Blog with MAE Capital

Has the Federal Reserve Board gone too far with raising Interest Rates?  The Federal Reserve raises interest rates to combat inflation.   Yes, we have high inflation, but has it been caused by high demand for goods and services or is it normal demand with a diminishing supply of goods?  This question is not a question the Federal Reserve (the Fed) has not addressed properly as when inflation started to be seen the Fed initially called it “Transitory” meaning short term, turns out they were wrong.  So now after the Fed realizes their mistake, they are raising interest rates at a far faster rate than they would have normally.

When the Fed raises interest rates, they only control one rate which is the Federal Funds Rate or the rate at which banks can borrow from the Fed.  The Banks, in turn, raise their prime lending rate to the public which affects business loans, Home Equity Lines of Credit, but not the interest rates for your typical home loans.  The reason home loan rates increase or decrease when the Fed raises rates is the fact the home loan rates are driven by the FNMA, FHLMC, and GNMA and the bonds that are spun off of those securities.  Wall Street will actually set the rates based on a perception of what will happen as a result of the Fed raising its interest rate.  There is another factor at play here that needs to be addressed and that is the fact that the Fed has been buying mortgage securities since the pandemic started and now they are selling their holdings off reducing the “balance sheet” as some of you may have heard.  

The Fed is raising interest rates to slow down the economy in the hopes that the demand side of the economy will slow due to the higher interest rates thus slowing the demand to borrow money and expand.  This philosophy is fine and works if both sides of the demand and supply curve are addressed.  The problem I see here is that the Fed is overreacting to situations they can’t control.  The Fed has no way of controlling the supply of goods and services they only can control the demand side.  The problem with this philosophy in this economy is that I see normal demand with a shortening supply of goods and services.   So, by trying to slow demand they are missing the fundamental problem and that is the supply side of the equation.   We all have heard about China and its lockdowns over the last several months.  This is causing a supply shortage of consumer goods, auto parts, microchips, clothes, and retail goods.  The Fed can’t control the loss of these goods in our supply chain they are simply making it harder for American businesses to catch up to the loss of goods coming from overseas.  

As the Fed tries to fight inflation by raising the rates and ignoring the supply side we will see a recession in the near future as the economy will have to pay so much more for the money that is needed to expand American Business.  Oil prices are also a major factor in the inflation equation as we can all see at the pump.  The Fed can’t control the demand for oil by raising interest rates, so as prices for oil continue to rise so will the price of goods and services until the price of oil is addressed by increasing supply or at least showing the American people that the government is working on freeing up resources to increase supply inflation will continue.  As inflation soars and the Government doesn’t address the supply side of anything we will continue to see inflation and eventually with rates rising so high we will see an economy stagnate to the point where there is no possibility of expanding the economy with high rates to borrow money.  This is called stagflation and I would argue we have been in this state for some months now with it worsening every day.  

On the Real Estate and Mortgage side of rising interest rates, the signs will be obvious.  As interest rates rise the affordability of homes will diminish even further.  As demand for Real Estate dries up due to high-interest rates you will see the demand for home goods diminish as well.  As the demand for money drops off with the high rates mortgage companies will be laying off workers and so will home improvement stores, home builders, and appliance stores.  This ripple effect will cause other industries to have to lay off workers and the economy will slow so fast that you will have high prices for gas, food, and all services that revolve around them.  Eventually, the prices of homes will go down due to high-interest rates and people out of work not being able to afford a home.  I don’t want to scare people, but the government has been out of control of the economy for over a year now and it is showing and will continue to decline if logical decisions are not made.  My fear is that what should be done and what is being done is all somehow politically motivated.  Janet Yellen, the secretary of the Treasury of the United States, admitted that she made a mistake with inflation by not raising rates soon enough.  Now fast forward to today the Chairman of the Fed Jerome Powell is glossing over the supply side of the equation for some reason and that should scare you as that is the core problem with inflation, not the demand side.  So, I see the Fed raising rates to where we see a deep recession with mass layoffs on the horizon if they don’t stop with the interest rates and move to the supply side.   Again, politics get in the way with this as the current administration is responsible for the price of oil as they have shut off possibilities of America producing more thus having to look to foreign sources of oil.  Although this may look grim we are all Americans and we will persevere and prosper.  To counteract rising interest rates look for new innovative home loan programs coming soon to help those get into homes in a changing world.   

Posted by Gregg Mower on June 15th, 2022 3:32 PM

Tips for Moving to Another State While Starting a New Business

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MAE Capital Mortgage is a Brokerage firm that uniquely blends mortgage and real estate services to give you as many resources as possible to get you in the home of your dreams. Connect with us today by calling (916) 672-6130!

Are you considering a move to another state? If so, you're not alone. According to the U.S. Census Bureau, over 27 million Americans relocated in 2021. While moving can be an exciting adventure, it can also be daunting — especially if you're starting a business in your new location. Here are some tips from MAE Capital Mortgage for a successful move.

Find Neighborhoods in Your New Location

When you're ready to look for a place to live, it's essential to do your research. Consider neighborhoods in your new location and what type of housing is available. If you're moving to Sacramento, CA, for instance, check out Historic Chinatown and Discovery Park. 

Secure a Job in Your New Location

Job hunting in a new city can be challenging, but there are a few things you can do to increase your chances of success. Start by researching the job market in your new location and identifying hiring companies. Update your resume and cover letter to reflect your qualifications and what you can offer potential employers.

If the move involves either relocating a business that you currently run or plans for launching a new venture, you’ll want to make sure that all your tech needs are covered, ideally before moving day. Using software that’s based in the cloud is your best-case scenario, as you’ll be able to access and use mission-critical apps on the fly. For example, you can get payroll services processed quickly with online payroll software that allows you to pay your employees on time and with direct deposit to avoid having to print checks. You can also rest assured that your tax liabilities stay in check, as such software calculates and pays payroll taxes automatically.

Know the Cost of Living in Your New Location

One of the most important factors to consider when moving to a new location is the cost of living. In Sacramento, the cost of living is relatively affordable. Sperling’s Best Places notes that the median home price is $435,600 and the median rent is $1,556 for a two-bedroom. The cost of groceries and utilities is also relatively low.

The area has many free or low-cost attractions, such as the historic “Old Sacramento” riverfront downtown area. Also, the warm weather makes it perfect for outdoor activities year-round, including at nearby Lake Tahoe.

Do you have children? Sacramento County has some excellent public schools and several private schools. Colleges include Sacramento State (California State University, Sacramento), the University of California, the Los Rios Community College District, and the University of the Pacific.

Purchase a Home in Your New Location

If you're planning on purchasing a home in your new location, it's essential to be aware of the different mortgages available. Talk to a local lender about your options, and compare interest rates. It's also good to get pre-approved for a loan before you start looking.

Adjust to Your New Location

Moving to a new location can be overwhelming, but there are a few things you can do to ease the transition. Make sure you're familiar with the area and have a good map of your new neighborhood. Get to know your neighbors and introduce yourself to the community. 

Start a Business Plan, Including Creating a Logo

If you're thinking about starting your own business, it's crucial to create a formal plan to have a road map for where you want to take your company. Your plan should include information on your target market, your product or service, how you'll reach your customers, financial projections, and funding. 

It should also have a marketing strategy, an important part of which is a stand-out logo that will help you create a memorable brand. Money is usually tight during the startup phase; fortunately, you can generate a logo online for free that will help you create a professional logo that pushes your messaging and identity in just a few straightforward steps.

With these items in place, a well-crafted business plan can give you a better chance of success as you start your new venture. 

Moving to Another State With Ease and Confidence

Moving to another state can be an exciting and challenging adventure. The right plan – which includes aspects like securing financing, using online payroll services, and drafting a business plan with a marketing strategy that should include creating a logo – can ensure everything comes together. For help finding financing for your dream home, contact MAE Capital Mortgage, where real estate meets mortgage!

