled with higher interest rates and many have decided to stay put where they are at. Potential move-up buyers may re-evaluate his or her ability to better their current living situation with these factors and may chose to stay put. With rising prices and interest rates some first-time home buyers may have "priced out of the market" and not have the ability to purchase a home. If you live in a market like Southern California or the San Francisco Bay area these percentage increases will hurt even more people with the higher home costs in these areas.
Supply of housing is also a huge factor in how fast Real Estate will increase in value. For example, in Southern California or the SF Bay Area there is only so much land available to build new housing on. With a limited supply of housing and a large demand for the housing that exists the prices are soaring and in those markets like Southern California and the Bay Area many people have been held out of the ability to buy or even live in those areas. So we have seen, and continue to see, people and businesses migrating to the central Valley to places like Sacramento, Fresno, Bakersfield, and the desert areas of Southern California. This migration has caused home prices to increase in those areas to record highs as well. Construction of new homes in those areas have increased dramatically and continue to do so as long as people and businesses need a place to be. As we see the creation of more jobs in California we will continue see the demand for those homes to house the workers. This could also be the demise of California’s housing boom as more and more employers are tired of the business environment in California and are choosing to leave this state. With more taxes and regulations put on businesses in California we are also seeing a record migration of businesses leaving the state. Although this is regulating the demand for housing to an extent currently there will become a time in the not so distant future that the business cycle will slow and the California Real Estate Market may be the first to feel a down-turn.
Which brings up the fact that there is a current migration out the state of people, especially retired folks due to it’s high cost of living. People are realizing that they can’t retire in this state and are looking to other states that have lower taxes and a lower cost of living to retire. If this migration out the state continues when the Real Estate market corrects California could feel the pains worse than other places around the country. However, as long as there are good paying jobs in California there will be people to fill them, but as soon as that changes so goes the Real Estate Markets.
Going back to rising interest rates and what effects that has on the economy we will see business slowing their expansion for the simple fact that the money to expand is costing more. This is the whole point of the Federal Reserve raising interest rates in the first place, to slow a hot economy and keep inflation down. In California we are experiencing that slowing effect now in some industries. The Real Estate Finance or the Mortgage Business has slowed dramatically with the rise of interest rates cutting out those that may have wanted to refinance to lower their mortgage payment. Although there is the home purchase business that is still good Mortgage companies depend on the demand for money to keep going as people need to mortgage their homes for other reasons that purchasing them, such as bill consolidation, College, home improvement and the rising interest rates have slowed those areas so the financial industry has also slowed.
Other factors that are slowing the demand are seasonal with vacations in full swing people are looking for fun not buying or selling Real Estate. The weather could have an effect on Real Estate Sales as the hotter the weather becomes the less people want to go out and look at houses. This time of year traditionally we have seen the vacation/weather slow-down to around mid-august to September then it starts to pick up as children start back to school and people have more free time to think about moving. At MAE Capital Real Estate and Loan we know these cycles as we have seen them occur for over 30 years of being in the business. We are here to help you buy and sell Real Estate as well as Finance it whether it be a cash-out refinance to pay for college or home improvement or to finance that first home or even that 20th investment property we have done it all and are doing it every day and look forward to working with you. Call us today at 916-672-6130 and we can help you with all your questions.
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.
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.
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.
Well Its that time of year again when the days get a little shorter, there is smoke in the hot air from all dry fires starting all over California. The kiddies are starting a new school year. It is the “dog days of summer” and with everyone changing their attention to things other than Real Estate, we generally get a seasonally adjusted lull in the action. This is all perfectly normal and being in the industry now for over 32 years it is pretty normal. The only other time we have not seen the lull was in 2004, 2005 and 2006 when things were abnormally busy, due to an overheated Real Estate Market. Although the Real Estate Markets have been brisk over the summer it was more of a normal healthy market with move up buyers and first time buyers entering the market. Real Estate Prices rose but only in the price affordability ranges.
