Blog with MAE Capital


By now you may have heard that things are changing in the Real Estate world with regards to commissions.   In a landmark decision, the National Association of Realtors (NAR) has lost a lawsuit that stated that Real Estate Buyers should be able to negotiate commissions with their agent and or Seller.  The lawsuit further states that Real Estate Buyers have the right to negotiate how their agent is paid and by whom.  We will discuss some of the pros and cons of this landmark case and how it will affect buying and selling real estate in the future.

Currently, Real Estate commissions have been paid by the seller of a property and is negotiated upfront prior to their property hitting the open market.  The traditional commission structure has been 5-6% of the sales price and if another Agent other than the agent who procured the listing called the buyer's agent generally splits that amount with the listing agent.  For example, if you are selling a home with a 5% commission in the listing agreement when another Agent brings a buyer to the home the commission to that buyer’s Agent has already been negotiated with the seller and that has traditionally been half of the total amount and in this case, it would be 2.5% to the Buyer’s Agent and 2.5% to the Listing Agent.  With the new ruling against the Real Estate industry, it now states that the buyer will have to pay for the commission when represented by an independent Agent.  It still can be asked that the seller pay this amount but now the Buyer has to be notified that it is their responsibility to pay their Agent.

One should know Real Estate law states that any Agent in a Real Estate transaction must take the seller’s best interests into account during the Real Estate transaction.  The exception is that if a Buyer contracts with an outside Agent to represent them their Agent can look after their best interests, not the seller's.   This is done with a contract between the Agent and the Buyers they choose to represent them, this is called a Buyer Broker Agreement and from this day forward this form will become mandatory for all Agents that represent home buyers.    Although this may seem like just another disclosure form in the already sea of forms a home buyer and seller must sign it and it has far-reaching consequences for the Buyer notwithstanding the cost of representation.  A potential home buyer may be forced to come out of pocket to pay for representation similar to an attorney-client relationship with a contract upfront stating how they will be paid to represent them.  If a potential home buyer chooses to use the listing Agent that buyer will not have the same representation as the Listing Agent has to look after the seller’s best interest before that of any potential home buyer.  This type of representation in California is called Duel Agency where the listing Agent represents both the buyer and the seller.  This is not legal in a lot of states so it will leave home buyers having to contract with another Agent.

The intent of the lawsuit other than the enrichment of attorneys was to allow potential home buyers to negotiate the commissions in the transaction.  This ruling missed the mark for home buyers as now they may have to come out of pocket with money for representation where before the seller has paid the buyer’s Agent.  In typical fashion, something that was spun to help home buyers will end up hurting them in the long run as it could dramatically raise the cost of buying a home.   A potential Home Buyer could now end up paying more for a home to get their Agent paid so they don’t have to come out of pocket to pay them.  If they go directly to the Agent who has the listing on the house and try to negotiate without an Agent representing them they too could pay more for the house without representation.  

All is not lost however, here at MAE Capital Real Estate and Loan, we have a solution to the problem of buyer representation.  We have been using this method to help our Home Buyers over the years and have been very successful and that is where we represent the home buyer and do the mortgage for them.   Yes, our Agents are licensed for both Real Estate and Mortgage which allows our Agent to negotiate with a home Seller for a commission which we also give a portion back to the Home Buyer for their mortgage.  In this scenario a home Buyer will not only get representation on their purchase, but they will get representation on the mortgage at the same time.  This method has proved to be far more convenient for a Home Buyer as they only have to make one call to their Agent to get information on the home as well as the progress of their mortgage as opposed to having to make 2 calls one to their Agent and One their Loan Officer.  Not only will this save them time it will also save them thousands in having to pay the new Buyer Broker it will save them on their costs of the mortgage and in some cases our Buyers get a lower interest rate as we have successfully negotiated all the fees to be paid by the Seller and we contribute some of the commission on the sale to the new loan.   In some other cases we have helped our clients Sell a home and Buy another home and we do their mortgage for them, in this case, we negotiate a far lower commission for our Seller and when they buy our contribution saves them  now on both brokerage fees as well as mortgage fees.  If you are considering Selling and buying another home this way will save you thousands and thousands of dollars when you work with MAE Capital Real Estate and Loan.  We call this service bundling which is similar to the way insurance companies work when you give them the opportunity to cover your house and cars.  Bundling Services in Real Estate now makes more sense than ever.  If you are looking for the best way save look no further than Mae Capital Real Estate and Loan.

Posted by Gregg Mower on March 21st, 2024 3:25 PM

FHA Loans were born during the great depression in 1933.  The idea of the government insuring a Real Estate loan, at the time, was groundbreaking.   In today’s world, we expect the government to step in and try to fix things when the economy is sluggish or depressed.  In 1933 our government was far less a part of the ordinary citizen’s life and it did not financially take care of its citizens like they try to do today.  So when the private sector was approached by the government to insure mortgages that were traditionally insured privately by large down payments was a groundbreaking concept.  At the time Banks and Brokers were the only way to get a home loan and they required that a potential home buyer put 25-50% or more down to buy a home.  So when the government said they would insure mortgages up to 95% of the value of the home, you can imagine how this changed the way Real Estate Loans were originated.   It was designed to stimulate housing growth to get the country out of the grips of the Great Depression.  It worked, along with a whole new age of people relying on the government to help them when things were tough.  Out of the Great Depression, we also got a welfare system, unemployment insurance that the government collected from employers to help with displaced workers and a whole litany of other programs that expanded the scope of the Government.  The Federal Housing Administration (FHA) was designed to be a short-term way to get the housing markets stimulated to get America out of the Depression.  The program still exists today, and you can take full advantage of it and you can get a mortgage up to 96.5% of the purchase of a home.  

