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In an industry obsessed with specialization, one hybrid firm is pursuing on versatility – and it’s paying off.

Automation may cut the grunt work, but running a boutique firm that juggles lending, broking and fund management still demands hands-on hustle – and it’s a model that’s quietly thriving.

While the financial services industry leans increasingly into specialization, some boutique firms are embracing a hybrid model that blends traditional mortgage services with investment fund management. This approach leans heavily on operational efficiency and AI, with automation handling up to 80% of formerly manual tasks.

In high-cost markets like Hawaii, where the median price of a single-family home on Oʻahu reached $1.02 million in early 2024, offering flexible financing and investment solutions under one roof can be the key to staying competitive.

It’s the model Reed Myers (pictured) has refined over the years. During the 2008 crash, he joined the mortgage company his father founded and eventually expanded it into a multi-branch operation. Today, Myers oversees lending, brokering, and fund management at Myers Capital and Myers Investment Group, firms that operate with a lean team but a wide reach – prioritizing personal relationships, low rates, and long-term thinking over high-volume transactions.

From real estate crash to family business
Myers’ financial career began in the Carolinas as an analyst for a real estate investment trust, but the 2008 crash brought everything to a standstill. Projects disappeared, and so did job security.

“All my projects I’d been working so hard on, everything got iced, put on hold; it didn’t look good,” he said. “Even my boss was telling me: ‘You should probably start looking for another position.’”

He joined his father’s company, Myers Capital, which had been founded in 1998. Initially unenthused about the industry as a teenager, Myers’ perspective shifted once he got a deeper look into the business.

“When I got involved in it later as an adult, I started to do really well. I loved it,” he said.

From there, the company grew. He opened a branch in Hawaii and eventually expanded to Virginia, seeing many of his clients beginning to invest in these areas. They were no longer bound by brick-and-mortar offices thanks to advancements in technology and regulatory changes.

“Technology [has] made it very interesting and allowed for opportunities we wouldn’t otherwise have had,” Myers said.

Adaptation, relationships and long-term thinking
Like many, the company embraced remote work after the pandemic, downsizing their physical footprint while maintaining client relationships across the country. But even as business shifted online, his core values remained intact.

“Part of my approach is very hands-on, very personal. I meet with my clients; I sit with them for an hour or two in my office,” he said. “But after COVID, our clients became a whole lot more tech savvy than they were before.”

Managing the investment fund comes with its own demands – namely, raising capital and ensuring it is deployed quickly and soundly to earn the double-digit yield investors are looking for. But for Myers, it’s about relationships more than formal pitches. Some of his borrowers become capital investors, and some investors return as borrowers, creating a flexible network where overlap is not only expected but encouraged.

“We have that full spectrum. We can help them on either side and give them a tremendous amount of creative lending options,” Myers said.

Even in a competitive industry, he doesn’t view other fund managers as adversaries.

“You would think one fund manager is vying for the capital that’s out there, well, it’s yes and no,” he said. “Many times, we collaborate with other fund managers to do larger deals that we would otherwise not be able to execute.”

Lower rates, a key part of his value proposition, come from leveraging volume in negotiations with capital sources – benefits he passes on to clients rather than keeping them as company profit.

“I’d rather have two or three good-quality clients that will refer us to their friends and family and other investors, than trying to maximize profits on any one deal,” he said.

Staying grounded in Hawaii, despite the costs
Living and working in Hawaii, however, comes with its own set of hurdles. The cost of living remains one of the largest challenges – both for him and for his clients.

“An average single-family home in Oahu is about a million dollars. So, if you’re a first-time home buyer, that’s not what you’re going for, unless you have gift funds from family members or are a very high-income earner,” Myers said.

He pointed out that even with help, the qualifications are steep. Many in Hawaii find themselves adjusting their career goals to match the cost of living, sometimes sacrificing passion for practicality.

“It’s challenging deciding what you want to do, as far as a career goes in Hawaii; you may have to go beyond [the] things you really are passionate about,” he said.

Still, for Myers, Hawaii is worth it.

“Hawaii is a very culturally connected place. And for me is the place I wanted to end up,” he said. “We still have the same issues as everywhere else, but it is a geographically beautiful and very special place.”

Article Published at Mortgage Professional America 

Summary: What is a DSCR Loan?

A DSCR loan is a real estate financing option based on a property’s cash flow rather than the borrower’s income. Popular among rental property investors, DSCR loans help qualify borrowers using rental income potential. These loans are flexible, can be refinanced, and are ideal for scaling real estate portfolios.

Key Points:

• DSCR Defined: Stands for Debt Service Coverage Ratio; measures property income vs. debt.

• Eligibility: Based on property cash flow, not borrower’s personal income.

• Formula: DSCR = Net Operating Income / Total Debt Service.

• Typical Requirements: DSCR ≥ 1.0, credit score in 600s, 20% down payment.

• Credit Reporting: Loans usually don’t appear on credit reports, but related activity may affect scores.

• Refinancing: Allowed, including cash-out options – evaluate for potential penalties.

• Loan Limits: No set cap on the number of DSCR loans a borrower can have.