So why even write about the Real Estate Market you ask? Well as a business owner and an economist I like to share the trends that I see developing so my readers can be informed in their investment approaches. This is the time of year where California starts on fire and I am not referring to the Real Estate market I am literally talking about wild fires. In late August, September and October we generally have not seen any significant rain fall since May, which causes dry tinder conditions perfect for wild fires. This However, can’t be said for other parts of the country that have had record rainfall and severe flooding. I am sure California Fire fighters would love to have just one day of significant rainfall to help knock down our fires. If you have followed Real Estate trends for any length of time you will know that it is very cyclical and predictable if you know the signs to look for. Folks looking to move to California may take a step back during this time of year as they may think the whole state in on fire per the wonderful media that reports on all the fires. The truth is, although there are several fire throughout the state and the smoke can be seen throughout the state, on a percentage basis is is only a very small percent of the state that is affected by the fires (less than one percent). I can’t talk to the flooding in Louisiana but my guess is that there are parts severely affected and other untouched we just hear the bad.
Anyway, you ask what is ahead in the Real Estate markets in California for the rest of the year? I am here to tell you that whether you are a buyer or a seller of Real Estate that you will be able to find great deals if you are a buyer and sellers will be able to sell at prices that will stay steady through the end of the year. However, if you are buyer you might notice fewer homes hitting the market this time of year as most people don’t like to move when their children are starting school and they generally don’t like to move over the holidays. What this creates is slow down in supply of houses hitting the market. In economics, if the demand for housing exceeds the supply of housing prices will go up. Conversely, if the Supply exceeds the Demand then prices will go down. So, although we see less sellers putting their homes on the market, this time of year, we also see the demand to purchase taper off as well. So with both demand and supply tapering off till the end of the year there are still great opportunities out there for both buyers and sellers.
Interest rates will stay low through the end of the year as well. How do I know this you ask? From an economic point of view, you have to know what drives interest up. Interest rates will be driven up if we start to see inflation. Inflation is where prices of goods and services are increasing. We are currently at about a 2% or less inflation rate annually, which is lower than what would be considered a “normal” inflation rate. We can predict inflation rising by watching personal income levels and employment rates, as the more money people make the more they tend to spend which would raise inflation and thus interest rates. So I don’t see any great increases in personal income from now until the end of the year thus a steady inflation rate and thus no interest rate increases.
What will the election in November do to the economy? Well, again if you know economics, there are what are called time lags that occur when something major happens in the economy like an election. So no matter who is the next leader of the free world it will not affect housing at all this year. In fact, I don’t see any major changes occurring at the earliest the second half of next year. The markets will need that amount of time to see what the new administration is up to. What I am focusing on is the new laws from this administration that have choked down the ability for people to qualify to buy homes. These last 8 years have been the toughest 8 years in Real Estate in the history of Real Estate and Finance and Government intervention. Over the last 8 years we have seen the implementation of the Consumer Finance Protection Bureau (CFPB) and the re-writing of the all the lending laws that were in existence prior to 2008. We have seen Loan officer Licensing across the country. We have seen the regulation of underwriting standards when a person qualifies for a loan. We have seen the CFPB put fear into lenders of being fined so they don’t take any risks in underwriting loans. We have seen predatory attorneys taking advantage of people that feel they have been wronged by a lender simply because they can’t make their mortgage payment. In the past, the free markets were left to weeding out bad lenders and bad loans as those bad lenders writing bad loans would end up bankrupt and out of business. In 2008 we saw our government “bailout” those bad lenders deeming them “too big to fail” thus a new world of banking has emerged. Today we see those same Banks that were deemed “to big to fail” ruling the banking industry and with their profits sky rocking they have been able to buy their own legislation to carve them out as “to big to be regulated”. I could go on and on with the negative effects of Government intervention in a free market economy but that will be for another article. We just need to be diligent as voters and recognize that a bigger Government gives the people less freedoms. So Real Estate will continue steady until the end of this year but what happens next will be up to all of you to do your research and educate yourselves. I will not tell you who you should vote for if you value Real Estate Investing or if you are going to be in the market to buy or sell your home in the next 4 years you need to educate yourself on the market facts. As a voter don’t be fooled by all the social noise you hear in the media, you need to educate yourselves on the benefits of a free market economy and the problems that a free economy faces when Government intervenes. I wish all well and if you need help with your Real Estate endeavors I hope you remember us here a MAE Capital Real Estate and Loan as we would love the opportunity to work with you for either you Real Estate buying or selling needs in Northern California and or you lending need or both.