Today FHA loans are still alive and well and are used still today to get people into homes with a small down payment.  FHA loans are still viable loans for those who have a small amount of money to purchase a home.  The way an FHA loan works is very similar to Conventional Loans in that a potential borrower must qualify for the loan with their income and a current credit score.  When we say qualify there are several factors that a lender must review in order for a client to “qualify” for any loan.  These factors are but not limited to having shown the ability to handle credit or in today’s world, have a credit score that meets the criteria of an FHA loan (550 or better).  Generally speaking, FHA loans are more liberal when it comes to having a good credit score than that of its Conventional counterpart that requires a 640 score or better.  If a borrower has a low credit score due to circumstances out of his or her control and has shown that they are trying to take care of it and that is the only factor with regards to their financial situation they generally can get approved for a FHA Loan.  There are several other factors that must fall into line before that can happen, however.  For instance, a borrower’s house payment combined with their monthly bills should not exceed 43% of their gross monthly income.  This brings us to verifying income and what is required by FHA.   First, a potential borrower must have a two-year history of working which could be multiple jobs or a combination of school and a job, and must be able to show that their income will be stable enough to maintain the mortgage payment. Next, a borrower has to be able to prove they have enough money for the 3.5% down payment.  This money can come from savings or can be a gift from a relative a close family member or friend, or an approved Down Payment Assistance Program.   

We talk about FHA loans being federally insured loans, but what exactly does that mean when you have to pay the mortgage insurance on an FHA loan? Simply put there are two payments to the insurance fund a borrower will have to make; One the upfront insurance is 1.75% of the loan amount (Sales Price minus the 3.5% down payment requirement) this is actually added to the loan so you don’t have to come out of pocket for this; Two the monthly payment of the mortgage insurance is a small percentage of the Loan amount every month.  These insurance payments go into pools that are designed to protect the lender’s yield on the loan if there is a foreclosure.  This insurance makes FHA loans more appealing to lenders and thus lenders have more flexible underwriting guidelines and can get more people into homes utilizing the FHA Loan.  

Talking about flexible Underwriting guidelines your eyes probably just rolled to the back of your head as this may sound confusing.  Not to worry I am here to help break it down to simple bullet points that you may not have heard of before.  Being evaluated for loan approval seems daunting but that is why we have a team of folks to walk you through the whole process.  Our highly qualified loan originators will walk you through the process.   The Loan Officer will gather your pay stubs, tax returns, bank statements, and W2s and they will do the analysis for you.  Your loan officer will check your credit, check your debt-to-income ratio, and make sure you have enough money verified to close the transaction.  The loan officer’s job is to paint your financial picture with your financial information and present it to the underwriter, who will approve your loan.  Our Loan Officers do this every day, multiple times, so they are experts at what it takes to get an FHA loan approved, so When you are looking for expert advice and guidance please let us walk you through this process.  

The benefits of using an FHA Loan are:

  1. You Only need 3.5% for a down payment and that can come from your savings, a gift from a family member or an employer, a government institution, or an approved down payment assistance program.
  2. Your Credit Score can be as low as 550.
  3. Your Debt-to-Income Ratio can be as high as 50%
  4. Interest Rates are Lower
  5. You can take cash out of your home up to 85% of the value of the house.
  6. You can finance 1-4 units utilizing FHA when owner-occupied.
  7. You can buy a house 2 years out of bankruptcy.
  8. You don't have to be a perfect person to qualify for an FHA Home Loan
  9.  Utilize a co-borrower to qualify in today's world of higher interest rates.
  10.  Finance your closing costs with FHA, and ask your loan officer how.

Now that we have explored the history and the benefits of using an FHA loan you may ask:  “How do I apply for an FHA Loan?”  At MAE Capital Mortgage Inc., we have over 38 years of experience working with FHA loans, so we should be your logical choice, not to mention our interest rates are better than the rest.  Simply click on this link and you can start the process or call us at 916-672-6130 and we can do it for you over the phone.     

 

Posted by Gregg Mower on August 29th, 2023 10:08 AM

“ 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

If you have been looking to refinance your home loan now might not be the time to do it.  Ok, I know this is contrary to the mainstream narrative when it comes to refinancing.  Most people are hearing that now is the time to act as rates are at historic lows, if you have heard this you are hearing the narrative.  It is true that interest rates are low, however, rates still should be lower.  There are many reasons why I say this, and I will get into it in this blog.  The biggest problem with lending today is not interest rates it is turn times and bottle necks in the industry. 