• Myers Capital Hawaii: Offers expert guidance and DSCR loan solutions for investors.

When you want to purchase a rental property or refinance an existing loan for a rental property, one of the most important things you can do is consider your options.

There are several types of investment property loans that real estate investors could choose, with each offering something unique compared to the rest. Bridge loans, portfolio loans, and fix and flip loans are just a few examples.

Today, we’re sharing key information about another type of investment property loan. Specifically, the Debt Service Coverage Ratio (DSCR) loan.

So, what is a DSCR loan and why do they make sense as a financing option for some real estate investors? Let’s take a closer look.

The Basics on DSCR Loans

A Debt Service Coverage Ratio loan, often called a DSCR loan, is a type of financing often used for short-term rental properties, including but not limited to condotel units. DSCR loans are also used for many other types of rental properties, like traditional apartment buildings and complexes. They can be used for refinancing and for purchasing a property.

The most unique aspect of DSCR loans is the income stream used to determine a borrower’s eligibility. Many loans take the borrower’s personal income into account, drawing on documents like W2s to verify the amount of money the borrower earns.

DSCR loans offer an alternative by focusing on the property’s cash flow instead of the borrower’s income. In essence, the lender uses the expected earnings of the property to decide whether issuing the loan is in its best interest.

So, DSCR loans can be a useful and powerful option when the borrower themselves doesn’t have a high income, but the property they want to purchase shows a strong return.

How Does a DSCR Loan Work?

DSCR loans work by measuring the cash flow of a property while also taking associated debts and expenses into account. Investopedia explains that the formula for calculating DSCR for an individual property (or for a business or similar entity) is relatively simple.

The DSCR formula is as follows: Net Operating Income/Total Debt Service. Here are a few key details:

•    Net operating income is calculated by taking the gross operating revenue and subtracting operating expenses from it.

•    Debt service is calculated by adding up the principal repayment, lease payments, and interest payments.

This calculation yields a DSCR ratio. As JP Morgan Chase points out, the figure tells the lender how much income is produced per dollar of debt service. So, a DSCR of 1.65 shows that a property earns $1.65 in income per every $1 of debt service. The higher the DSCR, the more income a property earns and, generally, the more likely a lender is to approve a DSCR loan.

How to Qualify for a DSCR Loan

Every lender has their own specific rules and requirements. However, there are a few standards for DSCR loans across the industry.

These include a minimum DSCR of 1.0, a credit score in the 600s, a minimum down payment of 20%, and evidence of the property’s actual or projected income.

These standards are flexible. Some lenders may have higher requirements, while others may have lower limits or make exceptions on a case-by-case basis.

How Many DSCR Loans Can You Have?

There is no legal, regulatory, or otherwise official limit to the number of DSCR loans a borrower can have. This is another reason why DSCR loans are a popular choice among real estate investors.

Do DSCR Loans Show on Credit Reports?

DSCR loans do not rely on personal income, so they generally don’t appear on credit reports. Activities related to the loan, like a late payment or a credit inquiry by a lender, can influence credit scores, but the loans themselves do not appear on credit reports.

Can You Refinance a DSCR Loan?

Yes, like many other types of loans, borrowers can refinance DSCR loans. Refinancing a DSCR loan is a popular choice when interest rates drop significantly and refinancing can reduce the amount of interest paid. Cash-out refinancing for a DSCR loan is another approach used by some investors.

Keep in mind that refinancing a DSCR loan may also lead to prepayment penalties and other financial obligations. Just like any type of loan, it’s vital to do the math and ensure refinancing will lead to the outcome wanted and not just a greater expense in the big picture.

Help With DSCR Loans from Myers Capital Hawaii

Myers Capital Hawaii is dedicated to helping our clients understand their loan options and choose the type of financing that best aligns with their unique needs. We are happy to discuss DSCR loans and how they could fit into your investing strategy with you. Learn more about our loans for investors.

Copyright 2025: Myers Capital Hawaii 

Mortgage News and Updates – Spring 2025
Get the latest mortgage industry news. Click here.

– Economy & Mortgages: Tariffs, Inflation, and the Fed: What’s Next for Mortgage Rates
– What is NMLS all about?
– How to Access Equity without Letting Go of a Good Thing.
– What are Involuntary Property Liens?
– What’s an Appraisal Gap? (And How Not to Fall Into It!)

Economy & Mortgages: Tariffs, Inflation, and the Fed: What’s Next for Mortgage Rates

What is NMLS all about?

You likely know the “MLS” is a service listing current homes for sale. What, though, is the NMLS? It’s only different by 1 letter, after all! Meet the “Nationwide Multistate Licensing System.” Not a listing of homes for sale, but an important consumer resource — an online platform used by states to manage licenses for mortgage loan originators and lenders.

Created in response to certain practices that contributed to the financial crisis of 2007-2010, it allows individual mortgage professionals and businesses to apply for, renew, and manage their licenses across multiple states through a single national system.

Consumers can use the NMLS website to check the licensing status of mortgage entities and individuals to verify who they are, their office location, and what states they’re licensed in.