Ok I know most of you shy away from the term “Economics” as it sounds like a college class you hated to attended. The reality is the more you know the better off you are. Real Estate is a volatile commodity meaning it can move up and down in value rapidly, so if you can predict the up cycles and the down cycles you can learn to profit from investing in both cycles. Real Estate as an industry has been the strongest investment above all other investments over the last 200 years since we have been taking record of it. If you look at the mix of investments of the richest people in the world you will see the largest source of their wealth is their Real Estate holdings. But acquiring Real Estate can be difficult especially in this new regulatory environment so owning it makes it that much more important, whether it is your personal home, a commercial building or raw land it all is going to increase in value over time. The reason Real Estate will continue to increase in value over time is the simplest of all economic terms, supply and demand, there is simply a limited supply of land and there is always a demand to own it. As the demand for land increases with increases in population over time the price of land will increase, simply because people will pay more to own it when it is in limited supply. The best example of this New York particularly Manhattan as it is an Island and there is only limited space on it to build and what you see is high-rise buildings with extremely high Real Estate Values as there is a limited supply with a high demand for it thus high prices.
Supply and demand theory is the most basic of all economic terms, whether it is pertaining to Real Estate or any other kind of product or service. It is really simple in that the higher the demand for a good or service and the more limited supply of that good or service the higher the price will be. When the demand for the product or service and the supply is being provided at the same rate the demand for the good or service is that is said to be in equilibrium thus you would have stable prices. The interesting thing about Real Estate is the fact the you can’t make more of it, there is naturally a limited supply. This is especially evident in high density populated areas. Areas like New York, San Francisco, Los Angeles, and generally any urban area where you have good jobs and high demand for housing. In Real Estate you also have the desirability factor, areas within those high density areas that people want to live in such as Beverly Hills in Los Angeles, Santa Clara by San Francisco, and Manhattan in New York. Those are just some of the most publicized areas in the US, but within every High Density City there are particular areas that surround it that are more desirable than other areas within the area and those areas will demand a higher price simply because of the demand to live there. Location, Location, Location is what us in the industry refer to as the 3 most important aspects of Real Estate investing as the better the location the more apt the value will increase at a faster rate than the normal increases seen by the national averages.
To take the economics of Real Estate even deeper we need to look at where the good paying jobs are located or are going to be located. This is important for no other reason than affordability of homes around locations where there are good paying jobs. Without employment people can’t afford to buy homes, commercial property, or land. Yes, this is probably the best kept secret from potential Real Estate Investors as not all Real Estate investments are good ones. You see, you could buy cheap land out in the middle of the dessert or in swamp land, but is that a good Real Estate Investment, probably not, for no other reason than there is generally no demand for this land as there are no jobs located close to that cheap land for others to want to live there thus low demand and low prices. Real Estate speculators will generally look to invest in areas where large companies are planning to move or expand. A good example is the new Tesla factory being built outside of Reno Nevada near Sparks Nevada. This land has been basically desert land with no real value, but now with a new factory that will employ hundreds and thousands of workers the land surrounding that factory is rising in value in anticipation that workers will need housing and services close by the factory. Right now with the factory under construction you have seen an increase in employment, thus creating demand for housing so you have seen increases in Real Estate values as a direct result of the construction workers.
The availability of credit is an economic factor in Real Estate that is not talked about much, but you can see as it becomes tougher for the average American to borrow money to purchase housing that housing price increases slowdown in general. This is a simple principle of supply of available money which means the more money available to potential Homebuyers the more they can buy and less money available the less they can buy. Why is this important? As the Government imposes more lending restrictions the tighter the supply of available money becomes allowing for less people to enter the housing markets. Again, the less supply of good Homebuyers the less the demand becomes for housing then prices have to go down to stimulate demand. When Government intervenes into a free market by creating limitations what you get, in the case of the Real Estate Market, is less people being able to obtain credit thus less people being able to obtain housing. For example, if you tend to believe and vote for those that want to regulate lenders and how credit is delivered you will be voting for slower increases in Real Estate particularly in the single family home arena thus trickling down to all aspect of Real Estate. The Dodd Frank Act of 2008 was the Government and your elected officials creating a new Agency, the Consumer Finance Protection Bureau (CFPB) designed to protect the consumer from bad lenders and regulate how consumer loans are delivered to consumers. Since the creation of the new multi-billion-dollar agency it has created licensing for loan officers, restrictions on underwriting guidelines, and have made lenders culpable in every loan they fund making lenders less apt to approve challenging loans. Before this Agency was created and the regulations it has imposed on the industry, if Lenders made bad decisions they would lose money or go out of business or both, but since the Agency not only can that still happen but if they make a decision that the government doesn’t like they face stringent fines and penalties. So as a result of the legislation lenders are lending to far less people than in the past, thus creating a credit drag on the availability of money to borrow to purchase homes and slowing the economy in general.