It is true that interest rates are low, however, there are still parts of the rates that are not figured into the price of the interest rate.  What I am telling you is that for most all Government loans, FHA and VA loans, there is a piece of the puzzle missing in the price of the rate.  The price in the rate refers to the discount points.  Before it was announced that you could take a pause or defer your mortgage payments during the pandemic the pricing on Government loans was considerably better.  The best way to explain why is to show you behind the mortgage curtain, if you will.  You see when lenders sell a mortgage in the secondary mortgage market to Fannie Mae, Freddie Mac, or Ginnie Mae (the Agencies) lenders will retain the servicing of the loan.  What that means is that a lender will need to re-capitalize their money reserves by securing the mortgage with one of the above agencies by selling a portion of the yield to one of the Agencies.  In other words let’s say you have a 3.5% interest rate on a loan (to make it simple) the lender may sell the loan to one of the agencies guaranteeing them a 3% yield.  They then will keep the .5% to collect the payments from the borrowers and send the 3% to the agency they sold the loan to.  What happens when borrowers stop making their payments?  Well the lender still has to make those payments to the agency they sold the loan to.  Thus, lenders will lose money on servicing loans during the pandemic.  So, to offset this a lender will have to raise their rates to offset the losses in their servicing departments.  It is more complicated than that but for simplicity that’s what’s going on with rates and pricing. 

Thus, when people start making their payments again, on a regular basis, lenders will then be able to adjust their pricing on their interest rates back down.  Interest rates are still artificially high although they are still low, if that makes sense.    I am not saying when the pandemic is over that rates will automatically go down, however, in a normal world they should.  Lenders might like the increased profits they are receiving from the higher upfront interest rates and fees.  This is all new territory for everyone so to say this is the “new normal” and that it will be this way is confusing as I have done pricing before with a Mortgage Banker so I know how it was done.   It may never go back to they way it was but competition is the key to lower rates and without it lenders could set interest rates and profit margins like OPEC with oil prices.  This activity is illegal in the United States, however, everything has changed and that too might be a “New Normal”.   

To add insult to injury, turn times on loans have slowed to a nauseating pace.  If you are in the middle of trying to get a home loan whether it is a purchase loan or a refinance you are experiencing this.  I have talked about this before in prior blogs but is has gotten worse with the increases in loan volume.  You see the large lenders have not been able to get back to their work spaces yet and some are working from home and others from the office, so we are seeing that the right hand often doesn’t know what the left hand is doing so the time to do simple tasks like sign off conditions are taking 2-3 times longer than before the shutdown.  This has impacted refinances and purchase transactions by adding an additional week or two or more, in some cases, to the process.  We have also seen signing agents (Title companies and Escrow companies and Lawyers on the East Coast) taking longer to do their jobs as their offices have not opened to full capacity yet either.  All this change has hampered the whole process of getting a home loan.  It is frustrating to clients but to us that have always strived to hit our target closing dates on time it has been a real challenge.  This will change in time; I can’t tell when as we seem to all be at the mercy of our local and state governments as to what can open and when and more importantly how they can open.  Until the world figures out how to fight this pandemic and how to govern during this time we will continue to see change in the Home Loan industry.  We are always here to assist you and give you the honest truth to what is going on in the industry.  Please call us at 916-672-6130 we are here to help. 

Posted by Gregg Mower on June 15th, 2020 10:40 AM

Ok we are a little over 2 months now since California shut down (March 16) so what is going on with interest rates?  Interest rates are great let’s just start there.  Interest rates are in the low 3’s and high 2’s currently.  So what is driving interest rates, you would think the answer would be easy, however it is far from easy.  There are many different factors that will determine what your interest rate will be and it will vary from person to person based on there credit scores, down payment or equity, cash back verse no cash back, loan size, loan program, fees waivers, and list goes on.  If you hear an advertised interest rate that is really low it probably does not pertain to you or what you would want from your home loan. Interest Rates are also geographical meaning that depending where you live in the United States will determine your base interest rate. So how are rates calculated and how do they vary from lender to lender.

First lenders across the nation give California a little higher interest rate than the rest of the nation to begin with.  This is due to the fact that California home loans tend to pay off faster than other parts of the nation.  This affects interest rates in that the longer a borrower will hold on to their current mortgage the more interest a lender can accumulate over time.  In California people tend to move more often that other parts of the country making the amount a lender can make on interest over time less so in order to compensate they raise the initial interest rate a bit.  So if you are hearing, on the news, that interest rates across the nation have come down and they give you an average rate you can rest assured that California will be on the high side of the curve. 

The next determining factor or factors that determine the interest rate you will get is your credit score(s).  When a lender is pricing your loan, they have to use the low mid-score of a married couple and the mid credit score if you are single.  When your Loan Officer (MAE Capital Mortgage)  prices your loan with lenders across the country we will have to have your credit score and the amount you are putting down and other factors in order to get the rate that fits you specifically then we will shop for the best loan scenario.  It also makes a difference if you are choosing a mortgage that will pay off bills in other words if you take cash out of the equity of your home on a refinance it will also increase the interest rate a bit.  When you hear a lender advertising that they will pay off all your bills with a refinance know that is costing you a little bit more to do that.  I would not discourage this just be aware of the increased costs even if you have 800+ credit scores the interest rate will be a bit higher.

