Do you have water-conserving plumbing fixtures?

As temperatures here in San Diego reach their annual highs, water conservation is a hot topic on everyone's minds.  Particularly, if you are thinking of selling a property that receives water from the City of San Diego, you must ensure that water-conserving plumbing fixtures are in place.  This is considered a "point-of-sale requirement" as it must be complied with in order to successfully close the sale.  Note: The buyer and seller can mutually agree to transfer the responsibility of retrofitting the plumbing fixtures to the buyer.  However, this is typically taken care of by the seller prior to the close of escrow.

So what are these requirements?   They are as follows:

Plumbing Fixture Retrofit Requirements

• Toilets which are manufactured to use more than 3.5 gallons per flush (gpf) must be replaced with Ultra-Low Flush Toilets (ULFTs) that use 1.6 gpf or less.  Modifications intended to reduce the flow of an existing toilet, such as the use of toilet bags, dams, bricks, or other alternative flushing devices, are not permissible and do not comply with the Code provisions. 
• Shower heads that emit more than 2.5 gallons of water per minute (gpm) must be replaced with a low-flow shower head that uses no more than 2.5 gpm.  Shower head flow restrictors are not acceptable.  The entire shower head must be replaced with a low-flow model. 
• Sink faucets (bathroom, bar, and kitchen sink faucets) that use more than 2.2 gpm must be retrofitted.  Faucet aerators may be installed to reduce the water flow. 
• Reverse Osmosis Systems require automatic shut-off valves. 
• Urinals that use more than 1.0 gpf must be replaced with low-flush models.  The entire fixture must be replaced, not just the flush valve.

How can you tell how many gallons per flush your toilet uses or how many gallons of water per minute your sink faucets use?  This can be easily measured and calculated if you don't know the brand and model of your fixtures.  To learn more, visit the following links:

1. Measure the flow rate of your shower heads
2. Measure the flow rate of your sinks
3. Determine the flow rate of your toilets

The seller of a property must also file a Water Conservation Certificate with the City of San Diego prior to a transfer of ownership.  Note: The filing of a Water Conservation Certificate is not necessary if the property already has a valid certificate on file with the City.  If you have any questions related to these matters, or you would like to receive a copy of this certificate, click here to e-mail me.

When does paying points on a mortgage make sense?

Points and When to Pay Them

As borrowers go through the loan application process, the topic of "Points" and whether to pay them will arise. Points are fees paid to a bank to obtain a lower interest rate on a mortgage. One point equals one percent of the loan amount. A lower interest rate may result in a lower monthly payment—which sounds great—but it's also important to consider how long a borrower intends to be in a home, and to compare current rates to historical market trends before paying points.

For example, a $300,000 mortgage with one point, translates to an additional closing cost of $3,000. Let's assume paying a point will save $100 a month, but it will take 30 months to recuperate the cost of that point. If refinancing or selling the home before the 30-month mark, the cost won't be recouped, so it would be better to not pay points.

Interest rates run in cycles. When rates are at historical lows, it may be sensible to pay points. It is unlikely rates will go down much further, hence, no need to refinance later. But when rates are up, it's likely they will come down eventually, and the chance of refinancing in the future is greater.

Should I pay my mortgage payments bi-weekly instead of monthly?

I recently received a great question from a client that purchased her home last month and thought it would be good to address on my blog as many people may not fully understand their options.  Her question was:

The bank that owns the loan has been sending me information on an option to change the method of payment from monthly to bi-weekly.  Do you think this is a good thing or not? 

My reply was: 

I’d say it depends…there are pros and cons to changing the payment.  By changing the payment from monthly to bi-weekly, you are essentially making an extra payment for the year (26 payments of half, or 13 total payments vs. 12 payments for monthly).  The pros of paying bi-weekly are that you pay down your mortgage quicker, thereby also reducing the amount of interest you will pay over the life of your loan.  You can also coordinate these payments to be right after you receive your paycheck – which is a selling point that banks like to use.  The cons are that you are making extra payments throughout the year, thus reducing the amount of income that you could allocate to other expenses or savings.  Also, you want to make sure to read ALL of the fine print to ensure that your bank is not charging you a fee for this service. 

Your other option if you are looking to pay down your loan quicker (and thus reduce total interest paid over the life) is to make an extra payment to your lender towards the principal.  This can be done at any time of your choosing and for any amount – you just want to make sure that you specifically write on the check that the amount is to go towards paying down your principal.  Assuming you are current on your loan payments, then this extra payment should not go towards interest at all, but should entirely go towards reducing your principal balance.  With this option, you are choosing when & if you make any extra payments to your lender.  

With the bi-weekly option, you don’t have to think about it….you will automatically be paying extra over the year. 

Hopefully, this will help you make a good informed decision!

What is a pre-approval?

Image by Zillow Mortgage Marketplace

How are your property taxes calculated?

One of the main expenses to consider when purchasing a new home are the property taxes you will pay every year as the owner.  But how do you know how much to budget for?

Thanks to the passage of Proposition 13 in 1978, all California property taxes are now assessed at 1% of the purchase price.  Each year thereafter, tax increases are limited to no more than 2% per year.  When a property is sold, it is then reassessed at market value (the sales price), but the rate remains at 1% of this sales price and the new owner is protected by the 2% cap on annual increases.

Exceptions to the 2 percent cap rule: There are exceptions to the 2% cap on annual property tax increases, including:

A. If the property is sold to a new owner.

B. If additions or major remodeling enhances the value, then the tax assessor can increase your property-tax basis. Presuming that you got a building permit, the building department will notify the assessor of the addition and the assessor will increase your tax assessment accordingly. The increase will show up in future tax bills, prorated from the date of completion. There may be one supplemental tax bill depending on when the date of completion falls within the tax year.

In order to determine the full amount of your tax bill, use the simple formula depicted below:

If you would like to know how much the voter approved bonds, Mello-Roos fees (if there are any), and special assessments are for a particular property, contact me directly at (760) 420-8642 or michelle.schwartz@coldwellbanker.com and I will get this information for you.

Property Taxes in San Diego

As the latest due date for San Diego property taxes has passed and the delinquency date draws nearer (with just over a month away), I figured this would be a good time to provide information about property taxes.  

The fiscal tax year runs from July 1st to June 30th of the following calendar year.  In late September & October, the Treasurer-Tax Collector mails out original secured property tax bills.  On the secured tax roll, the first installment is due November 1 and delinquent after December 10, and the second installment is due on February 1 and delinquent after April 10.  Taxpayers have the option of paying both installments when the first installment is due.  Penalties will not be waived due to not receiving a bill.

Keep in mind that as a new property owner, California law requires that you be responsible for the timely payment of taxes on your property. DO NOT WAIT TO BE NOTIFIED or expect receipt of a tax bill. None may be forthcoming. Make it a matter of your personal attention and responsibility to find out what taxes are due and owing by you, as required by law. 

To search the status of your tax bill and/or pay your bill online, go to the county assessor's website at http://www.sdtreastax.com/pay.html.  Please note that if you would like to pay using a credit card on their site, they charge a convenience fee of 2.25% for processing.

If you have any questions or would like more assistance with your tax bill, feel free to email me at michelle.schwartz@coldwellbanker.com.