Housing creation tends to bring about other increases in Real Estate demand such as commercial and industrial Real Estate. You see, the more people that live in specific areas the more the demand is for commercial goods and services such as shopping malls, Grocery stores, and other consumer services like Plumbers, Electricians, Contractors, Appliance repair shops etc.. Demand for housing itself is important but the net effect on the surrounding Real Estate for those support services is equally important as commercial development brings up Real Estate values across the board as well. As you can see the cycle of Real Estate itself will bring about jobs that will bring about demand for housing, so if you have a healthy Real Estate market you probably have a healthy economy in general. The more you regulate this industry the less opportunity there is for growth and the less opportunity there is for a healthy economy.
We as Americans need to be more educated not just in Real Estate but in all things so we can continue to be the best country in the world. If we allow our elected officials to govern the Real Estate markets or the Free market system that our country was founded on, then we will end up being a stagnant country with little or no growth or the ability to achieve a better for future for the generation of Americans. We have to be smart and not rely on the government to police the markets, it should be up every American to choose what good or service is best for them and if they have been wronged by a provider of a good or service there are avenues to communicate this, and if the provider of that good or service, no matter what their size is, does not fix the issue they end up going out of business and not bailed out by the Government. We have put way too much authority in our Government to police the so called free markets. In doing so we have created a monster of a Government that will keep needing to be fed, and that will eventually fall back on every American in the form of increased taxes and decreased freedoms and liberties. To fix this problem will only come through education, so whether your education comes from the internet or formal schooling never stop learning and never close your mind to opposing viewpoints and never trust the government is doing the right thing for you. Even if you work for the Government you can keep educating yourself and your family and maybe someday you will be able to branch out and enjoy the freedom to work for yourself and build something that will be lasting for you and your family and the American people. And lastly a final thought; America was built on freedom and capitalism, that is what made America great and the envy of the world, so do not give up on those basic principles of the American way.
I usually write on specific topics but this time I am going to have some fun with Real Estate and Real Estate Services. I am asked almost daily the same question “how’s the market doing”. I personally hate this question as it is not specific to all the things I do. I have to ask if they are referring to the Interest Rates, as I have been doing mortgages the better part of my 30-year career, or are they talking about the Real Estate market. Not a hot question, but since we are there I might as well elaborate. Interest Rates are hot right now. Interest rates are as low as I have seen them this year. What is not hot is the demand for the money. Ironically, the Federal Reserve (Not Hot) has kept the Fed Funds Rate or the Inter-Bank lending rate to right around 0 for the last seven years (Hot you would think) but during the same time lending laws have tightened, so tight that it makes it very tough for the average person to get a loan to purchase a home. So with hot interest rates we have a lackluster demand for the cheap money (Not Hot). As far as The Real Estate Market it is hot for price ranges up to $350,000 in the Greater Sacramento, Placer and Eldorado Counties. As for the San Francisco Bay Area that market is hot, in the Los Angeles Area that market is hot and not depending where you are at.
Not hot is the new Truth in lending RSPA Integrated Disclosures, or TRID rules that just went into effect October 3 2015. This is the Federal Government’s (Not Hot) way to help consumers to make the right decision on their home loan by giving them more time to think about what they are getting themselves into. That’s right the Government is telling the consumer that they are uneducated, ignorant, and that they should probably pay for an attorney to look over their loan documents before they sign (Not Hot unless you are an attorney, oh the law was written by attorneys for attorneys, double not hot). Although, the new TRID procedure is ominous at best, the “Good Faith Estimate” of fees and costs and the Truth in Lending statements have been combined into one form (Hot) that is more user friendly for consumers called the Loan Estimate Form. The Government actually consulted private industry (Hot) before imposing a form that had no relevance like the old Good Faith Estimate. With the onset of the new TRID procedures the consumer will have to wait longer at the end of the transaction (not hot). The new procedure will make lenders, after the loan has gone through underwriting, issue a new form called a Closing Disclosure before the lender can issue the closing documents for settlement (Not Hot). What this intended to do is give the consumer an additional “cooling off” period of 3-8 days depending on when the consumer receives the form. The way this works on a new purchase loan is that after the consumer has found a house, applied for a loan, received their initial disclosures, the appraisal has been completed, and the lender’s underwriter has reviewed and received all the conditions needed for an approval, the Closing Disclosure will be issued to the consumer. The Consumer will have to acknowledge that they have received the document or the wait time will be an automatic 8 days, once they acknowledge receipt of the form they will have 3 business days from midnight the day they receive the form to reject the loan or make any changes. If any changes are made there will be a new form issued and the same wait periods begin all over again (not hot). This has the potential to add up to 2 weeks to a purchase transaction (not hot). In a refinance transaction the procedure will be the same but there has always been a mandatory 3 day rescission period after the legal paperwork has been signed, making a refinance transaction take even longer on owner occupied loans (Not Hot).