Complaints can be filed there too. Check on us anytime!

How to Access Equity Without Letting Go of a Good Thing

Like many, you may be planning to stay put in your current home and make upgrades which will support various needs or goals.

As homes age, they routinely need renovation, whether to update outdated features (those old tile countertops), or repair/replace features that are losing functionality (that wood-burning fireplace with the cracks showing in the mortar).

Other homeowners want to add an additional dwelling unit (ADU) to their property, for an aging parent or a renter. Still others want to consolidate higher interest loans, like credit card debts, into a more affordable loan.

To get at that equity, there are 3 time-tested approaches.

Cash-Out Refinance: These have long been an option if your home has risen in value: refinance to a lower rate and a larger mortgage, keeping your payment about the same, you can get lump-sum cash out instantly. However, If your current record low rate makes that refinance unattractive, you have company! It’s estimated that over $32 trillion of home equity is “trapped” behind low-rate first-lien mortgages. Read on!

Home Equity Loan: These are second mortgages that are most suitable for dealing with one-time, large expenses like paying off other debts that have higher interest rates (auto, educational, medical, credit card, etc).

All the money is provided up front, and you begin paying interest on that full amount immediately. The rate is fixed, and you repay it in predictable, fixed monthly installments over a set period, just as with your primary mortgage.

Since it’s secured by your home, it’s usually at a lower rate than many other types of debts. Depending on the exact program, you could borrow a significant amount of the equity in your home (in some cases, up to 90%).

Home Equity Line of Credit (HELOC): These loans are most suitable when you need money periodically for ongoing projects or expenses. You can withdraw funds as needed during a “draw period,” which typically lasts ten years. Borrow only what you need, when needed, not up front.

It can be paid down, and reborrowed while you’re in the draw period. It’s effectively a revolving line of credit, like a credit card, but secured by your home, so the rates on outstanding balances are much, much lower. Interest is paid only on the amount borrowed.

The rate on the HELOC varies with the market, since you are in control of when the funds are accessed. Some people set up HELOC’s as a “safety net” for a future need, including emergencies. You never know when it could come in handy, and getting a loan during an emergency (i.e., job loss, health crisis) could be difficult.

A Note of Caution: You may also hear about “equity sharing” options, where private companies will provide cash with no payments due, in exchange for a portion of the equity on your home at some point in the future or based on a triggering event (like when you sell or refinance). If that raises a red flag, it probably should.

These are less straightforward than the three traditional options above, can be difficult to evaluate, and in some cases cannibalistic to the equity stake you are left with in the end. Talk to us for a second opinion before pursuing one of these.

We can help you make the right call, and find an equity loan or line of credit that works for you. We help you evaluate the usage of funds, repayment plans, cash flow needs, and time horizons in finding the right options for your needs.

What are Involuntary Property Liens?

A property lien is a legal claim that a creditor asks a county recorder to place against a property to recover debts from a property owner. Liens can apply to houses, cars, boats, and other real estate. There are two types: voluntary and involuntary.

In signing for your mortgage, you (voluntarily) agreed to have a “voluntary lien” applied to your property. When you pay off your mortgage, the lien is cleared, and off you go. If you fail to pay your mortgage, the lien gives that lender the right to repossess your property. Same with cars and boats.

What is an Involuntary Property Lien?

An involuntary lien is one you didn’t agree to up front. Good news: most creditors can’t place an involuntarily lien on your property – – an example being your credit card lender. Credit card debt is “unsecured”, meaning they can’t come after your house if you don’t pay (which is why credit card rates are so high instead).

However, there are other debts where the agency or creditor is legally allowed to place an involuntary lien on your property. Common ones are:

• Property tax lien: Issued by state or local governments for unpaid property taxes.

• Federal tax lien: The IRS places a lien due to unpaid federal taxes.

• Homeowners Association (HOA) lien: HOAs can typically place a lien for unpaid HOA fees.

• Mechanics lien: Contractors can place a lien for unpaid invoices. Contractor disputes can sometimes go unresolved, and later the homeowner discovers a mechanics lien when they try to sell.

• Judgment lien: Plaintiffs in lawsuits and debt collectors can file a judgment lien for the amounts due.

In most states, you can find out if there is a lien on the property by contacting your county recorder or assessor’s office. When selling or buying a home, a title search will check for any outstanding liens, and any “clouding” of the title must be resolved before closing.

You can avoid involuntary liens by staying current on taxes, contractor payments, and judgments. If you can’t stay current, find out if a payment plan is an option.

If you do end up with an involuntary lien, and you get it paid off, be sure to have the lien holder sign a release-of-lien form and submit it to the local government office.

If you are struggling to clear a lien, an attorney can help. We can connect you with the right attorney who can help resolve your situation.

What’s an Appraisal Gap? (And How Not to Fall Into It!)

The hyperactive pandemic real estate market, with low interest rates and skyrocketing prices, saw a boom in the occurrence of appraisal gaps, where a house’s appraised value (often based on recent sales only a few weeks old) still falls well short of the agreed-upon sales price. Today, the market is certainly less frothy, but the low inventory situation is still resulting in buyers resorting to escalation-clauses that lead to bidding wars, especially for the most desireable homes (starter homes) — and thus appraisal gaps are still prevalent.