MAE Capital Thanks  Suzie Wilson for authoring this article 

Posted by Gregg Mower on June 15th, 2022 9:38 AM

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Debt Management Tips for First-Time Home Buyers

 

Are you planning on buying a home within the next year? Now is the time to start managing any existing debt so you can improve your debt-to-income ratio and boost your credit score. While you don’t have to pay off all of your debt before buying a home, do what you can to get your financial house in order before taking on more debt. The last thing you want is to become house poor! Here are some debt-management tips to help you prepare for a home purchase in the next 6-12 months.

 

Home Buying Steps for Business Owners

 

If you own your own business, you may have to take some extra steps as you prepare to buy a home. For example, consider forming an LLC to protect your personal assets from business-related debts or lawsuits. This will keep your new home safe from creditors! LLCs also enjoy tax advantages and management flexibility that can make it easier to grow your company. Plus, when you file an LLC, your business will seem more credible to mortgage lenders when it comes time to buy your new home. Check specific state regulations around forming an LLC so you know what to expect.

 

Cut Your Spending

 

If you want to pay off a lot of debt quickly, one of the first things you should do is reduce your spending. MoneyUnder30 recommends against creating a strict household budget and tracking every dollar you spend. Instead, set up a system that tracks all of your spending automatically, like using a single debit or credit card for everything. 

 

Consider allocating yourself some money to spend on personal expenses, like a dinner out or a new clothing item. For example, you could set aside just $100 a month to spend on treats for yourself. Rewarding yourself for your spending cuts is a great way to maintain your motivation.

 

Make a Debt Reduction Plan

 

People use all kinds of different methods to pay off debt. Look into your options and choose a debt repayment method that will work best for you. For example, you could start by paying off either your smallest loan amount or your debt with the highest interest rate. These methods are known as the debt snowball and debt avalanche, respectively. Both of these methods can boost your confidence and increase your sense of control over your debt, encouraging you to continue down the same path.

 

Transfer Your Debt

 

If you’re paying a lot of interest on your debt, consider transferring your remaining balance to a line of credit with a lower interest rate. This will make it easier to pay down your debt. For example, you’ll typically pay a much lower interest rate for a line of credit than for a credit card or personal loan. A line of credit can also be useful for consolidating several loans into one. Just use the money from your line of credit to pay off all of your other debts, then you only have to focus on making one loan payment each month.

 

Land a Side Gig

 

Bringing in some extra income will help you pay off debt more quickly. Consider picking up a side gig for a little while until you’re happier with your debt situation. Look for a part-time job in town, drive for ride-sharing companies in your free time, or offer professional services remotely on a freelance basis. There are countless ways to make money on the side of your full-time job!

 

If you’re planning to buy a home within the next year, start preparing your finances now. Don’t let your existing debt get in the way of your homeownership goals! Make a plan to start paying down your debt now so you can feel confident in your decision to become a homeowner in the near future.

 

Are you looking for your dream home? MAE Capital Real Estate and Loan can help you find an affordable mortgage! Call today so we can discuss you

Article was written by: Suzie Wilson

Posted by Gregg Mower on June 7th, 2022 10:26 AM

It wasn’t too long ago that we were looking at multiple offers on million-dollar homes and fights erupting on homes in the affordability range.  This was just in March of this year.  We are looking at something dramatically different now with interest rates driving the changes.  Those million-dollar homes are now sitting on the market longer and we are now seeing price reductions in that price range.  While in the affordability range we are seeing the demand get sucked up quickly and houses are coming on the market at a much faster rate.

I will start with the analysis on the upper end of the market, those million dollars plus homes.   I now can say without a doubt that the top of the Real Estate Market was March of this year.  Since then, interest rates have risen above 5% which alone has slowed the market.  In March of this year, you could still get a home loan with an interest rate in the 3’s, and now with rates in the 5’s that has cut the purchasing power of potential home buyers by a lot.  What we have seen is that people were qualified back in March for one loan amount and didn’t realize that rates have risen as much as they did and while they were not looking they no longer qualified for the homes that were in their price range.   Watching the Multiple Listing Service or MLS we are seeing more properties that were in pending status come back on the market with no fault of the seller but turns out buyers no longer qualify with the higher rates.

In the affordability range (here in California) is between $450,000-$650,000 we have seen more homes hit the market in the last several weeks.  As potential home sellers realize that the top of the market has come and gone they are now putting their homes on the market.  I believe that potential sellers have waited to market their homes until the top of the market and now that we are there, they are all putting their houses on the market at the same time.  This is great news for potential home buyers that have been beaten out of the Real Estate market and decided to sit on the fence until this very thing happens.   Demand will quickly be eaten up and inventory will continue to rise.    As interest rates continue to rise this will cut a significant amount of potential home buyers from the market.  So, if you fall into this price range of home buyer then I believe it won’t be long before we enter a buyer’s market.

As interest rates rise and inventory rises, prices will have to soften a bit to get buyers to buy.  In addition to that, those sellers will be making concessions to get potential buyers to buy their home.  A sales concession is when a seller pays for pest work to be done, the buyer’s closing costs, and other things to entice a potential home buyer to buy their home.  This is what is commonly referred to as a buyer’s market.  This will occur once the pent-up demand slows down and interest rates price home buyers from the market.  This is not something we like to see; however, I believe this will not cause a manic sell-off as we saw in 2008 through 2011.  The reason is simple we don’t have a money crunch like the last Real Estate correction.   Money is still available but at a much higher rate and we have relatively full employment, and we are not seeing mass lay-offs as we saw during the recession of 2008-2011.   This is not to say that it still can’t happen.  The way this would happen is if the Federal Reserve continued to raise Interest Rates past the equilibrium point which is where we could be today.

If you are a home buyer today my advice would be to buy as soon as you can as interest rates will continue to rise.  At MAE Capital Mortgage we have a “Lock and Shop” option for home buyers.  The “Lock and Shop” is once we have you approved for a loan amount, we can lock in today’s interest rates.  The lock period could be up to 180 days to give you the opportunity to look for the right home or if you are having a new home built it will allow time for the build.   Doing this will cost you a little more than if you were to have a home a lock your rate for 30-60 days, but in a rising interest rate market, it could save you hundreds on your monthly payment.  We are at a rare place in history where the Federal Reserve has already told us that they will have 2-3 more rate changes this year alone.  That said the “Lock and Shop” option offered by MAE Capital Mortgage Inc. is an easy choice to do if you are shopping for a home to buy in the next few months.

If you are a Potential seller in this market, know where your house falls in the affordability range.   The higher the value of your home the more difficult it is going to be to sell your home.   If you are considering selling your home in the next 6 months now should be the time to get your home on the market to get the very best price.  My advice would be to talk with a MAE Capital Real Estate Agent about getting your home on the market and devise a strategy with them to get the highest and best price for your home.  Here at MAE Capital, we are no strangers to changing Real Estate Markets and how to market to the changes our Agents are seasoned pros and our newer agents have the energy and mentors to get you the very best price for your home.  We also have a bundling program that when you list, sell and buy your next home with us and use our mortgage options we will buy your interest rate down so you have a lower than market interest rate thus a lower payment as our realtors will put some commission towards your closing costs on the new loan.  This program is great and is not offered by any other Real Estate firm.   

If you are considering buying or selling now would be the time to get on it.  I can say that next month the Interest rates will be higher, and so will gas prices, and food prices.  Inflation is here to stay for a while and the Federal Reserve has said they will be continuing to raise rates, we know that gas prices will continue to rise until we either produce more domestically or cut our demand, which is not possible.   We also need to keep a watchful eye over geopolitical events as they could cause even more problems to our economy.   We are living in a very unique time with a very unstable economy, high gas prices, high inflation, and a government that wants to spend more money and raise the minimum wage, and raise taxes, all of which will cause even more inflation.   