What’s Hot is Real Estate Sales in the Greater Sacramento Area (where I write this from) for homes that comes on the market $350,000 or less. This seems to be the sweat spot for Real Estate sales in the area. Hottest markets seem to be Roseville, Elk Grove, Rocklin, Folsom, Eldorado Hills, Loomis, Penryn, Antelope. Average Prices are hot right around $314,000 for Sacramento County, $445,000 in Placer County, $435,000 for Eldorado County, and San Joaquin County comes in as the most affordable at $312,000. I don’t have the data for other parts of California at my fingertips, but with the average income for the State of California hovering right around $65,000 per household that would indicate that if you have an average household income with average bills you could afford a mortgage of about $318,000 (hot for northern California areas except the SF Bay Area). With California’s unemployment rate, as of April 2015, at 6.3% it is higher than the national average unemployment rate of 5.1% this could be an issue for housing in the future (Not Hot). From an economic point of view California is becoming a State that only the very richest companies can exist in due to the high corporate taxes, personal property taxes, excise taxes, and general higher costs of living. This could lead to a population of only highly skilled workers working for the high tech companies leaving manufacturing companies and labor intensive companies out of the loop in California thus leaving no room for the uneducated worker (Not Hot). California has long been a State with laws and taxes that have favored the lower class workers, now those very laws are actually hurting those workers that are predominantly unskilled labor as the State has forced the manufacturing, and unskilled labor employers out of the State by higher taxation and unhealthy laws and regulations (not hot).
Hot in lending and investing is private money notes. Hot for investors in Real Estate in that their qualification requirements fall basically into the equity in their property being financed. If you are an investor in Real Estate and buy and hold or buy and flip you can obtain money to leverage your activities fairly quickly and easily (Hot). If you are an investor in notes and Deeds of Trusts the market is hot in that you can receive yields from 6% to upwards of 13% with no hassles of being a landlord (Hot). Unfortunately, the laws have changed to be way to ominous for private investors to invest in Notes and Deed of Trusts on owner-occupied primary residences due to the Dodd-Frank act and California’s own set of laws (not hot). The stock market has been very volatile over the last several months so the increase in demand for investors to invest in these notes have increased significantly (Hot). However, with the increase in Real Estate prices investors that buy hold or flip have slowed down, so there is more money out there than there are investors to lend it to (not hot).
Finally, MAE Capital Real Estate and loan is hot as we follow the markets closely and we can offer all types of products for our clients. We can finance all kinds of properties from single family owner occupied properties (California only) to Commercial projects all over the country. MAE Capital Real Estate and Loan can list and sell your home in our local markets of Placer County, Sacramento County, Eldorado and Nevada Counties. We value our customers and work deals with our clients when we represent them in multiple transactions such as listing and selling their home qualifying them for their next home and finding them their next home. With our ability to represent clients from both the Real Estate and the Loan sides we can save our clients thousands of dollars in commissions that they would have otherwise had to pay (Hot). We look forward to working with you now and in the future (Hot).
So you are about to make an offer on a home and you are not sure if you should pay the $300-500 for a home inspections. Your Relator tells you that you should have one, but is it really necessary for you, or is it just to protect your Realtor? My answer is a little bit of both and we will explore why. First, we need to define the differences between a Home Inspection and an appraisal. An appraisal will be done mainly to establish a value of the property. An appraiser may note work items that should be done prior to the close of escrow, however, this is only for health and safety items and known code violations. A home inspector does not take value into consideration when doing the inspection. The home inspection is to identify problem areas with the construction of the home itself.