If you are one of those who love to shop around to find the best interest rate you had better be prepared to give your exact credit score, down payment or equity position that is accurate as a bare minimum.  Here at MAE Capital that is exactly what we do on every one of our loans as we are Mortgage Brokers that hold both a California Department of Real Estate License as well as the National Mortgage Licensing System (NMLS) license in order to be able to offer rates from lenders across the nation.  Not all lenders are created equal so be aware that rates will vary from mortgage company to mortgage company and that has to do with their overhead requirements.  The more people a lender has to employ the higher the cost for that lender to originate a home loan.  A Mortgage Broker will have less overhead, in most cases, than a Mortgage Banker or a Bank who will underwrite and fund their own originated loans.  The reason why a Mortgage Broker will have lower rates is the fact that they can shop the entire nation for lenders with the best rates and programs where Banks and Mortgage Bankers will only have their own set programs offered by there company.  Mortgage Brokers also get what is called a wholesale rate verses a retail rate and that low rate is pushed to their/our customers. 

The type of loan you choose will have a different rate than other loan types.  A loan type is a FHA Loan, Conventional Loan, VA Loan, Jumbo Loan, Non-traditional loan, Private Money Loan, USDA Loan, CALHFA Loan, and more.  All of these loans will have different rates associated with the risk they carry the higher risk loans, such as Private Money or Hard Money Loans carry the highest rates.  Again, if you hear an advertisement for an interest rate or program know that what you hear is not what you will actually get, in most cases.  For example; we have a lender that we sell loans to that has a program out now that has interest rates in the 2’s, but you have to have the perfect scenario in order to qualify for that program such as 750 mid credit score down payment or equity greater than 20% of the value or purchase price of that home, if you fit the parameters you win and get the rate.  But if you are trying to take cash out of your home to pay bills off then suddenly you don’t and most people only hear what they want to and when they hear rates are in the 2’s they tend to pick up the phone and call around.  Another factor that is currently changing the interest rates is the fact that many people have listened to the media and have stopped making their mortgage payment during the pandemic this not only hurts them but it hurts those with good credit and never being late on a mortgage.  With people not making their payments during this pandemic it is hurting those that are, and are making higher interest rates.  You see lenders have priced in the profit from collecting mortgage payments for the origination of a new loan before the pandemic and now they simply are not so we are experiencing higher rates because of this.  One phone call to MAE Capital Mortgage Inc. and we will be able to run your credit while we have you on the phone and will be able to give you an accurate interest rate.  I hope this blog helps people to navigate through all this and we are here to help.  Give u a call to get your pricing today at 916-672-6130. 

Posted by Gregg Mower on May 27th, 2020 10:50 AM

Here is a topic I have not visited in while but feel it is time again to address what is going on with mortgage rates.  The stock market has taken some serious hits over the last few days due to concerns with the Coronavirus and that has put downward pressure on the US Treasuries and the bond markets.  Why you ask?  I will get into the details of why later on but know that when there are panics in the Stock markets money tends to flow towards safe and secure investments while the markets are gyrating like bonds.   Some of the reasons the Stock Markets have corrected downward is over fear of the Coronavirus and the price wars going on now with oil prices after Russia pulled out of OPEC.  So there are a lot of economic new stories right now driving the markets.

Let’s talk about the effects of the Coronavirus and why it is driving the Stock Markets down around the world.  But first you have to understand what stocks are.  Stocks are shares of large companies that are sold to the public so the company can remain capitalized (i.e. have enough ready capital, money) to build and expand their business.  People who buy and sell stocks tend to look for companies that will have good growth into the future to buy so the hope is the value of the stock will grow with the company.  Investors in stocks will tend to sell their stock in a company if they foresee a potential down-turn in the company’s profits.  That said with this threat of Corona virus in the public it is believed that people will not buy or do normal activities if they can not go out into the public, thus not spending money on goods and services they would normally have spent their money. 

Now that you understand how the markets work in a basic form you now can see why the markets have been selling off.  But how does that affect the interest rates you ask?  Well this is where is gets interesting so follow along closely as I am about to open a door into a reality that few actually see or know about and that is economics.  As we have seen the Stock markets selling off due to the potential earnings loss of companies due to lack of demand (people not buying goods and services), investors in the Stock Markets have been looking for a relatively safe place to park their client’s money during this correction.  The place is the Bond Markets where fund managers and Stockbrokers park funds while Stocks settle down.  Specifically, the United States Treasury Bonds are the specific bonds that are purchased.  This is where it gets really interesting so hold on to your hat.  Not only do Stockbrokers and Money managers park their funds in U.S. Treasuries, the Mortgage industry uses the 10 year Treasury Bond to hedge their bet on interest rates. 

