San Diego, CA

What is Mortgage APR, Can You Explain It?

11-19-09

Bill Ladewig Your FHA Guru - FHA and VA Loans Since 1970

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Office: (866) 204-9733

Mobile: (760) 685-0480
Secondary: (858) 451-1481

WHAT IS MORTGAGE APR, Can You Explain It?

APR Demystified and APR Predators Exposed

First, lets demystify Annual Percentage Rate (APR).

Mortgage APR was designed to allow consumers to use one standardized number to compare each lender's rate for the same type of loan while rate shopping. It is supposed to represent the borrower's cost and it works like this.

If I lend you, $10,000 and, I charge a $500 Bump-ta-Bump Fee, you will actually receive $9,500, however you must still repay me $10,000. Mortgage APR is my real yield and your real cost on this loan.

We agreed that you will repay the loan at 8% interest on $10,000, HOWEVER you only received $9,500 therefore I will earn more than the 8.0% interest rate I charge on $10,000. In this case, my yield (APR) is 9.799% on the $9,500 you received.

APR is the lender's yield on dollars actually lent ($10,000 minus $500 = $9,500); in this case, the lender's yield (APR) on $9,500 is 9.799% (APR is computed as if the above example is a 30 year loan)

The $9,500 also represents the Amount Financed in the Truth In Lending (TIL) disclosure.

For those of you who use spreadsheets the Rate Function will find APR. Use the Amount Financed for Loan Amount and use the monthly payment on the actual loan amount.

Fees that must be subtracted from a mortgage loan to properly calculate Amount Financed for APR

Origination and Discount Points

Processing and Lender Fees

Pre-Paid Interest (Use 15 days when closing date is unknown)

Monthly Mortgage Insurance must be added to the payment of all FHA loans and Conventional loans greater than 80% loan to value.

The inclusion of Mi or MIP accounts for the large spread between Rate and APR on loans with mortgage insurance.

NOTES: Fees Not used in APR calculation; third party fees such as appraisal and credit. APR can only be compared on loans of the same type and amortization period

How Do APR Predators Work?

Many sophisticated borrowers shop interest rates by searching for lowest APR which, if property stated, is a valid way to compare similar loans. Unfortunately, APR is not always stated properly.

How is advertised Mortgage APR is misstated?

Prepaid Interest is not included - most common deception and true on all online Rate sites i.e.: Bankrate.com, Interest.com, Mortgage101.com, ShopRate.com, etc.
Prepaid Interest is understated - must be 15 days when closing date is unknown.
MI or MIP is not included in the APR on any online rate sites, Bankrate etc.
Some lenders do not include MI or MIP on their web sites such as Amerisave.com
Lender fees are either understated or not included in the APR calculation. This is a tricky one because No or Low Lender Fees does not necessarily indicate a predatory lender. Some lenders charge a higher rate and no points or fees for their so called "Zero Cost" loan. However, the "Zero Cost" rate will always be higher than a rate with points and/or fees.
Notes to the above:
- there is no such thing as a Zero Cost loan and some states prohibit lenders from advertising Zero Cost Loans.
- The spread between Rate and APR on loans greater than 90% LTV should be at least 0.700%. When it is not... you are being scammed

Rate - Points - Fees are all interdependent

The best way I can explain this is show various Rate - Point - Fee combinations where the lender is making the same gross profit on each combination.

In the examples below, we will use a $200,000 loan amount and Lender gross profit of $1,000, on a day when the Lender's cost for a 5.000% rate is par (0 point).

Best Rate: $1,000 Lender profit in various combinations of points and fees

Rate	Fees	Points	APR	Profit
5.000%	$1,000	0	5.044%	$1,000
5.000%	$500	0.250	5.044%	$1,000
5.000%	$0	0.500	5.044%	$1,000

Lowest Fees:
You pay $0 points and fees and Lender's investor pays the lender $1,000 for the higher rate.

Rate	Fees	Points	APR	Profit
5.125%	$0	0	5.125%	$1,000

The point here is that lenders design their loans to provide talking points for their sales staff (loan officers). They all require a certain profit margin and it is not important the way the loan is structured as long as the closed loan delivers their required profit margin.

This illustration also points out the value of correctly stated APR as a way of comparing mortgage loans. For the sake of these illustrations, prepaid interest was not used. If 15 days PP was calculated it would have increased each APR by 0.019%.

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Asbestos, and Mesothelioma awareness

11-19-09

The Relocation Professionals

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Office: (800) 900-2807

Secondary: (760) 633-4607

The path to home ownership is an exciting time for you and your family, but one which requires many additional responsibilities and things to consider. It may not be completely clear, but the first steps in the home buying process are important to the success and enjoyment during this process.

When embarking in the home buying process, there are many things to consider. Many new homes may need to be remodeled or repaired. Having the assistance of experienced and knowledgeable relocation professionals can make this process smooth and stress free!

Asbestos

An older prominent building material that has plagued homeowners is asbestos. Commonly used to insulate pipes, roofs, floors and walls, homes built after 1980 could still harvest asbestos or other environmental defected insulation methods. Asbestos is a form of insulation which is swiftly becoming obsolete because of environmental awareness and new protocols.

The use of this fibrous mineral became widespread due to the variety of industries such as chemical plants, paper mills, shipyards and oil refiners used the material because of its fire resistant and ultra durable qualities.