The home inspector is extremely thorough in inspecting the home and the systems within the home. A home inspector has a list of all the systems a home could have and he or she will inspect all the systems and make sure they are either working or if they need repairs or upgrades. As a home buyer, this is important to know as the home inspection can bring up faults to the house where the potential buyer may not want to buy the home without the items fixed. It is also important to know that if the sales contract is contingent upon the home inspection the buyer’s lender may request a copy of the report. Lenders can ask for certain items in the report to be repaired as a condition of getting the loan. So if you know there might be problems with the house and you don’t want the lender to have a say in the repairs you should get the home inspection on your own and not make it a condition to close. Remember in most Real Estate contracts there is what is called an "inspection period" for the buyer, usually 17 days, and during that inspection period you can, as a buyer, request any kind of inspections including a Home inspection.
So what does the inspector look for in a home? They look at the entire construction of the home. The inspector will note the age of the home and what the construction standards were when the house was built, in addition, they will note the new building codes that they believe the house should be upgraded to, if necessary. The inspector will go under the house, if there is a crawl space, and they will note the condition of the floor joists, foundation, plumbing, electrical and any deficiencies and they will recommend fixes. They will go room to room in the interior of the house checking floors, walls, ceilings, electrical, doors, floor coverings etc. and recommend fixes. In the bathrooms, they will inspect the plumbing, the fixtures, water flow, and floors, ceiling, and walls. In the Kitchen they will make sure the appliances are working, the garbage disposal (if installed) works, lighting, flooring, cabinets, and doors, they will note cracks in the counters if there are any. Then they will go into the attic space and check the roof from underneath, the electrical, plumbing, and any systems that might be in there such as the Heating and Air conditioning system. The inspector will walk around the outside of the house and note any leaking faucets, or pipes. They will inspect the paint and the siding of the house as to the useful life left. They will go on the roof and check the roof and make any recommendations as to the useful life of the roof and any other notations that they might find.
Once the inspector has completed the physical inspection they will take their notes and compile a written report which they will deliver to the person who ordered the report, usually the buyer. Within the report, the inspector will give his or her opinions on the status of the systems in the home. Home Inspectors don’t have to be contractors so they don’t offer a price to fix any of the problems they find. The reports themselves can be 50- 100 pages so the detail is there. They note everything they see from normal wear and tear to major issues they find. Most of the time, they will point out the major problems of the house in the beginning of the report and point you to the pages to see the detailed write-up of the problems and suggested fixes.
When you are reviewing a Home Inspection my advice would be to look at the whole report and look for major work that might end up costing a lot money to repair first. Also, you might want another professional opinion on a system that the inspector notes as in need of repair. For example, the inspector may note that the air conditioning is not blowing cold air. The inspector is not an air conditioning system repair person so they would only make a notation that the system is not working properly. So in cases like this you should seek a professional heating and air person to inspect the unit, as the problem might just be a $5.00 fuse. They may also make a notation that there is a crack in the concrete in the garage. The notation might read that there is a possible foundation issue when in reality there are cracks in most all concrete garage floors. So be careful of what is noted in the report and use common sense. Remember, the inspector is also covering their own liability issues so they will note everything and every possible problem that it might be. Don’t let these notations scare you away from purchasing a house as the inspector will note everything they see. They will note cracks in tiles, which doesn’t mean the entire counter top needs to be replaced. So when you are reviewing a Home inspection know that they are noting everything and every possible conclusion to cover their own liability.
Sometimes, getting a Home Inspection is not necessary, like I said in the beginning. If you are contractor and understand construction your Realtor will still suggest a home inspection as it is their duty to do so, but if you inspect the home yourself there would be no need to pay the additional money. If you have built a home in the past and understand construction you may be just as qualified to inspect the home yourself. My advice still would be to download the MAE Capital Home Inspection quick checklist and go through the house as thoroughly as a home inspector would. Note any problems you find that you would want the seller to fix prior to you purchasing the home so you were not burdened with the expense. The sale might be an “as is sale” and you would have to make the determination if you still wanted to buy the home for the price you negotiated previously. You might be able to make the fixes yourself after you own the house and are willing to take the home in the “as is condition.