In order to support the final mortgage amount, an appraisal is typically performed after the sales price is agreed upon. An appraisal gap can result in a higher loan-to-value ratio (if the borrower can qualify), or having to bring extra cash to the table to cover the gap and keep the anticipated mortgage structure the same. The borrower is to some degree “stuck” unless they plan ahead!

One solution in bidding on a house is a contingency clause (or form) where the buyer caps the additional amount they can bring to the table if the appraisal comes in low, and allows an exit if it exceeds the threshold. It’s a great solution but involves some math related to the mortgage.

We can help you determine the right amount to put in this contingency/exit strategy, such that you have a competitive offer, enough cash to cover closing costs, and don’t get caught by a gap you can’t manage through. Lean on our expertise, if you’re considering a purchase!

Copyright © 2025 Myers Capital Hawaii 

Tariffs. A government-efficiency task force. No Tariffs. Court challenges. New tariffs. The start of the new presidential term has been unprecedented. Mortgage rates remain in the mid-6%’s, and experts now predict they won’t fall much this year.

Taking a wait-and-see approach, the Federal Reserve has paused rate drops, citing concerns about economic growth, the potential effects of policy actions under the new administration, and persistent inflation which (excluding food and energy) remains at around 3.1%, versus the Fed’s desired 2% target.

Low inventory for sale continues to be a dominant factor in market dynamics. While rates are actually only about 1% above their long-term historical average, the effect on market psychology is real. Until rates come down, the “lock-in effect” is expected to continue. “(This) effect, where homeowners are reluctant to sell due to low existing mortgage rates, will continue to constrain inventory in 2025,” said Ali Wolf, Zonda Chief Economist. Those would-be sellers are not excited about roughly doubling their mortgage rates.

This sets up a second dynamic, which is that there are still more willing buyers (despite higher rates) than there are properties. Home price increases have moderated but are still a fact in most markets. Nearly every prediction, from CoreLogic to Morgan Stanely to Zillow, expects home prices to rise 2% or more this year, and in 2026.

“If mortgage rates remain stubbornly high, we can expect a continued period of subdued home sales and price growth,” concurred Mark Zandi, Chief Economist, Moody’s Analytics. The CalculatedRisk blog reported that “sales in January, at 4.08 million on a seasonally adjusted annual rate basis were down from December and still historically low. Sales averaged almost 5.5 million (monthly, annualized, seasonally adjusted) in the January 2017-2020 period. So, sales were still about 25% below pre-pandemic levels.”

We’ll have to see what happens. If a recession unexpectedly materializes later this year, interest rates should drop and improve buying power.

At the same time, it seems unlikely that a recession would lower house prices very much, given low supply and high pent-up demand – lower rates are widely expected to bring millions of sidelined buyers back into the market.

If you’re in need of a larger home, or downsizing, fence-sitting may not be a great strategy. Financially-sound borrowers usually have an opportunity to refinance once rates move down.

And if you’re like others who plan to sit tight, tapping into equity to improve your home may also be a great move, and we can help with that too.  

Either way, let’s put a plan in place to help you pursue those dreams!

Copyright © 2025 Myers Capital Hawaii  

We have been fielding calls over the last few months from clients who are wondering why, when the Fed has eased interest rates, mortgage rates have actually risen again after a brief dip over the summer. Great question!

To answer this, first know that the Federal Reserve (Fed) doesn’t directly set mortgage rates. Its mission today is battling inflation and keeping the economy out of a recession.

Indeed, the Fed can influence mortgage market rates by expanding or shrinking its balance sheet, buying and selling huge batches of government securities in the open market, as it did during the financial meltdown / Great Recession 15 years ago.

While that’s an example of how Fed actions can indirectly affect mortgage rates, clearly there must be other factors involved!

Federal Funds Rate:
The Fed sets the federal funds rate, which is the interest rate banks charge each other for very short-term (overnight) loans, as banks manage their daily cash flow. Mortgages, being longer-term debts, track more closely to the 10-year Treasury bond rates, which the Fed does not manage.

You can see this in the chart here – – note how mortgage rates track pretty closely to the long bond (10-year bond). Changes to the federal funds rate do make it more or less expensive for banks to borrow money. But it takes months for such changes to work through the financial markets and impact long-term bond rates.

Open Market Operations:
The Fed can buy or sell securities (like Treasury bonds) in the open market. You may recall “quantitative easing” being a part of the Fed’s response to the housing market crash around 2008. The Fed purchased over $1.5 Trillion of mortgage-backed securities, hugely expanding its own balance sheet.

By effecting massive demand for these securities, their price rose. In the inverted world of debt instruments, this lowered mortgage rates to help homeowners. Then it did so again in response to COVID-19, buying over $1T more! More recently the Fed has been trying to “unwind” its stuffed balance sheet by selling off debt, at lower prices, leading to (eek!) higher interest rates. Of course it has to try to do this carefully, or risk sending the economy into a recession. What a tightrope!