Hedging defined is buying or selling an investment to reduce the risk of an adverse price movement of another investment, kind of like an insurance policy.  In other words, the folks that sell mortgages will buy U.S. Treasuries to offset the possible movements in the interest rates.  The concept of hedging is important to know because the interest rates are being driven by this right now.  As the Stock market continues to correct and Treasuries are being pushed to their lowest levels in the history of the Treasury market, so what does this have to do with long-term interest rates?.  Although this does not directly affect interest rates it does take a way the hedge vehicle for mortgage bankers.  In response to that when interest rates should be declining, they have actually raised.  That’s right interest rates have gone up over the last few days as the Stock Markets declined the Bond Markets rallied but longer term interest rates have actually gone up. 

The Federal Reserve saw this affect happening and decided to lower the rate they can control to try to stimulate the markets with low interest rates.  You have to understand that the Federal Reserve does not control long term interest rates, the only rate they control is the Fed Funds rate.  The Federal Funds Rate is that rate in which Banks can borrow from the Federal Reserve.  The rub is that banks don’t need to go to the well for money in a strong economy to borrow money.  So, there is little to no effect on long term mortgage rates with the Federal Reserve or “Fed” lowering their rate. 

On another front is oil prices and their effect on long term interest rates.  With Vladimir Putin pulling out of OPEC ( the largest oil cartel on the planet who sets oil prices around the world) and OPEC responding by lowering crude oil prices to as low as $31 a barrel creating essentially a war over the control of oil prices.  This has a very adverse effect on American oil production as when oil prices dip to these kind of lows American oil companies cannot produce oil at that low of a price it will become more beneficial to import oil at the lower prices and hurting American oil producers and the workers that produce the oil.  There are now worries over American oil producers filing bankruptcy.  This now will impact American workers and those that support that industry like steel, heavy machines, plastics and so no, then the effects trickle down the towns in which those workers live and those companies that support those towns.   This will inevitably turn up in our unemployment numbers signaling a slow down in the overall economy.  This affects the Stock markets in the same ways as mentioned above. 

There is a bunch of things happening to where the Stock Markets and the Bond Markets have been reacting crazy.  This is a very unique time in our economy to watch what is going on as it is truly historic and has been going against everything we know and seen over time.  There is a component that I have not mentioned here that is hurting the overall economy in ways it has no idea and that is the media.  The media has been blowing this virus out of proportion to the point that people are panicking and running scared.  I do not profess to know anything about this outbreak nor do I profess to be any kind of medical professional but what I do know is numbers and when you see the differences between the deaths by Coronavirus versus the regular Flu there is no comparison far more people have died year to date over the Flu, so it stands reason that there is a abnormal hysteria going on out there.  I am not trying to discount how terrible this virus is, but I can’t buy into the hysteria. 

So, if you are wondering and scratching your head as to why interest rates have not done what the media is implying this is why.  Interest Rates are great I am not going to discount that and yes I love the attention we are getting from the media that interest rates are at historic lows it has been great for business, but don’t get set on getting a long-term mortgage in the 2’s without paying greatly for it.  My team is ready and waiting for your calls to go over your existing mortgage and see if now a great time to refinance.  We can refinance your mortgage without resetting the term which is a huge help with the over all interest you would pay on a mortgage over time.   For example, you took your existing loan out 2 years ago and have 27.5 years left on your existing loan and you don't want to lose those years you have already paid.  How about a refinance that would be a 27 year loan as to not take away the time you have already paid, we are doing this all the time.  For more information on refinancing your home or investment property give us a call today and we will tell you the truth about Refinancing and give you the best interest rates from Banks across this great nation.  916-672-6130 and download our app for free.  

Posted by Gregg Mower on March 10th, 2020 2:18 PM

It’s March 2020, not yet spring but in California it is always spring like weather.  Do you know what your house is worth this year?  Have you thought about selling and buying another home?  This might be the perfect year to do just that.  Why, you ask?  Well when the earth the stars and the moon all align you should take notice.  The interest rates are at historic lows would be the first good reason.  The second good reason would be that our economy is at full employment (Full employment is when the unemployment rate is less than 4%).  The third and most important for sellers is that the housing prices are still high, and we have not seen any correction in prices.

Interest rates are important for a variety of reasons.  When you are selling a house, you want the rates to be as low as possible so more potential buyers can qualify your house.  Low interest rates also provides a sense of security for home buyers when they are shopping.   Low rates also create a sense of urgency with potential buyers as they don’t want to miss the opportunity to get a low interest rate.  At MAE Capital Real Estate and Loan having control over both the Real Estate and the loan process can further save potential buyers and sellers as we will give buyers money towards their loan to lower their interest rate even further when we represent a buyer and do the loan.  With Rates so low putting your home on the market sooner than later will get you property sold faster as the inventory is so low currently.

In addition to low interest rates Americans are fully employed according to the labor department. So, with the majority of Americans employed in this booming economy there should be more potential home buyers in the market today.  These young buyers have more information at their fingertips than ever so they know that rates are low and that they can afford to buy.  In a market where most people are employed wages tend to be a bit higher so employers can keep those employees they have and not lose them to their competition, thus keeping job security and higher wages to potential home buyers.   This sense of job security is also making existing homeowners feel more comfortable with their finances and are exploring the possibility of selling and moving up.

