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Morro Bay (Harbor 6)

Central Coast Real Estate (Part 1): Third Quarter Overview

Central Coast home prices continue to rise, but through the first 9 months of 2014, sales data is beginning to point to something of a slowdown.

Continue reading “Central Coast Real Estate (Part 1): Third Quarter Overview” »

San Luis Obispo

Central Coast Real Estate (Part 2): City-by-City Breakdown

Learn more about Central Coast real estate, including: which cities are the most affordable? Which cities have the “hottest” real estate market? Which cities are the most expensive?

Continue reading “Central Coast Real Estate (Part 2): City-by-City Breakdown” »

San Luis Obispo Cal Poly

The MyCommunityMortgage Program: Discounts for Middle-Income Buyers

Middle-to-low income homebuyers who currently do not own a home are eligible to receive a significant price break on their loan under the newest program offered by Central Coast Lending, Fannie Mae’s MyCommunityMortgage program.

Continue reading “The MyCommunityMortgage Program: Discounts for Middle-Income Buyers” »

Recent Articles


Mortgage Rate Update (January 28, 2015)

For the week of January 26 through January 30

Conv. Rates 1.28

Government Loan Programs

Spec. Rates 1.28

There is not much movement in the mortgage rates this week. Although we’ve seen a slight increase in rates for 30-year High Balance and 30-year FHA 203k loans, most of the rate programs are keeping at levels similar to last week. Buyers can afford more homes, and existing owners may be able to refinance, lower their monthly payment, and / or save thousands of interest. Take advantage of these rates while they remain low! Give us a call at 805.543.LOAN for a free, customized rate quote!

Freddie Mac Yearly 1.28 30-Year Fixed (History)


Calculation Notes

  • Mortgage rates assume purchase of a singe-family, detached, owner-occupied, residential property.
  • Mortgage rates assume borrower credit score of 760 and a Debt-to-Income ratio of 35%. Rates for conventional loan programs assume a loan-to-value of 80%.
  • Loan amount is $417,000 for all programs (appraised value of $522,000), except for the high balance ($561,200 loan and $722,000 value), and Jumbo ($700,000 loan and $1,000,000 value)
  • Mortgage rates and APR subject to change
  • 30-year fixed, 15-year fixed, 30-year high balance, Manufactured, Jumbo
  • FHA, FHA 203k, Manufactured, USDA, VA

Truth-in-Lending and APR

You may have heard the terms “APR” and “Truth-in-Lending,” but what exactly do these concepts mean? And how does this information apply to you as a consumer and borrower?


The Truth-in-Lending Act

The Truth-in-Lending Act (TILA) is one of the most critically important consumer protection acts in the mortgage business.  In order to protect consumers, it requires complete disclosure of all credit terms, the consumer costs of obtaining credit, and the rules that will protect consumers when they borrow using a home as collateral.

Truth-in-Lending regulation has a noble purpose.  It is designed to allow the borrower to comparison shop loan programs and the overall cost of credit while providing protection from inaccurate and unfair advertising.  Unlike the “Good Faith Estimate” which discloses the entire transaction’s cost, Truth-in-Lending deals only with the cost of the loan. TILA was created for the following purposes:

  • To protect consumers by requiring the disclosure of all costs and terms of credit
  • To create uniform standards for stating the cost of credit, thereby encouraging consumers to compare the costs of loans offered by different creditors
  • To ensure that advertising for credit is truthful and not misleading

The Truth-In-Lending Disclosure Statement (TIL) should be given to the consumer at the time of application.  If it is not, the lender has three business days from the date of application to mail the disclosure to the borrower.


The Annual Percentage Rate (APR)

One of the most important figures disclosed on the TIL is the APR.  The APR calculation may confuse the lenders and buyers alike.  “Annual percentage rate” sounds a lot like “interest rate” to most borrowers.  The APR is not an interest rate, but a theoretical measure of the cost of credit expressed as a percentage rate. The purpose of the APR is to provide consumers with a uniform measure of the cost of a loan.  The APR equation includes the contract interest rate and adds the costs of the loan, including any prepaid costs (points, fees, etc.) that are part of the cost of borrowing.  Ideally, borrowers can compare costs from company to company by comparing the APR.






The cost of your credit as a yearly rate

The dollar amount the credit will cost you

The amount of credit provided to you or on your behalf

The amount you will have paid after you have made all payments as scheduled






The APR Formula:

1)      Compute total of payment by multiplying payment schedule, including PMI by amount of payments.

2)      Amount Financed is the loan amount, less points, prepaid interest, PMI, and lender fees

3)      Finance Charge is the Total of Payments less the Amount Financed

4)      Compute the APR by dividing the Total of Payments by the number of payments and apply that against the Amount Financed, as if it were the loan amount

The first step in determining an APR is to subtract the prepaid finance charges from the loan amount.  The result is the “amount financed.”  Next, the full principal and interest payment (including Private Mortgage Insurance or PMI ) is applied against the “amount financed” as if it were the loan amount.  The resulting interest rate is the APR.