 

Posted by Gregg Mower on May 18th, 2022 11:47 AM

MAE Capital Real Estate and Loan’s operating model exemplifies a forward-thinking approach to the Mortgage and Real Estate Industry as a whole, which we apply to the benefit of our clients. Reach out for more info today! (916) 672-6130

Your Guide to Getting the Best Deal on Your Home

 

Whether it’s your starter home or forever home, you deserve to get the best deal possible. This guide from MAE Capital Real Estate and Loan looks at the pros and cons associated with buying either type of home, as well as important considerations to take into account.

 

Starter Home or Forever Home?

If you’re a first-time homebuyer, the decision to buy a starter or forever home can be difficult. As you weigh your options, there are many factors to consider. The most important is your future plans and how much space you’ll need in the next few years.

 

Should You Rent?

When deciding whether to buy a starter home or a forever home, you should also consider the possibility of renting. While this is not always an option, Money Management International notes that it may be a solution for those who don’t have the money saved up or have bad credit.

 

Considerations Before Buying Your First Home

Ramsey Solutions points out that if you are looking for your first home, then you need to ask yourself a few important things, such as, am I ready to buy a starter or forever house?

You should take into consideration your future plans, the location, and the price. Are you looking to settle down in one place, or do you want to keep moving around? What is your budget like?

The pros of buying a starter home include affordability, less upkeep, and the possibility to earn future income (i.e., renting it out). The cons of buying a starter home include smaller size, the possibility of needing repairs, and typically more difficult to sell.

 

What to Consider When Buying a Starter or Forever Home

Before deciding whether to purchase a more affordable starter home or your forever home, there are a few things you need to consider.

The first is the size of the home. Starter homes are smaller and do not typically have as many amenities as a forever home. For example, if you have a growing family, starter homes may not be the best choice for you. 

The second consideration is how much upkeep will be required from homeownership. Finances and time constraints should also be considered when purchasing a starter or forever home. Another factor is purchasing a home warranty, which will help offset any costs for minor or major repairs down the road. So if you're looking for the best home warranty company you’ll want to start your research right away. At MAE Capital Real Estate and Loan, we will pay for your home warranty if you use one of our buyer’s Agents to help you find the perfect home and the warranty for peace of mind.   You’ll also need to be prepared to put in the work needed to maintain your property? Once these decisions are made, it’s time to decide which type of property meets your needs!

The pros of buying a forever home include putting down roots, you won’t have to move again, and they’re a larger size so you can grow your family. The cons of buying a forever home include a higher cost and more upkeep.

As you can see, you have a lot to think about as you compare the pros and cons of starter homes and forever homes. Depending on your current financial situation, it might make more sense to go with a starter home initially and then work your way into a forever home.

MAE Capital Real Estate andLoan can help you make the best decision based on your needs.     Bundle Your Real Estate services with allowing MAE Capital Real Estate and Loan and save thousands of dollars and get a lower than market interest rate thus a lower mortgage monthly mortgage payment.   We look forward to helping you with all of Your Real Estate needs.  

Authored by Suzie Wilson

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Posted by Gregg Mower on May 10th, 2022 10:26 AM

As we all know we are in an inflationary economy currently.  The Federal Reserve is now tasked with raising interest rates to slow down the demand side of the Demand and supply curve.  The problem with this approach is that sure we have demand for goods and services, however, what they are missing and have no real control over is the supply of goods coming from other countries that we have grown dependent on.  As you can see from the chart below when the supply is low prices go up to meet the demand curve for those goods and if supply is too high prices have to go down to suck up the excess supply.  This is basic economics, and all theories of an economy are based on this curve.  Some politicians pervert this curve by thinking that they can control it through regulations and monetary policy when in fact it is driven by people and every good and service has it’s own curve so trying to analyze the entire economy based on Demand and Supply you have to look at where the supply of the goods are coming from before addressing the demand side.  This is a fundamental mistake I see the Federal Reserve taking in our current economic situation.

 


   The Federal Reserve can’t control the supply side of the economy, even though they truly believe that it can.  What I mean is that the Fed believes that by raising interest rates they will slow the demand so that supply can catch up to demand.  What this ends up doing is creating a very long time lag and by the time supply catches up with demand the Fed has gone way too far in raising rates and has stagnated the economy by keeping rates too high for too long and slowing the market to a recession.  This is a dance that the Federal Reserve has been doing for decades since the Allen Greenspan era under Ronald Reagan and George Bush Senior’s years or the early 1980s to the early 1990s to the present day.  The difference between now and then is the simple fact that the economy has gone mostly global instead of America being predominant.  

The question is here how do we increase the supply of goods and services and housing without overrunning interest rates?  This is a question I am sure the Federal Reserve has been pondering also for decades.   In my opinion, the supply side of the above curve is what needs to be addressed and I do think Interest rates need to go up to curb demand, however, especially in housing, rising interest rates past the equilibrium point is counterproductive in the long run.  Simply put housing should be left to flourish so that builders are incented to build.  If interest rates are too high and supply catches up you end up with people that can’t afford to buy the entry-level home.  Currently, we have people sitting on the sideline of the real estate market waiting for prices to come back to an affordable range so they can buy.  This is called pent-up demand.  With Pent-up demand in housing by raising interest rates too high you end up with demand but no ability to act on the demand, thus stagnating the housing market even further.  On the supply side of the housing market, you have potential Real Estate Sellers not wanting to sell if the house is going to be worth significantly more in the upcoming months you end up with no inventory.  So, the question should be is how to entice those potential sellers of Real Estate to sell their homes?  The answer to that is simple if a seller believes that the Real Estate Market has topped out then you will see people putting homes on the market.  This has already started on the high end of the market and is working its way to the middle of the market where the affordability range is.

As the word gets out to more Realtors and potential Real Estate Sellers you are going to see inventory begin to rise.  While builders are building as fast as they can that too will increase the supply of housing.   I truly believe that the equilibrium point for interest rates should be in the 5.5%-6.5% range for a 30-year fixed rate home loan, If the Fed pushes rates even higher you will see an almost sudden increase in the supply of housing.  If this happens too fast you will see an increase in inventory as well as prices being forced to go down to allow for people to afford homes with the higher interest rates.  Going back the above to the Demand and Supply chart you can see with an increase in supply, past the equilibrium point that prices have to fall to the equilibrium point.   This is about as basic of an explanation as I can give and in a true market without government intervention as the economic concept of Supply and Demand works every time.  

That is a good representation of the housing markets but what about the rest of the economy?  What we have in the U.S. economy on a macro level is a bit more convoluted.  As the Federal Reserve raises rates, they are also hoping to slow the demand for all goods and services like cars, trucks, heavy machines, and as companies that need to expand their production obtain loans for expansion, it will cost more to more every month for them to do so. As the costs to run a business increase then that increased cost will be put on to the consumer to pay for in form of higher prices for those services.   Add in the high price of oil and everything that runs on oil or is manufactured with oil and as those prices continue to climb you can have a recipe for disaster.  Oil is the wild card that the Federal Reserve can’t control.   Therefore, the Fed has to be very cautious when raising rates as if they go too far too fast then that could very easily put the economy into a recession which is what I see happening by the end of the year or beginning of 2023.  So, if you watch the markets and you look around at what you and your neighbors are doing you will probably be able to see the future by your own actions unless the government does something stupid.      

Posted by Gregg Mower on April 25th, 2022 3:53 PM

As I write this blog, it really helps to have some years lived under my belt.  Although I was only 9 in 1972, I was there and can remember the gas lines and high-interest rates.  The reason why this is important is that history has a way of repeating itself no matter how hard people try to erase it.  Regardless, you are here to read about where interest rates are headed and maybe even oil prices.  As I write this blog Russia is in the process of invading Ukraine.  Russia is one of the largest producers of oil in the world currently and the United States gets about 1/3 of its oil from Russia and Europe gets about 50% of its oil from Russia.  Currently, the US and Europe have imposed sanctions on Russia that is basically crippling their economy except for the oil the world is purchasing from them.    As Russia’s currency and banking system is being crushed by the sanctions, the oil is still flowing out of Russia to Europe and the US to the tune of 100 million barrels a day and at $100.00 a barrel (the current price of oil) Russia, especially Putin, are still making money every day.  At some point, either Europe and the US will stop buying the oil and financing the war, or Russia will turn it off and choke Europe with gas prices so high it will cripple the European economy and will hurt the US economy.  