The inhalation of asbestos can cause a rare, but severe lung ailment known as malignant mesothelioma. Treatment has varied effects on victims because current research indicates it can take up to 20 to 50 years for this illness to develop. The amount of incidents in relation to the asbestos scandal has lead to mesothelioma lawyers protecting and advocating victim rights. Millions of people have been wrongfully exposed for financial gain. Though a cure does not exist, options such as radiation, chemotherapy and surgery may be available to patients to battle the disease.

Healthy Tips & Advice

Prior to moving into your new home or apartment, identify whether or not asbestos materials are present. Sometimes the best action is no action at all in regards to dealing with asbestos. Experts will advise to leave it un-disturbed, as disturbing the material can cause its fibers to be broken down and released into the air. If you believe that your home contains asbestos, a home inspection could be extremely important for safety, health and investment reasons.

If removal is necessary, it should be performed by a licensed abatement contractor who is trained and licensed to deal with hazardous materials. Schools, places of work and other public locations must also be removed by professionals. The Department of Professional and Occupational Regulation has further standards and guidelines in the removal of asbestos for home and business owners.

Homeowners Going Green

Once the area is asbestos free, environmentally sustainable materials should be considered including cotton fiber, cellulose and lcynene. Cotton fiber is becoming a favorite insulation method and studies show it can reduce energy costs by 25 percent annually. Made from recycled batted material, it is then treated to be fireproof. These green options have the same beneficial qualities as asbestos, minus the health deteriorating and toxic components.

A catalyst for homes, industries, schools, universities and business, the incredible diversity of enterprises is driven by a common bound to move to a green lifestyle.

Implementing green methods of building can have positive environmental, health and economic benefits. These include: 1) Conservation of natural resources, 2) enhance air quality, 3) protect Eco systems, 4) energy sustainability, 5) increase property value,6) improve quality of life, 7) improvement of pulmonary and cardiac health and 7) Reduction of waste.

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Historic Mission Hills Home - Gorgeous Inside

11-17-09

Michael Paganelli

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Office: (619) 964-4663

1617 West Montecito Way
San Diego, 92103

Listing courtesy of Ascent Real Estate, Inc

Property Details

Current Asking Price	$699,000
Original Asking Price	$699,000
Living Square Feet	1,071
Bedrooms	2
Bathrooms	1
Year Built	1925

Property Features

View	Info Not Known
Pool	Info Not Known
Spa	Info Not Known
Patio	Stone/Tile
Cooling	Info Not Known
Laundry	Garage
Parking	Attached
Amenities	Info Not Known

Description

This classic 1925 Mission Revival Bungalow has been painstakingly revived by the designer/owner and no detail has been spared. From the kitchen with custom handmade mahogany cabinets, soap stone counters, GE Monogram appliances to the Venetian plaster walls, no opportunity has been missed to create beauty coupled with function. This home was recently featured in Traditional Home magazine and is scheduled to be featured in the upcoming January 2010 issue of SD Home & Garden Magazine. By appointment only.

For Additional Information

For More Information,
Call Mike at (619) 964-4663

Michael Paganelli
Broker Associate (Lic: 1421063)
Woods Real Estate Services

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Incredible High Rise Condo in Hillcrest with Views

11-17-09

Michael Paganelli

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Office: (619) 964-4663

2620 2nd
San Diego, 92103

Listing courtesy of Discovery Property Group, Inc.

Property Details

Current Asking Price	$449,000
Original Asking Price	$449,000
Living Square Feet	1,506
Bedrooms	2
Bathrooms	2
Year Built	1971

Property Features

View	Bay,City,Evening Lights,Ocean,Panoramic
Pool	Community/Common
Spa	Info Not Known
Patio	Enclosed,Other/Remarks
Cooling	Central Forced Air
Laundry	Closet Stacked
Parking	Assigned
Amenities	Exercise Room,Pool,Clubhouse/Rec Room

Description

Beautifully Upgraded, 2 Bedroom, 2 Bathroom, 1,505sq/ft Condo with Panoramic views of San Diego Bay, 18" Travertine floors in kitchen & bathrooms, Full-Sized Stackable Laundry Closet, Marble Countertops, Maple Cabinets, Amber Glass Tile Backsplash in the kitchen. Amenities include Heated Pool, Exercise Room & Community Room. Walking distance to Balboa Park and Hillcrest, Assessors record indicates 1,343sq/ft. Enclosed Patio adds 162sq/ft of living space. Complex over 80% owner mailing addresses on site.

For Additional Information

For More Information,
Call Mike at (619) 964-4663

Michael Paganelli
Broker Associate (Lic: 1421063)
Woods Real Estate Services

Or Click:

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Gorgeous Condo in North Park with Vaulted Ceilings and Upgraded Kitchen

11-17-09

Michael Paganelli

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Office: (619) 964-4663

3957 30th
San Diego, 92104

Listing courtesy of Steele Canyon Realty

Property Details

Current Asking Price	$210,000
Original Asking Price	$210,000
Living Square Feet	949
Bedrooms	1
Bathrooms	1
Year Built	2006

Property Features

View	Info Not Known
Pool	Exercise
Spa	Info Not Known
Patio	Info Not Known
Cooling	Central Forced Air
Laundry	Other/Remarks
Parking	Assigned
Amenities	Info Not Known

Description

Beautiful condo in the heart of North Park. High ceilings, recessed lighting, granite counter tops, and full laundry hookups in unit. Secure building with assigned gated parking spots. Complex includes Exercise and weight room facility with hot tub and sauna. Call LA for Lockbox Code.

For Additional Information

For More Information,
Call Mike at (619) 964-4663

Michael Paganelli
Broker Associate (Lic: 1421063)
Woods Real Estate Services

Or Click:

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