Additional Economic Factors
Mortgage rates have risen recently because other economic factors also have a powerful influence. Persistent inflation tends to devalue debt, since a dollar repaid in the future is worth less! That pushes down bond prices, and bond yields (interest rates) go up. Strong economic performance has the same effect. The bond market is focusing on these factors as they consider the prices they’ll pay for long-term debt securities.

In sum, while the Fed strongly influences financial markets, its monetary policy actions only indirectly influence the markets for longer-term bonds that directly impact mortgage rates. Contact us for a more detailed discussion, and our thoughts about where rates may go from here!

Copyright © 2025 Myers Capital Hawaii 

Financial markets value certainty. Regardless of which party controls the White House or Congress, putting the election behind us gives markets a clearer view of the economic policy ahead. Although a certain amount of uncertainty (pun intended!) does still surround things, the prospects of a housing-friendly regulatory environment have the industry cautiously optimistic.

Mortgage rates have been bumping along in the mid-6’s with the markets reacting one way or the other to economic news of the day. The Fed, jobs, unemployment numbers, inflation, and even the impact of potential tariffs on our trading partners (or is it all posturing?).

On the economic front, the picture is mixed. Payroll job gains are solid, though concentrated narrowly in a few sectors. At the same time, unemployment is rising, now above 4%, with more households reporting long-term unemployment and the hiring rate on the decline. If you have a hard time seeing how both are possible at once, you’re not alone.  

This mix of conditions makes it difficult to predict exactly where rates are headed. Our take is that as long as inflation doesn’t head in the wrong direction (upward), the Fed may continue its cautious rate-cutting plans into 2025. Don’t expect huge changes though in mortgage rates – – we’re probably going to live with rates in the 6.25% – 5.75% range during 2025. Still, that should yield a gradually improving housing market.

Housing inventory continues to struggle to catch up to demand for homes. Housing starts in October were 3.1% below September and 4.0% below starts in October 2023. Existing home sales in October, benefitting from a dip in mortgage rates that started in the Summer, increased year-over-year for the first time since July 2021, but at 3.96 million on a seasonally adjusted annual rate basis, were still historically low.

On a positive note, we’re seeing some loosening in the average mortgage rate “lock-in effect,” where homeowners with low-rate loans stay in their homes because they can’t give up that great rate. While it’s welcome news, the additional homes for sale of course still won’t accommodate our unmet housing demand, so prices should stay firm.

The rule of thumb continues to be that if you’re considering a purchase, waiting may not yield a better result. We have programs for all types of borrowers that help them take advantage of opportunities that exist in the market today – and great opportunities can be found in all types of markets. Let’s connect to discuss your goals, and we’ll put together a winning financing plan!

Copyright © 2025 Myers Capital Hawaii 

Mortgage News and Updates – Winter 2024
Get the latest mortgage industry news. Click here.

– Economy & Mortgages: Mortgage Rate Outlook – Gradual Normalizing Continues

– Is AI taking over mortgage lending yet?

– If the Fed is easing rates, why are mortgages not exactly following?

-Inheriting a house with a mortgage. What to consider.

-What’s Mortgage Protection Insurance and Do You Need It?

Economy & Mortgages: Mortgage Rate Outlook 2025 – Gradual Normalizing Continues

Is AI taking over mortgage lending yet?

The mortgage business has been automating steadily for years, and as Artificial Intelligence (AI) becomes more powerful, there exists a potential to help lenders achieve faster, more data-driven results. Already, our tools are able to collect and analyze your financial data, and can automate many routine underwriting steps, speeding up initial risk assessments and approval decisions, and reducing costs.

But AI falls short for now because mortgage scenarios can be amazingly complex, involving dozens of potential loan program solutions, unique borrowers, property valuations, and credit histories. It’s a heavy lift to develop the “training data” needed to build an effective AI solution. The industry is getting there, but for now, the human touch is still required for a good portion of the more nuanced work.

While AI will eventually take on larger roles within the mortgage business, for now, you’re in good hands with our expert team of humans!

If the Fed is easing rates, why are mortgages not exactly following?

I have been fielding calls over the last few months from clients who are wondering why, when the Fed has eased interest rates, mortgage rates have actually risen again after a brief dip over the summer. Great question!

To answer this, first know that the Federal Reserve (Fed) doesn’t directly set mortgage rates. Its mission today is battling inflation and keeping the economy out of a recession.

Indeed, the Fed can influence mortgage market rates by expanding or shrinking its balance sheet, buying and selling huge batches of government securities in the open market, as it did during the financial meltdown / Great Recession 15 years ago.

While that’s an example of how Fed actions can indirectly affect mortgage rates, clearly there must be other factors involved!

Federal Funds Rate:

The Fed sets the federal funds rate, which is the interest rate banks charge each other for very short-term (overnight) loans, as banks manage their daily cash flow. Mortgages, being longer-term debts, track more closely to the 10-year Treasury bond rates, which the Fed does not manage.

You can see this in the chart here – – note how mortgage rates track pretty closely to the long bond (10-year bond). Changes to the federal funds rate do make it more or less expensive for banks to borrow money. But it takes months for such changes to work through the financial markets and impact long-term bond rates.