This should be opening our eyes to the severity of this conflict, not to mention Putin has put his nuclear arsenal on the ready.  So, what will happen to interest rates here at home?  This question has to be answered with a history lesson.  First, let's look at where we were before Russia invaded Ukraine.  Here in the US, we were seeing a high inflation number (6%) before the invasion, and this was due to many factors but going to core economics we were seeing a high demand for goods and services and a diminished supply of goods and services which caused prices to go up.  That is simple economics, now add a war where the supply of oil will be diminished so the price of fuel will be higher.  The goods being delivered to our stores will cost significantly more to get them there so the price of those goods will have to go up to compensate for the delivery charges.     Here is where history comes in, as in the past Interest Rates have been raised to slow the demand for goods and services thus slowing down a heated economy.   In our current situation, we have high demand, high prices, and high inflation with a short-term outlook for even higher costs as delivery costs rise with the price of oil increases.

In 1972 we had rising costs and an oil supply shortage that caused higher delivery costs with no war.   By the end of the 1970’s we also had interest rates for home loans that got as high as 20%.  What we also had during the 1970s was an expanding economy with high demand for labor.  Remember, there were no computers back then, so everything was done by humans, so you had to pay good wages to get good humans to work for you, so we had wage inflation that kept up with the inflation of the time.  Sound familiar, it should as currently we have a high demand for labor, and we have wage inflation.  So, if history repeats itself, we should have high-interest rates.  The wild card here is the war.  If we get involved with the war our economy will heat up even more, but what we have going for us is the fact that the US Dollar is currently the world currency giving the US a stronghold.  This could change if China and Russia joined forces, a discussion our leaders.   

Why then are interest rates relatively stable in today’s world in the low range and what will happen to rates with war and then without a war?  Let’s break this down and use history to help us.  If Russian oil is cut off, we will have higher prices across the board which is inflation, but will the Federal Reserve (the Fed) raise interest rates to slow down the economy?  My belief is that the Fed will have to raise interest rates to curb demand, however, they will have to be very careful not to mix up demand inflation for goods and services to the abnormal price increases of oil.  The Fed will be tasked with separating consumer demand for goods and services that is normal to the price increase of oil.  The price of oil increasing is not a function of demand for it, it is a supply-side issue that will have to be calculated.  As I write this blog the stock market is going down and interest rates are lowering a bit.  The reason for interest rates going down short-term is due to a flight to quality where when the Stock market falls rapidly stock traders move away from highly volatile stocks to the steadiness of US Treasury Bonds.  As the demand for steady interest rates bonds increase the price of those bonds increases thus lowering interest rates in the short term.  In the past, the Fed has raised interest rates to slow down the economy to curb inflation.  What we have currently is a slow economy with high demand and high inflation or as they called in the 1970’s Stagflation.  

History has shown that war brings nations out of situations like this.  This war is like nothing I have seen in my life where you have a superpower (Russia) being an aggressor.  The only historical time that can be looked at is Germany in the late 1930s when they were severely depressed coming out of the loss of World War 1.  Germany stimulated their economy by starting up its war machine and WWII was started and pulled the entire world out of a depression.  I can only hope that the current actions of Russia don't start WWIII.  In the meantime, we can only pray that this situation does not escalate even further, but if it does God help us.  Assuming this goes on for a while and oil is choked off from Russia we will have higher prices for all goods and services and in order to slow demand will be to raise interest rates.  If the war ends and the oil continues to flow, then we still have pent-up demand and inflation.  The Fed will have to raise interest rates to offset this.  The dance is going to be where the right interest rate point is that keeps the economy moving at a sustainable rate without run-away inflation or stagnating the economy.  This is no easy task for the Fed as there is no real point in history where we have had all of these factors at once.  My belief is that we will see higher interest rates due to the demand factors seen prior to the war with Russia and Ukraine.  I believe interest rates for home loans will equalize around 5-6% by the end of all this without full-on WW3.  We have to be positive with regards to war as not only do we have to watch Russia, but China is also looming out there and that scares me more than Russia as they are closer to the West coast of the US than Russia.  In conclusion, I see the underlying economy in the US as heating up without our involvement in a war, if we get involved demand for labor will go up significantly and so will wage inflation to attract workers to build aircraft, munitions, and military items.  The Fed will have an almost impossible task if that is the case.  If we can stay out of war and we go back to what was happening in the economy prior to the conflict the Fed will have to raise interest rates until supply catches up with demand.  In these uncertain times, there is no right answer we have to look at history to see where we are headed and most importantly as Americans we need to stick together.  

 

Posted by Gregg Mower on March 1st, 2022 2:35 PM

As we wind down 2021 we are still in a pandemic era with uncertain times ahead.  From an economic viewpoint, we currently are under a low-interest-rate environment with high inflation (6.2%).  Before the pandemic, this would be an easy fix with the Federal Reserve (the Fed) raising interest rates to combat higher prices.  Under the pandemic era, things seem to be working in opposite directions from an economic approach as there is an uncertainty of new COVID variants coming out and the Government overreacting to them by shutting the economy down again.  With higher interest rates you will see a slowing in the housing markets as fewer people will be able to qualify for the already high prices of homes.  This brings up a question of right or wrong to raise interest rates and should the Fed raise them now or later?

To see the future, we have to look to the past in how the economy works.  Contrary to some trains of thought the economy is consumer-based, meaning that the consumer is driving what the Federal Reserve does not the other way around.  What we have seen from the past is that the Fed has bought Mortgage-Backed Securities (MBS’s) starting in 2008 to help recapitalize the housing industry.  This means that as the Fed buys MBS’s mortgage companies have the ability to sell their mortgages to them freeing lenders up to lend more, in simple terms.  So as the Fed buys fewer Mortgage assets the ability to sell mortgages to them becomes tighter thus forcing lenders to raise their rates to slow the number of loans they take in.   This is what “tapering” is as you hear this on the news channels.  So, the Fed announced that they are going to taper their buying of these MBS’s at a pace twice of what they said back in November so lenders will generally have to raise their rates to slow the number of loans coming in so they can inevitably sell to recapitalize so they can lend more.  I know these concepts are confusing but this is what it all means as you hear financial people talk about “tapering”.

The other area of which the Federal Reserve controls to slow inflation is to raise their funds' rate.   The Fed Funds Rate is the rate at which banks can borrow money from the Federal Reserve.  We learned that the Fed is not planning on raising this rate this month but plans to through 2022.  What this means is that the banks will be able to borrow at 0% still from the Fed making banks ability lend stay at the status quo.   This begs to question with a 6.2% inflation number currently and the Fed’s goal of 2% inflation is not raising the Fed Funds Rate going to cause inflation to continue to rise?  Time will tell, but one thing out of all of this is for sure is that interest rates must go up it’s just when and how fast.  Is the Fed going too slow or not aggressive enough in the fight against inflation?  This is the question up for discussion and time will tell.  From my perspective, I would say they are moving too slow and will have to be more aggressive in raising interest rates in 2022.

Why do I think that rates will have to go up significantly in 2022?  I see many factors here that the Fed has glossed over that will keep prices going up into 2022.  The major factor the Fed glossed over is wage inflation.  Wage inflation is a good thing for those working folks, however, if inflation rises faster than wages then workers are worse off than before even making more money.  One of the factors that I believe the Fed is missing in their outlook is that the continued demand for goods and services is going to continue to rise into 2022 at a faster rate than they think.  The Fed believes that inflation is, in the most part, due to lack of supply or goods being hung up at the ports and not making it to consumers as fast as demand wants it.  I believe that the demand will continue beyond the current supply issues into other supply issues into 2022.  This means that once the ports catch up with the goods coming into the US the demand will still exceed supply thus the continued inflationary trends.  Once this is realized in interest rates will have to go up to slow demand and could rise far faster than people have seen before.   The longer the interest rates are held low the faster they will have to rise to offset inflation.