We have not seen the influx of sellers yet as most potential sellers like to wait until spring to put their house on the market traditionally.  Those that make the move early will reap the rewards from a quick sale at the top of the market if their house is price properly.  All of this creates stability in the Real Estate prices as the current supply is less than the demand which usually means that prices should increase,  We have not seen the increases yet as we are still seasonally stagnant with buyers waiting for the spring inventory to hit the market.  With that said if you are thinking of selling your home this year it would be prudent to get your home on the market as soon as possible with rates low and full employment.  Here at MAE Capital Real Estate and Loan we are here to help.  We have programs for first time home buyers, we have the lowest rates in the market on home loans, we  bundle our services to save our clients money and if we list and sell your home represent you when purchasing your next home we will kick in money to lower your payment even further.  Give us a call (916-672-6130) or check out our site and download our App. 

  
Posted by Gregg Mower on March 3rd, 2020 10:59 AM

Here is an interesting topic as I fit the category myself.  Hopefully once you have made it to the ripe old age of 50 you still have good health and are financially grounded.  Financially grounded means that you have taken the proper steps for saving for retirement that is looming, in the not too distant future.  This also includes college for you kids and any future weddings or large expenses that are to be incurred.  You may not be rich by any stretch, but you have done what it takes for your family to be secure.  It is time to protect your assets.

So, lets take a look at your home, it may only be the one piece of real estate you have ever owned and you have paid it down substantially over the years.  Now you hear the commercials advertising using your equity for things like college and weddings and large family expenses.  Is this prudent or a play from mortgage companies to sell you additional financing?  Having been in the Mortgage Business for the last 35 years I can tell you it is a play for your business.  However, if you need the money and it is the only way then you do have it at your disposal.  My advice would be, even though I am in the business of selling you that loan, is to really evaluate your finances and see if there are other ways to get the funds you need.  I say this as you home is your family’s shelter the place where your kids grew up and to put additional financing on it may put it in jeopardy. 

How could financing a home when I am over 50 jeopardize my home, I have a good job?  This is a good question and can be answered by those that have come before you.  50 doesn’t mean that you are not capable of working or staring at your death bed what it does mean is that you no longer will have the energy to keep up with 20 and 30 somethings in the work force.  Large employers have traditionally let go people over 50 to make room for the younger more energetic workers.  I am not saying this will happen to you but to guard what you have attained in life is important.  If something like a loss of a job or an illness were to happen it is a lot harder to find a new job so protecting your assets is super important, even more so when you are over 50. 

In addition, if you have been in the private work force your entire career you may not have built the retirement that you may need to have when it comes time to retirement.  Your home can be used to assist in retirement if the is the case.  When you are over 62 and have equity in your home you can utilize a reverse mortgage to use the equity for additional income or erase your monthly mortgage payment so the income you do have doesn’t need to go to a mortgage payment.  You can’t get a reverse mortgage unless you have enough equity (generally you would need about 30-50% equity depending on your age).  So, if you mortgage your house to pay for stuff in your 50’s you may not have enough equity to get a reverse mortgage in the future.  Another reason why you need to evaluate your finances when getting any financing when you are over 50. 

Reaching the age of 50 and being financially stable is a great accomplishment and you don’t want to jeopardize your finances at this age.  When evaluating your mortgage when you are over 50 and you have windfall like an inheritance or an insurance claim you may want to consider paying down your mortgage. This I have done for my clients a lot lately and it is a financially smart move.  As an example; a 54 year old receives an inheritance and she owes $300,000 on her current home loan with 20 years left to go.  She gets an inheritance of $400,000 and she already is financially stable with a good paying job.  She may elect to pay off the existing loan, or pay it down, or refinance the existing loan to a lower balance and lower payment with a lower term of the loan.   This would be a financially prudent thing to do as she would save tens of thousands of dollars in interest and have a lower payment to allow her to save even more monthly. 

Being over 50 and financing stuff should be done with care to make sure you are not risking your home and your assets.  Here at MAE Capital Mortgage we can do all the numbers for you and help with the planning of your future.  If you are looking for a Reverse Mortgage, we also provide those to our clients and deliver the most aggressive programs available on the market today.  As with any financial moves you make you should also consult your Tax consultant or Financial planner to make sure you are making the right decisions with your finances.  We are here to help so if you have questions or please give us a call at 916-672-6130.

Posted by Gregg Mower on May 22nd, 2019 3:48 PM

Welcome to 2018.  I think it is a good time to review all the available loan types in today’s lending world and what they are uses for.   Although there has been changes in the industry There are still options for people to get financing for both their primary homes and their investment property.  There are creative options for those that are self-employed that don’t show all their income on their tax returns.  Of course, we have the basic home loans like FHA, VA and Conventional loans that are still priced really good for an economy that is starting to build steam.  On the end of the spectrum we have Hard MoneyLoans available for those investment properties that banks may have said no to for one reason or another.  All these loans have their purpose in today Real Estate Markets.