Open Market Operations:

The Fed can buy or sell securities (like Treasury bonds) in the open market. You may recall “quantitative easing” being a part of the Fed’s response to the housing market crash around 2008. The Fed purchased over $1.5 Trillion of mortgage-backed securities, hugely expanding its own balance sheet.

By effecting massive demand for these securities, their price rose. In the inverted world of debt instruments, this lowered mortgage rates to help homeowners. Then it did so again in response to COVID-19, buying over $1T more! More recently the Fed has been trying to “unwind” its stuffed balance sheet by selling off debt, at lower prices, leading to (eek!) higher interest rates. Of course it has to try to do this carefully, or risk sending the economy into a recession. What a tightrope!

Mortgage rates have risen recently because other economic factors also have a powerful influence. Persistent inflation tends to devalue debt, since a dollar repaid in the future is worth less! That pushes down bond prices, and bond yields (interest rates) go up. Strong economic performance has the same effect. The bond market is focusing on these factors as they consider the prices they’ll pay for long-term debt securities.

In sum, while the Fed strongly influences financial markets, its monetary policy actions only indirectly influence the markets for longer-term bonds that directly impact mortgage rates. Contact us for a more detailed discussion, and my thoughts about where rates may go from here!

[Data: Federal Reserve Bank of St. Louis]

Inheriting a house with a mortgage. What to consider.

Inheriting a house that’s not yet paid-in-full is becoming more common. Homes have become more expensive to start with, and mortgages are effectively outliving borrowers in many cases.

Additionally, many seniors have purposely tapped built-up equity for “aging in place” improvements that allow them to stay put longer, for medical expenses, and for other needs. This leaves them with mortgage debt — all for very good reasons, of course!

Given the price of homes, keeping a house within the family as one generation passes can give the offspring a leg up in terms of continuing to build real estate wealth. It’s not uncommon for children or grandchildren to get a start in real estate by inheriting a house.

If you find yourself inheriting a house, you have a few options:

-Sell the house: The first decision to make is whether to keep the house. If no one is planning to live in it, you could sell the house. This solves the mortgage problem. It would be paid off out of the sale proceeds, and you’re done. If the debt exceeds the value of the house, in many jurisdictions heirs are not responsible for a mortgage shortfall (speak with your mortgage attorney!).

-Move in / keep the mortgage: Many mortgages have a “due on sale” clause, and if you don’t occupy the home, it gets triggered when the title is transferred. If the borrower dies and you inherit the home and plan to occupy it, you cannot be forced to pay off the mortgage. You’d “assume” the existing mortgage, supplying the mortgage company a with a certified copy the death certificate and a copy of the deed to the home showing you as the new owner, replacing the original borrower and continuing to make the original payments.

Since you’re technically making payments for the person who is deceased (who’s on the mortgage), those payments do not go on your credit report. And if the terms of the old mortgage are better than what you can qualify for today, that may not be an issue.

Move in / replace the mortgage: If you move in and the characteristics of the mortgage don’t fit with your own financial situation, we can help you attempt to finance the home with something more appropriate.

Keep in mind that this is not a “re-finance” since you aren’t on the original mortgage. You’d have to qualify as normal for a new mortgage. Overall, the first step is to contact us. We have handled these situations over the years, and we can help you make the right moves!

What is Mortgage Protection Insurance and Do You Need It

Mortgage Protection Insurance (aka Mortgage Life Insurance) pays off your mortgage upon your death. It is a legitimate product, but do you need it? When you die, your survivors inherit your mortgage debt along with the house (see article inside about inheriting a mortgage). Mortgage protection insurance pays some or all of the loan off, leaving inheritors with less mortgage debt (or none).

Mortgage Protection Insurance has some advantages versus traditional life insurance. Many offerings are “guaranteed acceptance” policies, which helps if health conditions prevent you from getting affordable life insurance coverage. The insurance payment goes directly to the lender. Your inheritors don’t need to handle that payoff, and your heirs inherit a fully paid-off home, or at least a smaller mortgage.

However, traditional life insurance generally offers greater flexibility for those you leave behind. Traditional life insurance pays the funds to the beneficiaries, not the lender. They can use the funds to pay off debts first, or use them in other ways, if they assume or replace the inherited mortgage.

If your current insurance portfolio offers sufficient coverage, I would not recommend adding mortgage protection insurance. If you don’t have life insurance, we can help you explore this option.

Copyright © 2025 Myers Capital Hawaii

The Federal Reserve today announced its second rate cut of 2024, lowering its benchmark interest rate by 0.25% just after the U.S. presidential election. This follows a 0.5% reduction in September and is in response to easing inflation and persistently low unemployment.

This move comes after a series of 11 rate increases from March 2022 to July 2023, bringing relief to consumers by reducing borrowing costs for credit cards, auto loans, and home equity lines of credit.

Impact on Mortgage Rates
While the Federal Reserve doesn’t directly set mortgage rates, it influences them through its policies. Mortgage rates generally follow the direction of shorter-term interest rates.