So now that we see interests going up what does that mean for Real Estate?  In a higher interest rate environment, fewer people will be able to qualify for homes.  For example:   If you qualify for a $400,000 loan at an interest rate of 3% if the rate moves to 4% now you may only qualify for a $350,000 home loan.  The same concept flows over to people buying cars and trucks and companies that buy heavy equipment.  Couple this with an “Infrastructure Bill” that is poised to go through congress, the demand for these goods will be on the upside further pushing inflation.  So as the Fed thinks that inflation will calm down on its own, I believe with the Government spending more and more money that inflation will continue to rise so interest rates will have to as well.  

In Conclusion, I see the Real Estate market tapering, so to speak, with interest rates on the rise.   There will be continued demand for housing, but fewer people will be able to afford housing.  Housing prices will stabilize in 2022 and if inflation is left untouched or not acted upon aggressively you will see housing prices go down if interest rates are forced to go up at a faster pace than everyone is anticipating today.  Housing itself has been a major cause of inflation and that is not generally looked at by the Fed as a major problem, but, as housing prices rise the perceived wealth of people increases and they have taken out equity due to this.  When reality is that the increases in housing prices are the precursor to all price increases except for the price of oil.    Simply put, when people have seen their equity in their homes rise, they tend to take it out for home improvements and the purchase of other goods and services and that is what we have seen over the last few years.  So as home prices stabilize, and interest rates go up the demand to take equity from their homes decreases thus the demand for goods and services will also decrease.   Another factor that is missing in all of this is the price of fuel.  If the price of fuel continues to go up, then it will cost farmers more to bring food to market so we will see continuing inflation in the food sector if prices of oil are not contained.  So, with certainty, we can say that interest rates will be on the rise through 2022 and it looks like wages will continue to increase as there is more demand for labor than there is the supply of it currently.  Home Prices will stabilize and move lower if interest rates go up too high.  If you are looking to buy a home in 2022 it could be a great time to buy as demand slows down and prices may adjust down a bit.  Interest rates may be a bit higher but if you can qualify go for it.  You can never go wrong owning Real Estate especially your primary home.          

Posted by Gregg Mower on December 16th, 2021 12:43 PM

The first thing everyone who is considering using Private Money otherwise known as Hard Money loans to fund Real Estate is that these loans are primarily for Investment property.   People ask; “why not help fund owner-occupied property with poor credit?”.  The answer is that the current lending laws with regards to Qualified Mortgages have many limitations and disclosure requirements.  A Qualified Mortgage is a mortgage used for owner-occupied 1-4 family homes.  Usually, Qualified Mortgages are sold to FNMA or FHLMC which have stringent lending requirements.  Private Money loans, on the other hand, are from private individuals, and retirement funds of those investors, and they are more interested in the equity in any piece of Real Estate than the qualifications of the borrower.  The thought is, if a borrower is going to put down 30% or more of the purchase price, they are not likely to walk away from that investment, so they tend to make the payments even when the rates are high.  

Private money/ Hard Money can be used to fund residential property, raw land, commercial property, Commercial land, construction, mixed-use properties, warehouses, Agricultural land, and more.  Each investor or the people with the money to lend generally have an appetite for a specific type of property they feel most comfortable lending on with their money.   As a Mortgage Broker, MAE Capital Mortgage has many different investors with different appetites for different types of property.  It is our job to match up the investor with the borrower and make sure that both investor and borrower know what they are getting into before a deal is struck.  MAE Capital Mortgage will do the legal paperwork to keep both the investor and the borrower informed as to the terms of the financing prior to funding an investor’s money.

When would you use Private/ Hard Money to purchase Real Estate?  The best answer to that would be when a borrower doesn’t qualify for traditional financing.  Most folks that utilize Private funds for their project generally the borrower or the property has issues that a traditional lender will not lend on.  A borrower may have poor credit with a large down payment thus not qualifying him or her for traditional financing.  This is where a private investor comes in.  A Private investor will lend to a borrower regardless of their credit score if they feel the equity is there, in case of a foreclosure situation, however, like I said earlier people generally will not walk away from a large equity position and will find ways to make that payment so they won’t lose the property.  This is good for both investor and borrower in that the borrower gets the property and is good for the investor as they get the yield on the loan without any obligation to fix a property or pay any maintenance, utilities, or taxes.  

Hard Money Loans have been used for fix and flip properties and fast funding.  For the fix-and-flip property buyer, it is extremely helpful to have money ready and available for fast closing so these types of Real Estate flippers usually have a good private money lender that they can draw on at any time to get the deal where others may not be able to close as fast.  In addition, with a fix-and-flip loan, we have investors that will fund the costs of improvements up to 65 or 70% of the projects after repair value, which is helpful to obtain the fund to fix the property.  At MAE Capital Mortgage we work with many of these types of Fix-and-Flippers to fund property fast.

The terms of Private/ Hard Money loans vary a bit, but they are generally a 1–5-year Interest Only Loan.   The interest rates will vary greatly depending on the Loan to Value, property type, and borrower experience.   The beginner borrower will probably be looking at interest rates between 10% and 12%.  An experienced borrower or someone with good credit may be able to get rates as low as 4.99% and everything in between.  The cost for private money to the borrower ranges from 2%-6% of the loan depending on the investor and the risk.  These costs are generally factored in by an experienced Real Estate Investor into the profit margin for the project they are buying.  

Using Private funds to fund your Real Estate project is not for everyone, but you know when you need it, and we are here to help you fund your projects.  With a relationship with a Hard Money Broker over time or after a few transactions, you tend to get better pricing and lower costs when the team understands that you are a good risk.  To hop all over with different Brokers you will always be on the high side of rate and fees as private money lending is relationship-driven.  Here at MAE Capital Mortgage our experienced team of loan officers has the investors and the tools to get you closed when you need the funds.  WE look forward to helping you whether you are a novice or experienced we can accommodate your needs.  Call us today at 916-672-6130.

Posted by Gregg Mower on October 28th, 2021 2:38 PM

“ I heard the market was red hot and homes are selling for more than the asking price”  this is what we are hearing daily from our clients.   Is this true anymore or is something else going on now?     All you hear on the TV and Radio is that the Real Estate Market is red hot, but is this really true?  In my 37 years in the Real Estate and Mortgage business, I have never seen a market quite like this one we are experiencing.  I also hold a degree in economics and have not seen anything like this in history. So what’s going on, one minute things are going crazy with low interest rates and more buyers than sellers.  The next minute everything slows down.  

This is happening across the board, interest rates are still at historic lows, but it appears everyone that has had the opportunity to refinance and take advantage of the low rates has done sone so.  Or is it that, like COVID, we are about to experience a second wave of people refinancing and buying homes.  We have never seen such a market in the past so there is no real model to judge this on.   But we have seen a dramatic slow down in home buying and refinancing over the last 3 months.  In California, they lifted the mask mandate, and it appears those that have been locked down decided to all go on vacation at the same time.   

We generally see a summer lull in Real Estate, however, this one is far more pronounced than ever before.   It has me and others asking if this lull is just that or is it something else?  I do see this as the market seeking an equilibrium point, not an all-out bust.  I have seen big news in the markets before and the way the markets tend to react to this is by over-correcting on both sides.  I would liken this to stretching a rubber band and letting it go, it will spring up then back down then reach an equilibrium point.  Right now, in the real estate market, we are seeing a bounce down or a slowdown after it was super-heated.