Inspecting a home should be done no matter if you do it or if you contract with a licensed Home Inspector to. You never know what might be hiding behind that wall or fireplace. I would also highly recommend that you get a termite inspection as well as a home inspection as termites, beetles, and dry rot can be major future expenses as well. A termite company will guarantee their report for a period of time, so if you do move in and find there is termite damage that the inspector failed to find then the company will repair your home at their costs. You should be prudent with your inspections of any home you are purchasing even if your intent is to fix and flip the property as you never can know fully what is going on until you move in, which could be too late. Something we do for our buyers, that is not a requirement, we buy them a Home Warranty with every sale we do. The Home Warranty warrants the major systems in the house like the heating and air, plumbing, electrical, and some will have extended options for septic systems and wells. At MAE Capital Real Estate and Loan we do this for our customers as we want to ensure a good buying experience and repeat customers. If you have any questions please don’t hesitate to leave them here on our blog and feel free to wander around our site there is ample information for any home buyer. We would love to earn your business.
Excellent, you have decided to pursue the American Dream of home ownership. Now what do you do? Well you need to know how much of a home you can afford with the income and bills you have. This step is the single most important step to your process of obtaining a home. This process is called getting pre-qualified or pre-approved. Although, the thought of shopping for a home may be an appealing one you should not even look at homes until you know for sure what you can buy or if you can buy. The Pre-Approval process is where you will gather all of your financial documents together and get them to a licensed Loan Officer so he or she run the numbers and your credit report and derive a number to which you can qualify for. You can read more about this process on our Pre-Approval page or our Process Flow page. Your Loan Officer will give you a loan amount, a loan program, and a sales price you qualify for based on your finances.
Once you have the Pre-Approval letter in your hand with the terms and amounts you qualify for it is time to find a Realtor to look for homes with. You may ask why you need a Realtor, and a simple answer will be it doesn’t cost you anything to be represented by one that knows the laws, the inspections requirements, contracts, and inventory. Yes, it doesn’t cost anything for you, as a home buyer, to be represented by a licensed Real Estate Agent as the sellers pay the real estate commissions to both the listing Agent and the Selling Agent. If the free service is not enough to convince you to contact an Agent to work for you how about the laws, unless you happen to be a Real Estate Attorney the laws with regards to real estate process and procedures are many. If that doesn’t scare you enough to be represented, how about the contract itself, there are items in a professional Real Estate contract that, if missed, could cost you thousands of dollars. Then there is the inventory, or shopping help an Agent can provide for you. Again you might say I can find anything I need on the internet. Again true, but, the problem with internet data is the updating of the data is old. In some cases like Zillow it requires that the listing Agent actually input the data into the system in order for the world to see it. Whereas the Multiple Listing Service or MLS is required to be used by licensed Realtors for every listing they have or they will be fined.
Now, that you are convinced to find an Agent to represent you, who do you use? I would, of course, recommend one of our qualified Agents, but if you are out of our service area we can always screen Agents for you in the areas you are looking to buy. This is a little know service, again its free to you as a buyer, that we offer to assure our clients are represented by an Agent who knows their stuff. You see, if you go dialing for dollars, as we call it, you will undoubtedly end up with an un-experienced Agent. This is because the experienced Agents are out working not sitting in the office waiting for the phone to ring, the Agents that are in the office waiting for the phone to ring are generally new to the business trying to get call in business. Another pitfall buyers run into is calling the listing Agent on a house they wish to buy and have them represent you. This is called dual Agency, and we as listing Agents love this as we get both sides of the commission, however, undenounced to the un-educated home buyer, the listing Agent’s allegiance is to the seller first, by law. So it can really pay to be consulted first by one of our Agents to have them either represent you or screen other potential Agents to represent you and your needs.
Shopping for the perfect home should not be taken lightly either. You should have a list of items that are “must have” items in a home such as number of bedrooms and bathrooms, updated kitchen, new or existing home, and most importantly location. Making this list is crucial for your Agent as they will be able to search for properties that fit your exact criteria, so you are not wasting your time looking at homes that don’t fit your needs. In addition to the “must have” list you should do a “wish list” like granite counter tops, hardwood floors, a pool etc. You should also do a list of items you absolutely do not want. You Agent has the ability in the MLS system to put in exacting parameters that you can’t get on the consumer version on the internet. Your Agent will put your parameters into the MLS system and put you on an automatic drip of homes in the area(s) you are looking in with the exacting parameters you have. Your first email of homes will be the largest as the initial search will pull all the current listings that fit your parameters. The emails you will get after that are “as they hit the market” emails, in other words you will be the first to see the properties come on the market. This is great if you are in a competitive price range as you will be able to see properties as they come on the market with no delays. This could be the difference of you getting the best home or not.
