2013 FHA Loan Changes Every Homeowner Should Know About

Prudential California Realty is Central Coast’s Real Estate experts. Our first priority is you – always. It is our goal to provide you with the most innovative real estate services on the Central Coast.

As we all know, Benjamin Franklin is famous for saying, “The only things certain in life are death and taxes.”

We can be just as certain that we will die as we can be that we will have to pay taxes, but we cannot always be certain how we will be taxed, which makes sense considering Albert Einstein said, “The hardest thing in the world to understand is the income tax.”

That is why this is the blog post is meant to help you understand just a few of the major changes every homeowner and homeowner hopeful needs to know for 2013 regarding home loans – since taxes and loans are so closely intertwined.

FHA loans are one of the most popular loans home buyers obtain.  These are mortgage home loans insured by the Federal Housing Association. These are popular with first-time homebuyers because they make buying a home easier, or possible, thanks to less rigid borrower requirements.

Buyers can expect to see changes in FHA mortgage insurance and upfront fees going into effect in spring 2013. For some, fees will go up; for others, fees will go down.

Here is the gist: Fees for refinancing will fall sharply, as the upfront mortgage insurance decreases to 0.01% of the base loan amount, from 1%, starting on June 11.

For buyers, the upfront mortgage insurance premium will increase to 1.7% of the loan amount, from 1%, effective April 9, and annual insurance costs, paid monthly, will rise 0.10 percentage points. Those with so-called jumbo loans, those above $625,500, will see a 0.35-percentage-point jump in the annual insurance premium, effective June 1.

On April 2012, FHA changed its collection account guidelines. Going forward all collection accounts within the last two years must be paid off. All collection accounts totaling over $1,000 must be paid off. Collection accounts that total less than $1,000 and are over two years old may not have to be paid off.

If you have collection accounts that are not paid off, FHA allows you to set up a payment arrangement to qualify. By setting up a payment arrangement FHA will allow you to make three on-time monthly payments to qualify for a FHA loan.

FHA allows a borrower with a credit score of 580 to buy a home with only a 3.5% down payment. FHA guidelines allows a borrower with a minimum credit score of 580 to buy a home using their own funds for a down payment or the down payment funds can be a gift from a family member.

FHA guidelines allow a home buyer with a minimum credit score of 580 up to a 6% seller’s concession. The seller’s concession must be written into the sales contract.

Now that we know these are the inevitable parts of life, let us ask you: What do you plan on doing in the real estate world in 2013?

If you have any more questions, we suggest you call us today.

Getting Your Home Ready for the Holiday Season

Prudential California Realty is Central Coast’s Real Estate experts. Our first priority is you – always. It is our goal to provide you with the most innovative real estate services on the Central Coast.

Whether you just moved into your new home or just looking to try something new this holiday season, it’s a great idea to start planning now what you want to do to prepare your home for the upcoming holiday season.

After all, the holiday season is just about a month away. It’s time to get started! You might want to serve Christmas carolers at the door, host a dinner party, or find some other creative and clever ways to show your holiday spirit, so let’s look at some fun ideas.

First off, we recommend that you start at the entranceway. Introduce your festive personality as your friends and family introduce themselves to your home. Greenery, stylish lights, and decorations set the stage, so white Christmas lights, wreaths, and other more classy and classic holiday decorations are perfect for every holiday season. Look at your entranceway and ask yourself if it looks inviting.

Next, move inside. Once you are inside the house, the first thing to do is declutter. Make sure all toys, exercise equipment, shoes, etc. have been moved out of the way and definitely before any guests arrive. Now you can start decorating.

Tossing richly colored throw pillows with warm and spicy colors quickly livens up a room. Lamp shades can be replaced with warmer colored lamp shades that make the light appear richer and softer. Changing colors and simple accessories like throw pillows, blankets, etc. can do a lot to change the atmosphere, even if you are on a budget.

Take a look around your house and see what needs replacing. An old throw blanket, those bathroom hand towels, window and shower curtains may be outdated or out of season, but you have been too busy to notice. This is your perfect opportunity to update them just in time for the season.

Don’t forget the power of smell. Intensify the experience for you and others with lovely fragrances throughout your home. Try not to have too much variety in the house, but don’t feel restricted to have only one scent either. For this time of year, we recommend vanilla, cinnamon, peppermint, cloves, orange peels, frankincense. Consider also employing inexpensive fruits like green apples, tangelos, and lemons.

Do you have any recommendations or ideas for home decorating for the holidays? Please share them in a comment below.

What Every First-Time Homeowner Should Know

Prudential California Realty is Central Coast’s Real Estate experts. Our first priority is you – always. It is our goal to provide you with the most innovative real estate services on the Central Coast.

If you recently found in your hands a set of keys that belong to your first home, then congratulations. Being a homeowner is a core part of what many consider the American Dream.

As you already know however, being a first-time homeowner comes with a lot of responsibility. Gone are those days when you could pick up the phone and call your landlord when the kitchen faucet sprung a leak or a rat decided to be your family’s newest member.

Everything is now your responsibility. Sounds gloomy – until you remember that you can paint the walls whatever color you’d like or install make that home upgrade you thought would be perfect without having to revert everything back a year later when you moved out.

So, what does every first-time homeowner need to know? These 5 things:

Inspect things carefully

Pull out the home-inspection report and reread it. The report can act as a useful maintenance checklist.

Water down your problems

Water-related problems can be a homeowner’s biggest pain. A home’s basement, foundation, and roof are highly susceptible to water damage. That is why it is critical to regularly inspect these susceptible areas.