Another factor that we have not seen before is that California was shut down for 15 months and people were told to stay inside and not travel.  In a normal year, people would travel all time of the year but the last year and a half have been far from normal.  What we saw during the pandemic was people staying home not traveling, so when they were told they could now go out and about they did and they are still are taking vacations and traveling not thinking about Real Estate or their mortgages.   Couple that with their kids being out of school they are taking full advantage of the time they have out of their houses seeing family they have not seen in months and enjoying the outdoors while the weather is good.  

Understanding how humans think is a big part of economics.  So as schools reopen in August and kids head back to the classrooms that will leave the parents back home and working with the time to think about their living situation and their financial situation.  Coupled with low-interest rates that the Federal Reserve says they are keeping low until 2023 I believe that the Real Estate market will pick up again by the end of August and into September, but it will not be at the pace we saw during the height of the pandemic thus the bounce.  Another interesting phenomenon that will be discontinued in September is the extra $300 a week in unemployment benefits.  This will send people back to the workforce, but will the economy be able to accept all of these long-term unemployed folks that took advantage of the system?  As an employer, I would not hire an able-bodied person who chose to stay on government assistance rather than work as that shows me laziness and I think this will be a big issue in the high-end job market.  Entry-level jobs like Walmart, retail jobs, and restaurant workers will be happy to take these folks back into the workforce as those workers can easily be replaced if they don’t work out.  But I digress, those entry-level workers will not be homebuyers in the immediate future but having them back in the workforce will allow management and owners to realize a better income level so those folks will be the benefactor of the ability to purchase real estate.  So my crystal ball says that by September we should start to see Real Estate pick back up for all the reasons that are not the standard reasons for Real Estate to boom or bust.  To get started today and beat the rest of the crowd call one of our Real Estate Professionals to get pre-approved for a home loan and start your search as new listings hit the market you will be there first.  If you have been waiting for your credit score to improve before refinancing start now ahead of the crowd Interest Rates are still in the 2’s and 3’s.   Call MAE Capital Real Estate and Loan to get started at 916-672-6130.

Posted by Gregg Mower on August 5th, 2021 2:14 PM

Well, here in California we are one of the last states set to re-open on June 15th, politics aside.   What will this mean for the red-hot Real Estate market?  We are currently still experiencing a shortage of home listings on the market, and we have demand still exceeding the supply of listings.  What will loosen up the market and get Real Estate back to a normal where the average person can get into the market?  What effects are inflation having on the market?  In this blog, we will be exploring the possible scenarios that could happen with a re-opening and what those consequences are.   

First, we need to ask why are people not willing to sell their homes and will it change?  In my opinion, I think the main reason, from what I am hearing from our clients, is that there is nothing to move up to.  Simply put, if they do sell their home where will they go if there are no homes for sale in the area they want to move to.  People have a fear of being homeless or paying more than they can afford and with no other homes to move to this is a major problem when it comes to freeing up inventory.  This is what is called an inventory shortage where demand for homes exceeds the supply of homes for sale.  Builders are trying to meet the demand, but the rising costs of materials are making the cost of building homes more expensive thus home buyers are getting less home for more money.  So, for a potential home seller moving up becomes a lateral move, not an improvement so they hunker down in their current homes waiting for the market to change.  Another phenomenon we are seeing is that older homeowners who would have sold and moved down are not doing so and staying put in their family home as it is cheaper to stay in a bigger home with low property taxes than it would be to move to a smaller home and have to pay more in property taxes, especially in California.  Those that have decided to move from the family home, we are seeing, move out of state where taxes are lower and property prices are cheaper, again not so good for the California economy.   

Another economic factor that we are dealing with is inflation.  This will keep people in their homes as well when they realize that the new home, they would qualify for is on the same level as the house they are selling making it foolish to sell and move.  In addition, inflation makes the cost of goods and services more expensive, so for potential move-up buyers inflation makes their income go far less and the costs of living is more expensive in their current home.  If you are paying more for food, gas, and consumer goods, and your income is not going up as fast, it makes the money you have, get eaten up quicker, so saving money becomes more difficult.  Inflation also makes building costs go up and the prices of new builds go up as well as we talked about earlier.  People want to feel comfortable before they make a move up to a higher mortgage payment and this is another factor why people are not putting their homes on the market.  We are in a territory never seen before, so as the government enacts monetary policy and new taxes and spending we will not see the end to this volatility for a long time.  

Looking to the future when California is fully open what will we see?  The first major problem we will see is the fact that California is keeping the extra unemployment benefits ($300 extra per week) until September 11, 2021.   What this is doing, and will continue to do, is to keep workers from going back to work where they would be making less money working than staying on unemployment.  To analyze this phenomenon, we must first look at the jobs people are not going back to work at.  These jobs are generally restaurant workers and retail workers and entry-level workers.   The workers that have not been working and receiving unemployment and the extra $300 a week have been taking their extra money and investing in the stock market and Cryptocurrency; thus, we have seen record highs in the stock market and crypto’s, this will go away when the money goes away, and they have to go back to work and begin paying bills with their earnings.  So come October, when this will be felt, we might see a stock market correction.  If we get a correction in the stock and equity markets people feel less secure as their investments will be considerably less than they expected forcing people to look to the equity in their homes for the extra money other than the stock market.  This may force some to sell their homes or it will hunker them down even more and possibly refinance their home again.   Then looking to those millennials that have been living at home for the last year and a half will have even less opportunity to move out as there will still be no homes to move into and this will keep demand strong for homes even at higher prices.  

Not knowing what will happen in the immediate future as things re-open, we do know that over time Real Estate is one of the best investments you can have.   So, what will pop the Real Estate Bubble this time?  We are looking at economic times we have never seen before coming out of a worldwide pandemic.   We are currently experiencing inflation, and, in the past, the Federal Reserve (the Fed) has raised interest rates to combat this, however, the Fed has said that they will not raise interest rates until possibly sometime in 2022 keeping rates low to keep the economy moving forward.  The fear is that we will have “Stagflation” which is inflation with a stagnant economy.  I am also taking into consideration that in October of this year the interest rate markets and the stock markets look 90 days ahead, so if inflation is still out of control in October in 90 days it will be 2022 and that could cause or help a stock market correction and higher interest rates.  To get people to sell their home they need to feel comfortable with their current financial situation and until that happens, we will see people hunkering down in their current home until they feel comfortable enough with their personal finances to sell and move up.  Hopefully, the re-opening will do that with people going back to their offices and business and can enjoy profits again and the supply chain of goods and services can catch up and inflation cools off.  

This is all a guess based on what people will do.  The thing is we do not know how the re-opening will affect Real Estate yet, but we know the demand, as it stands today, will be there until prices or interest rates rise to a point where the demand goes away.  We do know that low-interest rates always help real estate sales but that is not what we are looking for as we have enough demand, we just do not have enough inventory for the demand, and it will take a while to catch up and for builders to build and for sellers to feel comfortable selling and moving up or down.   What I do know is that the more money the government puts into the economy the higher inflation will go.  We have seen this already and sadly the dollar has gone down against every major currency in the world.  Although it is nice to receive money from the government it has become more harmful than helpful to the overall economy.  If this government spending trend continues, we will continue to see inflation and if the Fed doesn’t raise interest rates inflation will continue unchecked and everything will cost more.  As we see monetary policy and spending come from the Federal Government, we will see the overall direction of the housing market evolve.   The market watch will be month-to-month as we watch the economy and government policies.  If you have been on the fence about refinancing this is the time, without a doubt, as interest rates will go up and that you can bank on, and my best guess is this will happen around October of 2021 so get in now if you need money or think you will need money as the price of money has never been cheaper.  In conclusion, what we know for sure is that interest rates will be heading up, Real Estate demand will remain high until prices go too high and income can’t keep up with inflation and we know that Real Estate is a proven investment over time so good luck and let the team here at MAE Capital Real Estate and Loan walk you through the Real Estate and the Loan process.   