A great strategy to look at homes is to drive the properties that look good in the listings that you have viewed on line. Driving the properties will give you a real idea of where they are, what they really look like, and how they have been maintained. When driving the properties you don’t have to include your Agent as you are simply doing your own diligence. Make notes of the ones you would like to see and then call your Agent to make appointments to see the homes. Never go up to the door and disturb the occupants it is not nice nor is it safe. To see the homes your Agent will need to make appointments with the listing Agents or the owners directly for you to get inside. Your Agent will put together “a tour” that will include your availability to see them and the seller’s availability to show them. When you go to view the home take pictures and take notes so you can remember the ones you liked and disliked. You may not find the perfect house after several showings, don’t get discouraged homes are coming on the market every day and with patience you will find what you are looking for.
You did not expect to go looking for houses today and find the perfect one, but that is the way it happens, one minute you think you will never find the perfect house the next you find one you can’t live without. You now need to get it tied up so no one else can have your perfect home. Your Agent will write an offer for you and ask you to provide your pre-approval letter and a Ernest Money Deposit (EMD). The offer will be on a 10 page form that has all terms in it from the offer price to the loan amount, to the items that need to be inspected, and it also spells out who pays what. Remember you can ask for anything in the offer and your Agent will go over those details with you. Once you have decided the price and terms you will be offering you will sign the offer and your Agent will then submit your offer to the listing Agent. Within the offer you wrote a time period the seller has to get back to you with a response. When the seller reviews your offer they will either accept it as is or they will counter offer your offer with different terms. This is all part of the negotiation process. Once you and the Seller have reached an agreement and both have signed and accepted the terms you are now officially in contract.
Once in contract you will have certain dates that you must adhere to in the contract such as inspection periods. The inspection periods include your right to get a home inspection, appraisal and any other inspections you and your Agent deem fit. Those inspections periods are about 2 weeks so you should be prepared to start paying for them right away. Your Agent will know good inspectors to use so rely on them to guide you through this time period. A special note about home inspections is that they cover everything from cracks in the driveway to mold in the attic and sometimes it is difficult to determine what items are important to have repaired or if they need repair. You can talk with the inspector directly to determine this or talk with your Agent or both. If you determine you require additional repairs in order to buy the house you will have your Agent prepare a repair addendum, and submit it to the seller. The seller has the right to say that they will or will not do the repairs. If the Seller says that they will not do the repairs you may need to make the decision to renegotiate price or back out altogether. If you do back out during the inspection periods you are entitled to a refund of your deposit. If you miss the time frames in the contract and decide to back out you could very well lose your deposit. Your Agent will work with you to make all of this legal. Another variable inspection is the appraisal. If the appraisal comes in lower than the offering price your Agent will discuss your options with you. Those options will be to give the seller a counter offer with the lower value as the price, or you could pay the difference in down payment if you are so inclined. If you decide to pay the difference be prepared to make the down payment on the lower of the sales price or appraised value and pay the difference. For example if the sales price is $250,000 and you are putting 10% down for a 90% loan to value (LTV) or $25,000, and the appraisal came in at $245,000 you will be required to put your $25,000 down and you will have to add an additional $5,000 for a total of $30,000 and you will still be at a 90% LTV.
Once you have made it through the inspection periods and everything has passed your standards, we are full steam ahead to the closing of this transaction. At this time I would suggest you get back with your MAE Capital Loan Officer and make sure they are on schedule to close and see if they need any more documentation from you or explanations. By now the loan should be approved, and hopefully you are just waiting for the legal paperwork to be delivered to the escrow so you can sign and bring in the remainder of down payment and closing costs. You can always refer to the closing diagram on our Process Flow page to see where you are at in the process. There still may be a few weeks left in your escrow process so be prepared to provide more information for your Loan Officer. Now would be a good time to start preparing to transfer your utilities so you have no interruption when you move.
OK, you signed brought your money in to the Escrow and are ready to close. The lender must review everything before they release funds to Escrow to make sure all signatures are correct and the all the conditions the underwriter put on the file have been met. Once everything is good the lender funds the loan to the Escrow and they then take the Deed to the county to record the transaction to make the house legally yours. Congratulations you are now a home owner and you can move in and do anything to the home you wish. Your first mortgage payment will be due the first of the following month and be sure to make that payment on time or it will affect your credit. I hope this helped you with some basics to buying a home. If you go to our Pre-Approval page and complete the form at the bottom of the page we will contact you are start your process or give us a call we would love to talk to you at (916) 672-6130.