However, despite the 0.5% rate cut in September, mortgage rates have actually risen, with 30-year fixed-rate loans now averaging 6.79%, according to Freddie Mac.

Key Economic Factors Influencing Mortgage Rates
-Bond Market: Mortgage bonds, or mortgage-backed securities (MBS), consist of groups of mortgages bundled together and sold to investors. These investors receive interest payments from borrowers’ monthly payments. Recently, bond yields have risen due to expectations of stronger economic growth under the incoming administration, making these bonds less attractive and pushing mortgage rates higher.

-10-Year Treasury Yield: Mortgage rates often move in tandem with the 10-year Treasury yield, a crucial indicator of long-term interest rates. In early September, this yield was 3.84% but has since jumped to 4.31% as of November 7.

-Labor Market: A robust labor market has also put upward pressure on mortgage rates. The September jobs report showed payrolls increasing to 254,000, up from 159,000 in August, while the unemployment rate dipped by 0.1 percentage points to 4.1%. Strong job growth can signal increased demand for housing, which can drive rates higher.

These factors indicate that, despite the Federal Reserve’s recent rate cuts, mortgage rates may stay elevated as the economy continues to show resilience. While additional rate cuts are expected at the Fed’s December meeting and potentially in early 2025, their timing will depend on the strength of the economy, the labor market, and inflation trends.

Whether you’re buying, refinancing, or exploring your options, we’re here to help you secure the best mortgage financing. Contact us today for expert guidance and personalized solutions tailored to your needs. Call 808-566-6611 for details.

The mortgage market has made a promising shift! Mortgage rates are gradually decreasing from their near-8% peak last Fall, making homeownership more accessible for those wishing to buy. The average rate on a 30-year fixed mortgage first retreated under 7% in July thanks to a brighter June inflation report.

That favorable trend continued into August, bringing the national average 30-year fixed rate solidly under 6.5%, where it has been hovering as the market waits for continued developments on both inflation and the health of the economy.

Inflation still sits a bit higher than the Federal Reserve’s 2% target, but continuing to trend in the right direction. Coupled with signs of weakness in the job market, the Fed chairman indicated in late August that they’re finally ready to start cutting rates in September.

Keep in mind that bond rates and mortgage rates have recently fallen in the absence of a Fed rate cut — more appropriately, in anticipation of a Fed rate cut. That means any Fed action in September may only have a small effect on mortgage rates.

Home prices are finally stabilizing, after a period of rapid escalation that began in 2021, providing additional relief to potential buyers. The inventory of homes for sale remains tight, though experts predict increased supply as the year progresses.

But if you’re waiting for home prices to dip, you may end up waiting a really long time. With just over 26% of adult Gen Z’ers owning a home in 2023 and Millennial homeownership standing at 55% (compared to Gen Z and Boomer homeownership at around 70%), the expected generational demand will continue to exceed the supply, keeping a floor under prices.

“The recent decline in rents means Gen Z’ers can put more money toward saving for a down payment. Plus, the job market is strong, and career opportunities have become less concentrated in expensive cities during the remote work era, meaning many Gen Z’ers can choose to live somewhere more affordable,” said Daryl Fairweather, Chief Economist for online real estate firm Redfin.

How are lower rates affecting the market?
Thus far, the lower rates we’re seeing haven’t brought buyers into the market in any significant way. That said, as rates continue to improve, we do expect a gradual shift towards a more active market in the latter half of 2024 and into 2025.

If you’re in a position to move up or downsize, it might be better to make a move while things are relatively quiet, rather than wait and battle it out with other buyers entering from the sidelines. Let’s get in touch and set up a time to review how the improving market conditions can support your real estate ownership goals.

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Copyright © 2024 Myers Capital Hawaii

Get the latest mortgage industry news. Click here.

– Economy & Mortgages: Mortgage Rate Outlook – Ready to Take Advantage of Lower Interest Rates?
-ARMs are Big  
-The Importance of Liquidity When Buying
-Should You Skip the Rate Lock?  
-Is Title Fraud Really a Problem? 

Economy and Mortgages
Mortgage Rate Outlook – Ready to Take Advantage of Lower Interest Rates?

ARM’s are BIG

Adjustable Rate Mortgages (ARM’s), which are usually fixed for 3, 5, 7, or 10 years before they actually start to adjust, are a popular alternative to 30-year fixed-rate mortgages, since they can have lower initial rates, which can improve affordability.

They can be a smart option for buyers who don’t plan to stay put. ARM’s tend to be more popular with younger, higher-income households that have larger mortgages, according to the Federal Reserve Bank of St. Louis.

Because rates have been high recently, ARM\s represent about 16% of the market, near a historical high-water mark. Many borrowers are attracted to the rate advantage, figuring that rates will have improved enough within the next few years to make a refinance possible. Or, they plan to move soon.

If you do the math, even if rates rise after the fixed period ends, an ARM could make the most sense to finance your purchase. But hold on, we do all this math for you! Reach out to us for details.

The Importance of Liquidity When Buying

When buying a home, especially your first home, it’s easy to get focused on the amount of funds it takes to make the purchase happen — down payment and closing costs – and overlook the resources required after the purchase.