Post-Script June 21, 2021:  The Fed has announced that they will keep interest rates low until 2023.  This seems really unrealistic unless inflation slows down dramatically in the next several months.  If this is actually the case we have seen this before in the early 2000s when the government kept credit flowing by allowing the subprime markets to flourish for years after they should have and that led to the "Great Recession" starting in 2008.   I am not saying that will happen but it sure points to that.  The longer the Fed holds the market in an overheated nature the longer the correction will be in the future.  

Posted by Gregg Mower on June 21st, 2021 10:11 AM

Make Your House a Standout With Creative Curb Appeal   Photo by Pixabay

When it comes to selling your home — and selling it quickly, fabulous curb appeal ranks right up there with location, location, location. Not only does a little cosmetic work make the home look inviting and well-cared-for, but it also helps it stand out in the neighborhood — an especially important feature in areas where it’s hard to differentiate one house from another. Of course, knowledgeable real estate help can also make a difference in how fast you sell and how much money you make from the sale.

What Is Curb Appeal?

In short, curb appeal is a term used to describe the first impression a property makes on prospective buyers. Standing on the curb in front of the house, what do buyers see? What do they feel? If a place is run down with patchy grass, peeling paint, dead foliage, and broken toys scattered about, the first thing they think is: The owners didn’t care much about the outside — is the inside in ill repair? What about systems we can’t see — did they take care of maintaining those? Good curb appeal also makes buyers more confident about a potential purchase — if everything looks great, there’s no reason to worry about putting extra money into fixing it up.

What Adds to Curb Appeal?

There are a number of quick and affordable fixes that can give your property a facelift. For example, according to Better Homes and Gardens, consider drought-tolerant plants and get your landscaping into shape by planting new flowers and pruning shrubs and trees. A fresh coat of paint inside and out can also make a house look and smell “new.” This is an especially good idea if you have unusual colors in your home — most buyers look for a neutral color palette. If you have siding or brickwork, power-washing is a good idea. When it comes to peeling exterior paint, a touch-up or full repaint can make the place look extra fresh. Resurfacing of driveways and patios can also give the curb appeal a boost.

What Can I Do Myself?

There are a lot of things you can do on your own if you have the time, the know-how, and the tools. You can also find skilled handy people on online job boards. For example, a freelance landscape designer can help you create a custom plan for the fraction of the price of a large company. Curb appeal also extends to inside spaces, so a deep cleaning, including window washing and attention to cabinets, baseboards, and crown molding, are good bets. According to Green Clean Restoration, steam cleaning can make carpets look and feel new. Updating fixtures, steaming tile, replacing toilet seats, and acid-washing swimming pools are other inexpensive, easy fixes. 

What Else Can I Do?

If you really want to take your home prep to a new level, you can “stage” your house like a model home. Pack up personal non-essentials, knick-knacks, and items you usually store on your kitchen or bathroom counters. The idea is to make space clean, open, and airy. Buy a nice set of towels to display in bathrooms and some oversized throw pillows for the couch. Strategically place extra lighting and real or silk plants. A fresh doormat and area rugs can also add a touch of color and “hominess” to the house, as can a mildly scented candle or wax melting lamp.  

Seasoned and knowledgeable real estate professionals like MAE Capital can be helpful in many ways, from helping you price your home to making suggestions about improvements that will help the sale but not break the bank. Unless you have an area of your home in complete disrepair or an issue that would negate a successful home inspection, major structural overhauls are unnecessary and are likely to cost you more time and money than you’d realize. 

If you’re in the Rocklin, CA area and are looking to buy, sell, or refinance a property, MAE Capital Real Estate and Loan can help! Download the free app or call (916) 672-6130 today.

Written by Suzie Wilson thank you for your support

Posted by Gregg Mower on May 18th, 2021 10:05 AM

When it comes to creature comforts, little ranks higher than feeling safe. There are many ways we work toward creating a living environment that promotes security, and improved security often means higher home values and lower home insurance premiums. From MAE Capital Mortgage Inc., here are some of the key security solutions for homeowners and what you need to consider when listing a home.  

 

Traditional Basics

 

We all use doors and locks to secure our homes, but your choices can impact how truly safe your household is. As Safewise explains, most burglars enter homes right through the front door, so selecting a secure door is paramount. Steel doors are the most economical, and there are hardwood choices that are very attractive. Avoid sidelight windows for optimal security, or consider installing security film to add peace of mind.

 

When it comes to locks, certain kinds of deadbolts tend to be more resistant to break-ins than others, and you can reinforce entryway doors and locks to bolster security. Lighting can also play a key role in home security. Think in terms of exterior lights that can reduce hiding spots for criminals, motion-activated versions, and interior lights on timers.

 

Rethink Your Landscaping

 

When viewing your home from the exterior, try to do so in the mindset of a burglar. Look for nooks and crannies that would shield people from being viewed by passersby. Overgrown landscaping close to your house provides cover for would-be thieves, so SFGate points out that you should take steps to shear shrubbery back to no more than two feet tall. At the same time, a tall, protective barrier around the perimeter of your property can effectively keep scoundrels out, especially if you choose greenery sporting spikes and thorns. Installing a shrub barrier can be a significant undertaking, so consider hiring a pro to do it for you. With the right tools and equipment in hand, they can knock it out quickly and save you the backbreaking work. 

 

Smart Home Locks, Doorbells, and Cameras

 

If variety is the spice in life, smart locks and doorbells -- all part of smart home security -- offer ample seasoning to pick from. As opposed to conventional security systems that require you to turn it on or off every time to enter or exit your house, a smart system is on 24/7, negating the need to remember to arm it every time you leave home. What’s more, some smart systems have motion sensors that trigger emergency notifications if something seems suspicious. 

 

Smart home security has come a long way since conventional security. It’s all now very intuitive; in addition to tracking main entry points into the home, a smart system can track behaviors and alert you via text. One example is if a thief cuts your phone line (a typical first task before breaking in), your smart system can send you an alert if it ever loses the connection.

 

Smart locks alone offer options ranging from notifying you when someone arrives at your home to special codes for each user, voice activation, temporary codes for guests — and everything in between. You can often make changes to settings from your smartphone, and some offer keyless touchpads in case you lock your keys or your phone. Smart doorbells offer a live feed straight to your phone so you can see in real-time who is at your door. Some record the activity for your review, while others offer interaction with the visitor.  Smart home security cameras offer a number of interesting features as well, such as voice activation, facial recognition, cloud storage, and emergency services monitoring.

 

Selling Your Property

 

With the advent of technological security systems, selling a well-reinforced property is slightly more complicated, but it’s a worthwhile investment. Security systems can catch a prospective buyer’s eye, and at the same time, being recorded can be off-putting to some house hunters.  One suggestion is to hang a notification at your entryway indicating that a system is installed and whether it’s in use at the time of a showing. When your property does sell, you should ensure all smart home devices are returned to factory settings and notify technical support there is a change of ownership. If you intend to remove the devices when you move out, you should discuss the situation in detail with the homebuyer in case they intend to replace some or all of the gadgets. Be forewarned, however, that it may be up to you to install adequate replacements for certain items, so you should investigate your responsibilities.

 

Security means peace of mind for you and your loved ones, and it can also influence the sale of your home. Think about what will be attractive to house hunters and what will put your mind at ease while boosting your home value. With a well-thought-out plan, you can rest easy.  

 

Are you ready to buy a home? Contact MAE Capital today at 916-672-6130.

The article was written by  Natalie Jones

Posted by Gregg Mower on May 4th, 2021 9:48 AM

Have you been trying to enter the Real Estate market but just cannot save the money required for a down payment and closing costs?  Then you have come to the right place.  We have a new program that will give first-time buyers or homebuyers in general up to 5% of the purchase price for a down payment and closing costs.  This program is great as you are not required to be a first-time homebuyer to qualify for this.  We have partnered with a company that has a program called Chenoa.  This is a pool of funds that are designated to assist home buyers with the costs of getting a home.

