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