Inspect all bathrooms, laundry rooms, and kitchens for water leaks.  Ensure that all nuts and bolts are tightened and the areas around doors and windows are sufficiently caulked. Also, make sure the gutter system is free and clear of any leaves and debris. Blockage in a gutter system can lead to costly and problematic repairs to the foundation and other parts of the home.

Check every shingle part of the room

We actually meant check every single part of the roof. If your roof is more than 12 years old (some experts recommend fewer than 12 years), it should be professionally inspected. The saying ‘a stitch in time saves nine’ applies perhaps most aptly to a home’s roof than most other parts of the home.

Spark your interest in home circuitry

Map out your new home’s electrical system by determining which outlets are connected to which circuits then label them. The previous home’s owners may not have labeled them correctly, so knowing for yourself is all the wiser.

Know where your new home’s main shutoffs are

The electrical shutoff should be a switch either at the main breaker or outside near a service entrance. The water shutoff valve will be on a wall of the house facing the street. After locating them, ensure that they are easily accessible.

Do you have a tip every first-time homeowner should know? Please share it with us in a comment below.

More Great News Around San Luis Obispo

Prudential California Realty is Central Coast’s Real Estate experts. Our first priority is you – always. It is our goal to provide you with the most innovative real estate services on the Central Coast.

Every now and then, we like to update our readers with exciting and good news from the San Luis Obispo area. As always, we have exciting news for those currently living in the area and those looking to move to the area. So, let’s gets started.

• San Luis Obispo County schools get good grades from the state

Excitingly, nearly 64 percent of San Luis Obispo County schools are surpassing a state academic achievement benchmark. Plus, 48 schools have scores higher than the target of 800 on the Academic Performance Index (many of the schools that did not reach this benchmark are not far behind).

• San Luis Obispo is the Happiest City in America

Ok, so this may not be news to many of you. If you didn’t see our post from September 2011, we reported on Oprah’s naming of San Luis Obispo as the Happiest City in America for numerous reasons; however, we now have another name…

• San Luis Obispo has been named “Train Town” by Union Pacific Railroad

The weekend of October 6^th, Union Pacific Railroad recognized our city as part of its national network of Train Town USA communities. This designation comes as Union Pacific celebrates its 150^th anniversary. Now in its fourth year, the Central Coast Railroad Festival kicked off earlier this month at the San Luis Obispo Farmers Market.

To celebrate, festival organizers set up model train layouts and railroad equipment at the corner of Higuera and Chorro streets. Visitors  played with toy trains, participated in an Amtrak raffle and listened to live music by Don Lampson and BanjerDan.

• San Luis Obispo: one of six cool cities

All the way from London, England come the compliments for San Luis Obispo. What did they say about us?

This is a college town on the Californian coast, roughly halfway between Los Angeles and San Francisco. It’s an old city – one of the     oldest in California – but with a youthful vibe. The well-preserved centre has great bars, including a brewpub serving around 10 home-brewed beers. Wine is another big attraction – so it’s no wonder this is known as the happiest city in America. Edna Valley, Arroyo Grande Valley and Avila Valley are home to small, family-run wineries, most open for tastings. Koberl at Blue is a restaurant serving dishes specially designed to complement the central coast’s wines. The Thursday night market is a large, rowdy affair, with students, bands and cyclists clogging the streets. There is a campsite at nearby Montana de Oro state park, which has miles of sandy beaches, and there is great kayaking between Shell and Pismo beaches, where there are sea caves to explore. The Madonna Inn, doubles from $189) is an eccentric local landmark – a theme hotel that’s worth a visit, if only to check out the rock waterfall urinal in the men’s bathroom.

For purposes of brevity, we must unfortunately end our list here. Do you have some great news about the San Luis Obispo County or North Santa Barbara County area we should have included?

Please share it with us in a comment below.

Managing Your Debt: Pay Off Your Mortgage Sooner

Prudential California Realty is Central Coast’s Real Estate experts.Our first priority is you – always. It is our goal to provide you with the most innovative real estate services on the Central Coast.

The saying “money doesn’t buy happiness” is true, but a huge monthly mortgage payment may stand in the way of your happiness as well.

Why is that exactly? Well, there are a few reasons: Repaying your loan in a shorter time period may enable you to focus on other priorities such as a child’s college tuition, or saving for retirement. You can also reduce the overall cost of your mortgage by making fewer interest payments over the life of the loan. Sounds good, doesn’t it?

To be fair, there are some disadvantages to this as well. You may have higher monthly payments. You may not receive as much of a tax deduction. You will also pay origination charges as well as closing costs for your new loan.

Now, there are a few things one should know about a shorter-term finance:

• In the beginning, you will be making payments that are more heavily weighted to the payment of interest as opposed to principal.
• As the term of the loan progresses, you will gradually begin making payments that are more heavily weighted to the payment of principal as opposed to interest.
• Because your mortgage term is shorter, your monthly payments may be higher, depending on the interest rate of your current loan, the original loan amount and the new loan amount.
• If you select a longer term loan, your monthly payment may be lower but the amount of interest paid over the life of loan will typically be higher.

Shorter term loans have a heap of benefits, but they are not for everyone. Do you think you would benefit?

There is a lot more to understanding paying off your mortgage sooner, so we strongly encourage you to visit this easy-to-read Wells Fargo page. There, you can find out if refinancing is for you, understanding some financing basics, and much more.