The Chenoa program is paired with an FHA Loan and this works great as FHA only requires a 3.5% Down payment and that would leave you with 2% left for closing costs.  It is conceivable for a home buyer to get into a home with no money out of pocket.  In this crazy Real Estate Market, I would advise my clients to have at least 1% of the sales price as a minimum.  This would be for additional items such as inspections to make sure the house you are buying is in good condition.  Although the market is crazy, and sellers are calling the shots you still have the ability to negotiate work to be done on a house prior to closing.  

Since the Real Estate market is so competitive this program will allow for a buyer to still be “in the game” as a buyer you will not need to ask the seller for any concessions towards the purchase because you as a home buyer do not have enough money.   In a regular Real Estate market, sellers will generally help pay closing costs if the price of the home can absorb those fees.   In this market asking the seller to pay for anything is tough as there will be a line of people trying to buy the same house with more money down or no concessions from the seller.  This is where this program makes good sense for a buyer as they will not have to ask the seller for any money towards closing costs.  

The documentation for this program is the same as a regular FHA loan.  You will need to provide 30 days of pay stubs, 2 months of bank statements, W2s for the last 2 years, and a 620 Credit score.  There are income limitations that are you cannot make more than 130% of the median household income for your area in Califonia.  It can also go fast as there is no more additional underwriting that some other Down Payment Assistance programs require such as CalhFA.   This will also help to get your offer accepted as you can close this in 30 days or less.  At MAE Capital Mortgage we are here to walk you through this loan and all the loans in our arsenal.  It doesn’t cost anything to see if you qualify for this we are just a phone call or a click away.  We look forward to assisting you with this product in California.  Call us at 916-672-6130 to talk with a licensed Loan Officer or Click Here to provide your information confidentially.  



Posted by Gregg Mower on April 23rd, 2021 10:11 AM

We are coming out a year-long pandemic that has shut down certain sectors of our economy and now with the vaccine people are feeling better about going out in the world.  The Government has infused $1.9 Trillion dollars into our economy and other countries.  People are getting their stimulus checks whether they need it or not.   The stock market is at all-time highs and the Real Estate market is so hot it is prohibiting first-time homebuyers from entering the competitive market.  This all sounds like great news right, but is it?  This remains to be seen but if we follow the logic and basic economic principles this short-term run of euphoria will run out of gas over the next several years and here is why I say this.

Assuming the worst of the pandemic is behind us and those stores and restaurants that have been closed or limited in capacity will soon be up to 100%.  What will consumers do?  That is the question, will consumers go to Shopping Malls or stay to ordering online?   I do believe that people will go to restaurants again as that is social and people are social animals.  The landscape will look different as people’s habits have changed and adapted. Travel will also begin to get back to normal as people will want to finally go on a vacation and after they are vaccinated, they will feel confident in traveling again.  So as far as the obvious things people desire those will come roaring back but what about the price of those goods and services will they be able to afford the new higher prices?  

Higher prices of goods and services are inevitable with higher gas prices and inflation and the devaluation of the dollar.  Although the Federal Reserve has said they will not touch interest rates until 2023 the market will have other aspirations.  We are already seeing higher interest rates in the mortgage market as a result of the economy opening and stimulus.  Higher gas prices are due to the current administration’s killing of the Keystone Pipeline and moving to more oil dependency from foreign providers.   That dependency on importing oil makes the cost go up as opposed to relying on domestic oil production.  Thus, higher prices for goods and services that are imported, shipped, trucked, or driven to the marketplace.  We are also seeing increased prices in commodities (steel, copper, gold, silver, lithium, etc.) as the price to produce them has increased.  This makes automobiles and other items that depend on the price of steel or commodities more expensive to produce thus more expensive for consumers.  This is what we call inflation.

Inflation, left unchecked, can cause more problems than just higher prices of goods and services.   Inflation will cut potential buyers of goods and services out of the market thus causing businesses that sell those goods and services to slow production and lay off workers.  For example, automobiles, if the price of a new car is so high that the average or middle-class person can’t afford one they will not buy new cars, they will be relegated to buying used cars until their income catches up with inflation.  This will cause the automakers to slow and have to lay off workers.  This affects all goods produced thus causing other industries to have to lay off workers as well.  So, inflation is one of the most toxic things to occur in any economy.  Traditionally, the Federal Reserve would raise interest rates to slow inflation by making the cost of money more prohibitive for expansion.  Inflation is caused by 2 things; one the demand for goods and services are higher than the supply and; two the dollar is devalued to other currencies.  Currently, we are seeing both in action.

The demand for housing currently is a good example of where the demand exceeds the supply and that is why you are seeing skyrocketing housing prices.  You are also seeing the cost of the materials rising at a higher rate than normal to build a new house so new house prices are going up in response to demand and costs to produce.  In the short run, in the next 1-2 years, you will see this trend continue, and coupled with low-interest rates to buy a home the demand will stay strong.   The housing market will slow only when interest rates go up and the demand slows until then you will see increases in housing prices to the point that the average person can no longer afford a home.  The worry is that supply suddenly increases as people realize their homes are worth far more than they thought so they decide to sell all at the same time.   This would only be bad if the supply of homes for sale exceeds the demand for the houses.  When that happens, it would mean that all the demand has slowed due to higher interest rates or higher prices or high unemployment, or all three.  This is what we would call a perfect storm and we saw this occur in 2008 when the housing bubble burst.  

So, for the short term in the economy, we see higher inflation with industries opening up again and with the stimulus checks going out to Americans and to other countries.   The inflation we see will keep going as people get back to work and people feel better about their personal finances.  As people spend their stimulus checks or invest them this will keep the short euphoria going.  In the long-run, if inflation is left unchecked, the worry is that we will start to see normal economic moves such as higher interest rates to fight inflation which will cut people’s ability to buy higher-priced homes.  This will cause a slowing in demand for homes and eventually we will see supply exceed demand thus prices will have to go down to adjust for that.  How bad will this adjustment be is yet to be seen and will hinge on what monetary and fiscal policy the government adopts.  If the government raises corporate taxes to a point where corporations can no longer expand or hire, we could see an increase in unemployment which will hurt the economy.  The Government has also talked about raising taxes on individuals as well to pay for all this stimulus.  There is also talk about raising the capital gains tax to 43-48% from the current rates of 15-20%, if that happens people that have investments in Real Estate and Stocks or commodities will be impacted by either not selling or if they do having less from the sale to reinvest in the economy. In addition, if gas prices rise too high we could see a phenomenon that we have not seen since the late 1970s when we had “Stagflation” where we had a stagnant economy with inflation and super-high interest rates.  I do understand the human aspect of the government wanting to help people, but my worry is that what might be nice today will hurt tomorrow.  The $1.9 trillion dollars the government just spent is a worry that every American should have as that will have to be paid back and with the national debt over $35 Trillion dollars that’s over $80,000 per American that is owed.  When will it end, will the debt be called due at some point, do we just ignore it?   I am not sure the average American understands what this means to our country and to every American. Now there is talk about another $2 Trillion Dollars be allocated for infrastructure, the fixing of roads bridges.  

In the end, every dollar, the government spends it is money that we all owe back as Americans.  The way our economic system works is for every action there is an equal and opposite reaction.  So, If the government keeps spending our money every American will have to pay for it in higher taxes and inflation.  When the dollar falls from the world currency then America becomes like Europe that has had all kinds of problems with their monetary system since they went to the Eurodollar in the beginning of this century.  Every American has to pay for what our elected officials do.   This is not a political statement it is fact, and it is the way our country was founded.    What can be said about our economy is that we are in store for inflation and higher interest rates which will slow the economy and the slowing will cause higher unemployment.  We have the ability to stop all of this but the average American will not understand these basic principles as all they will see is the short-term benefits not the long-term harm.  We all need to learn basic economics so when we go to vote we are not harming our children and their children.  Rates are still great so if you have been thinking about refinancing or buying, now would be the time and everyone needs to look toward the future and hold their elected officials accountable.  

Posted by Gregg Mower on March 31st, 2021 10:57 AM

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