Let’s start a look at the most basic of loans that are used for purchasing and refinancing primary residences.  These loans are, what we in the industry call, “A” paper loans.  These loans also fall under, what the government calls, Qualified Mortgages or QM loans.  These loans are full of regulations designed to protect the consumer from lenders that may not have their best interest in mind.  One of these loan types is the Convectional loan and is the most widely used type of mortgage.  The Conventional Home loan will allow buyers to purchase home and put as little a 5% down.  A Conventional home loan is privately insured which means if you put less than 20% down you will be required to purchase mortgage insurance from a private institution.   The same would hold true for a refinance, you would need greater that a 20% equity position in order to refinance a Conventional loan without Private Mortgage Insurance (PMI).   Because the insurance is private the underwriting guidelines are a little tighter than that of the Government insured loans like FHA.   Traditionally FHA insured loans have had the full faith of the Federal Government backing these loans making them more desirable for banks to sell the loans to each other.  Thus, interest rates on these loans are little lower than their Conventional counterparts and the underwriting criteria for FHA loans are little easier as well.  So, if you have a lower FICO score (550-660) FHA will probably be your best bet as there are not additions to the interest rate with lower credit scores with the FHA loans.  FHA does come with mortgage insurance, however, with the higher Loans to Value loans it still is a lower payment than a conventional loan.   Both FHA and Conventional loans now do not require a termite report and clearance unless it is asked for in the Real Estate Contract making both loans flexible for home buyers in a tight Real estate market or if buyers are willing to buy light fixers.  The Veterans Administration loans or VA loans are only for those that have served in the military and have the eligibility required (usually 4 years in) to qualify.  The benefits of being able to use a VA loan are great, besides the fact that the Veteran does not have to put any money down at all it is fairly easy to qualify for the payment as interest rates are low for these loans, as well.  VA loans will take Veterans with credit scores as low a 550 with no money down and no mortgage insurance.  These are all considered Qualified Mortgages in the Government’s eyes and will require certain waiting periods to ensure borrowers have the ability to shop and compare and make sure the loan being offered them is good for their situation. 

Another option for home buyers under the Primary Residence type of loan is the Bank Statement qualifying loan.  These types of loans are still considered Conventional loans as they are privately underwritten.  They are specifically designed to provide an alternative way of qualifying as opposed to the traditional way of having to provide Federal Tax Returns.  These loans will require a borrower to provide 12-24 months of bank statements from their personal or business accounts or both.  They will be qualified by averaging their deposits and taking out a certain expense number and that will be the income that will be used to qualify them.  As it still falls under QM loans these loans are required to make sure the borrower has the means to make their mortgage payment that they are applying for.  Due to the fact that Private Mortgage insurance companies will only underwrite under traditional income qualifying guidelines these loans will require a 20% or more down payment.  As they are considered “higher risk” loans and interest rates are bit higher than Traditional Conventional loans and FHA loans. 

Lastly, we need to cover a sector of the market that is almost considered “Underground Funding” and that is Private Money Loans or Hard Money loans as they have been called traditionally. Private Money loans are for those investors that don’t qualify for financing under traditional bank guidelines.  Hard Money loans are used primarily on investment property both Residential and Commercial properties.  These loans are arranged by mortgage brokers with private funds from private investors (individuals) and hedge funds.  The borrower is not scrutinized as much as the property is under this type of funding and the bigger the equity position is the better chances are that an investor will fund the project.  The minimal investment required to get a Private Money Loan or Hard Money loan is 30% of the project’s value or purchase price. whichever is less.  These loans can be used to purchase Residential, Commercial, Industrial, Mixed-Use, Land, Construction projects, Churches and those properties that Banks tend to shy away from.  Hard Money loans can be used to refinance an existing project, or provide funds for construction.  

There are many different types of loans available today and can be used for many purposes.  Here at MAE Capital Mortgage we have all these loans available.  Not only do we have these loans available we have experts in guiding you to the right loan product.  As we are a Mortgage Broker we are also limited by the government on the amount we can charge for certain products thus making our loan interest rates and fees the best in the market.  We work with direct lenders and get what is called a wholesale interest rate which is lower than a retail interest rate you would get from a Banker or direct lender and we pass those saving on to you.  We know you have options out there and I would advise that you work with a team like MAE Capital Mortgage that has decades of experience that will be passed on to you in the form of knowledge and  reduced costs and fees.  Please call our offices is you have any questions regarding these loans or Real Estate we welcome the opportunity to help you with this process.    MAE Capital Mortgage 916-672-6130 or www.maecapital.com. 

Posted by Gregg Mower on January 8th, 2018 12:55 PM

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.  

Posted by Gregg Mower on August 28th, 2017 4:36 PM

Is it time to bring back loans that people don’t have to fully income or credit qualify for?  I believe it is, for no other reason than the current environment cuts out an entire section of the US economy from qualifying for a good loan.  The self-employed borrower is being left behind with the current lending rules.  The self-employed borrower is a broad reaching term that applies to people that derive their income from partly or entirely from a source that does not require the withholding of taxes.   This includes people on commission as a part of their income or their entire income.  Another section of potential borrowers that are being left behind are those with less than perfect credit and a high down payment or high equity positions.   