The last thing you want is to buy your dream home and then be “house poor” and miserable for months afterwards. Planning for post-purchase liquidity is an essential part of a winning financing strategy.

First, you’ll need to meet the minimum requirements for mortgage reserves. Lenders often require reserves — it guarantees that there is cash on hand to cover the mortgage for a few months after closing, in case you’re laid off.

On single-family homes, this amount can be up to 6 months of mortgage payments for conventional loans (FHA loans usually do not require them), and varies based on several underwriting factors. Reserves can be cash in checking/savings accounts, money market accounts, CD’s, stocks and bonds, trust accounts, cash value in life insurance policies, and the vested portion of 401(k)’s and IRA’s.

It’s tempting to check that box and be done with it, but keep in mind that buying a home comes with a few other financial considerations that you’ll want to plan for:

• Moving Expenses: A local “DIY” move could still cost $1,000 or more (plus pizza and beer for your friends). Long-distance moves with pros start at around $4,000 for a 2-3 bedroom load and a few hundred miles, to over $15,000 for a 4-5 bedroom load and 2,000 to 3,000 miles.

• Furnishings: A new home may be bigger or simply different than your current home. To make your new place not look just like your old place did, you should have a generous reserve in your budget for furniture. The good news is that there is a tremendous market for pre-owned furniture these days, which can help you get more for your dollar.

• HOA Fees: Many newer homes come with Homeowners Association dues that cover the cost of common areas in your development. Make sure you know what those are.

• Upgrades and Maintenance: In addition to upfront costs for upgrading paint, carpets, flooring, and window coverings, the average annual cost to maintain a single-family home reached $6,663 in 2023, according to vendor website Thumbtack. Budget as much as 4% of your home’s value each year for maintenance of things like roofing, HVAC, plumbing, flooring, landscaping, pest control and more. In certain areas of the country, you’ll also want to be prepared for periodic costs associated with storm damage.

Take action early. As you approach a home purchase, you can bulk up your reserve readiness by decreasing spending as much as you can, setting aside funds each month in a special account, or even picking up some side gigs if that’s an option. Make sure your home purchase goals are realistic enough to ensure you’re liquid and not “house poor” once you move in.

With Rates Dropping, Should You Skip the Rate Lock?

With mortgage rates edging down, it’s natural to ask whether requesting a rate lock still makes sense. When interest rates are rising, exercising a rate lock is a slam-dunk decision. With rates trending down, it’s still worth discussing with us, since it still may make sense.

What is a Rate Lock? 

You lock in your loan rate for a specific number of days, often aligned with the time it will take to close your home purchase or refinance.

Rate locks of 15-30 days are standard, depending on your loan application status, whereas locks of over 30 days usually cost more, to cover the risk that the market rate will change relative to the rate that was quoted.

Locks for 30-days and 60-days are typical, given how long it takes to close on a purchase, with even longer locks sometimes available at higher cost.

Why Lock When Rates are Trending Down?

The main reason to lock in your rate when interest rates seem to be declining is peace of mind. Even in a downtrending market, rates jump up and down on a daily basis. There can be periods of 2 to 3 weeks where rates trend up for one reason or another, then resume their down-trend.

If you’re someone who agonizes when rates bump up by even a small amount, and it’s stress inducing to think that you might have missed a slightly lower rate, then lock it in and relax. There are enough other things to worry about when buying a home.

Have Your Cake and Eat it Too

Float-down options can also help. These let you honor your locked-in rate or the current rate, whichever is lower. Float-down options often have unique terms that dictate how many times the rate can float down, what the cost is, and how much it can float down in total.

Talk to us about how this works. Right now, with financial markets already pricing in Fed rate cuts to some degree, any upside surprise (employment, consumer spending, inflation, geopolitical conflicts, etc.) could cause interest rates to pop unexpectedly.

If these things are of concern, a rate lock can help with peace of mind. We can help you make the best decision for you.

Is Title Fraud Really a Problem? 

Losing sleep over that radio ad about villains stealing the title to your home? The ads claim that thieves can “steal” the deed to your property, then mortgage it or sell it without you knowing. In a world where phishing, hacking, personal data theft, and scamming is all too commonplace, it could be another new thing to worry about.

Or not. Here are the stats: the FBI estimates that title fraud impacts 10,000 homeowners annually. So yes, it’s a thing, but with 86 million homeowners out there, a “crime wave” it is not. You might want to ignore the hysterical ads peddling $79 monthly “Title Fraud Insurance.”

While someone could potentially forge a deed that transfers title to themselves, and try to record it with the county, if a buyer or lender relies on that forged deed without doing due diligence on the property’s title, they (not you) are on the hook for any lost money paid to the thief.

Further, the deed’s signature must be certified by a Notary Public, who is required to verify your identity. And lenders, title companies, and real estate firms have major safeguards in place that validate any transactions based on a myriad of other factors.

Still, if you’re worried, contact your county offices. Just like the free monitoring services available from the credit bureaus, many counties now offer title monitoring services that alert you when a change occurs to your deed.

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