The idea of tight underwriting criteria is to keep the foreclosure rate low and to protect potential borrowers from themselves over committing themselves on a mortgage.  In the past, lenders were left to their own when determining risks associated with lending money to potential borrowers.  It has pretty much always held true that the more money, or equity, a potential borrower has into their home the less likely they will default on their mortgage.  Even during the mortgage crisis of 2005-2011 we found that the folks that had a high investment into their homes initially were far less likely to default on their mortgage.  After the crisis and with the onset of the Dodd Frank Act that put law into the mortgage risk assessing business we are finding that those folks that have the ability to save from their self-employed jobs are being discriminated against for no other reason than being a true American by using a tax accountant to prepare their taxes and writing off more things than a salaried employee can.  This affect can be attributed to the current tax code that allows people write off business related expenses off their income thus reducing the amount of income a lender can use to qualify them.  Currently even with a substantial down payment, 20% or more, if the self- employed borrower does not show enough income, net of expenses, they will not be allowed to get a traditional loan under the Dodd Frank laws. 

This holds true for those that have a lower than acceptable credit score with a high down payment or equity position.  I would contest to say that if a borrower can put a large down payment, 20% or more, they would be less likely to walk away from their mortgage even if the house devalued by 10-20% in the first few years after purchasing.  We have seen over time that Real Estate, over the long run will continue to rise at a rate as high, or in most cases, higher than inflation.   What this means is that people with large down payments have shown a commitment to the house they are purchasing for the long term.  I would contend that even though a potential borrower may have a less than acceptable credit history for a low down payment loan that they should be able to be able to buy a home with a large down payment as they will tend to find ways to make the payments so they don’t lose their investment. 

Good news, there is hope for these underserved borrowers out there.   We have seen an increase in investors that see loopholes in the law that will allow for these underserved folks to be able to purchase a home.  The Dodd Frank law states that “a borrower must show the ability to repay the mortgage”.  FNMA and FHLMC (Fannie Mae and Freddie Mac) have interpreted that to mean that all loans securitized by them must explore all income verification sources such as Tax Returns, Pay-stubs, W2s, 1009’s, for all borrowers on the loan.  Currently if a borrower fails to provide any one of those documents that support an income needed, the borrower is declined from those loans.  The good news is that some new innovative lenders, even with the support from Wall Street hedge funds, are providing loans to those that have similar situations. 

The laws state that if you are going to do a qualified mortgage (a home loan for a primary residence) you must show the borrower’s ability to repay that mortgage or verify their income.  This can be done by other ways than tax returns, W2s and paystubs, as no two borrowers created equally, everybody is different.  So to discriminate on those that don’t show income on their tax returns when they obviously are making income is ridiculous.  There are other ways to prove income such as showing regular deposits made to a bank account, or show enough assets that could pay the mortgage off, or simply listening to a borrower on their thoughts of how they plan to repay the loan based on the large down payment they would be making.    The market place is coming up with new ideas every day to stay within the law.  Alternate income loans are going to be the future for those that cannot show proof of income through traditional sources and we have those Alternate Income Loans Available today

Alternate income loans vary greatly from source to source that is why here at MAE Capital Mortgage Inc. we take care in making sure our alternate income lenders are everything they say they are.  We have several Alternate income sources that will use bank statements for the last 12 to 24 months and average the deposits. The borrowers that can show a good deposit history will tend to get the best alternate income rates on their primary home.  All the Alternate Income sources have graduated tiers for credit scores, and down payment or loan to value.  What this means is that if you have a large down payment, good deposit history in the bank and you have a good credit score you will get the bests alternate loan rates.  The rates will vary to the degree of risk.  So on the other hand if you have poor credit you will be required to put a larger down payment or have a larger equity position for a refinance in order to get an alternate income type of loan.  The Alternate income loans will require at least a 20% down, or equity position, to obtain this type of loan as the loan is not sold to FNMA FHLMC.   There will be plenty of cases where people should not attempt to purchase at this time if their credit is too bad, or they just don’t have a good source of income, or they don’t have the saving to put into purchasing a home. 

The Alternate Income loans are designed to fill the gaps where the banks will not lend.  Most Alternate Income Borrowers are those that feel that they can make a mortgage payment with the income they are currently making, and have saved a good amount of money, and have good credit.  Banks don’t offer these types of loans for a variety of reasons, so you will have to use MAE Capital Mortgage to find the alternate funding sources that will fit your needs.  We are licensed by the department of Real Estate and we hold a NMLS license and that makes us uniquely qualified to be able to Broker loans to those funding sources.  Our job is to find the best source for your particular situation and match the borrower with lender.  We are limited by law on what can be charged on Alternate Money transactions as these loans are on your primary residence, so you know you will be taken care of when we do this type of loan for you or any loan for that matter.  Our job, when working with our borrowers, is to find the best funding source for you, the borrower, for your particular needs and or challenges and if you do fit the box for a FNMA or FHLMC or FHA or VA loan we will certainly fit you into the best deal possible.   If you have been faced with being declined for a loan from a Bank or a Mortgage Banker give us a call today and we will see if we can fit you into an Alter Income Loan.  Again thanks for reading and You can call us today at 916-672-6130. 

 

Posted by Gregg Mower on December 16th, 2015 12:17 PM

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MAE Capital Real Estate and Loan

CA DRE #01913783|NMLS #806170

4940 Pacific Street Suite A
Rocklin, CA 95677