What are Finance Charges?

A prepaid finance charge is any charge one must pay in exchange for obtaining a loan (charges you would not incur if you were paying cash for the property).  Like the APR, it can be used by consumers as appoint of comparison between lenders.  Finance charges include loan fees (discount points, origination few, PMI) and miscellaneous fees (tax service, underwriting, document preparation, or lender review few).

In addition, some prepaid items such as per diem interest and escrows for PMI or prepaid PMI, FHA upfront MIP (Mortgage Insurance Premium), and the VA (Veteran’s Administration) funding fee are considered finance charges.  Other prepaid items, such as association dues, are not included.

Appraisal and credit report fees are not included when they are collected as part of an application fee.  Any inspections (termite, well, septic, etc.) that are required by lenders are not considered finance charges.  Fees for recording a deed of trust are not included either.  The only exception is a construction loan draw inspection.

There are a number of third party fees involved with the finance charge; Regulation Z (12 CFR 226.4(b).) lists the following charges from third parties as examples of fees that the creditor must include when calculating the finance charge:

  • Interest, time-price differential, and any amount payable under an add-on or discount system of additional charge
  • Service, transaction, activity, and carrying charges
  • Points, loan fees, assumption fees, finder’s fees, and similar charges
  • Investigation and credit report fees
  • Premiums on insurance protecting the creditor against the consumer’s default
  • Charges imposed on a creditor by another person for purchasing or accepting a consumer’s obligation
  • Premiums or other charges for credit life, accident, health, or loss-of-income insurance, written in connection with a credit transaction
  • Premiums for homeowner and liability insurance written in connection with a credit transaction
  • Discounts to induce payment by a means other than the use of credit
  • Debt cancellation fees


There are also a number of fees that are excluded from the finance charge:

  • Application fees charged to all applicants for credit
  • Charges for unanticipated late payments, exceeding a credit limit, or delinquency
  • Charges imposed by a financial institution for paying items that overdraw an account
  • Fees charged for participation in a credit plan, whether assessed on an annual or other periodic basis
  • Seller’s points
  • Interest forfeited as a result of an interest reduction required  by law on a time deposit used as security for an extension of credit
  • Real-estate related fees such as fees for title examination, charges for the preparation of loan documents, credit report fee, notary fees, appraisal fees, and amounts paid into escrow, if these fees are bona fide and reasonable
  • Discounts offered to induce payment by cash, check, or other means


Insurance and debt cancellation coverage can also be excluded if the coverage is not required by the creditor, the premium for the initial term of insurance is disclosed, and the consumer signs or initials a written request for the insurance.  If itemized and disclosed, certain taxes and fees prescribed by law are also excluded from the finance charge.

Explaining the amount financed would be much simpler if each loan came with an “itemization of amount financed.”  The itemization would include a detailed list of the loan amount, the payment schedule, and each finance charge.

Another factor in calculating your APR is the payment schedule.  To determine the payment amount to apply against the amount financed, divide the total of payments by the number of payments and use this average amount.  On a fixed-rate loan, the payment schedule is quite simple-the monthly payment is the same through the life of the loan.  Variable payments (as in an ARM, Buydown, GEM, or GPM) may be more complicated on a payment schedule.  The APR or ARMs can change based upon future interest rate changes.  Buydowns, GPMs, and GEMs have fixed payment schedules, so the APR on these loans will not change.

After the APR, amount financed, and total of payments have all been calculated, what is the total finance charge?  The difference between the total of payments and the amount financed represents the cumulative total of all interest and prepaid finance charges accrued on the loan, or the total finance charge. Subtracting the amount financed from the total of payments reveals this number.


Call us at 805.543.LOAN to talk to a loan officer if you have any questions about TIL or APR. The Mortgage Experts are here to help!


Central Coast Lending is a California mortgage broker and direct lender based on the Central Coast of California in San Luis Obispo County. Call 805.543.LOAN to set up a free pre-qualification. 


Mortgage Matters Radio: January 24 (’15)


Guest: None.

Central Coast Lending SoundCloud (full episode downloads). January 24, 2015 (link to full episode).


Mortgage Rate Update (January 21, 2015)

For the week of January 19 through January 23

Conv Rates 1.21

Government Loan Programs

Spec. Rates 1.21

Although rates have risen very slightly this week, mortgage rates remain significantly lower in 2015 compared to last year . Buyers can afford more homes, and existing owners may be able to refinance, lower their monthly payment, and / or save thousands of interest. Give us a call at 805.543.LOAN for a free, customized rate quote!

freddie mac survey 1.16 30-Year Fixed (History)


Calculation Notes

  • Mortgage rates assume purchase of a singe-family, detached, owner-occupied, residential property.
  • Mortgage rates assume borrower credit score of 760 and a Debt-to-Income ratio of 35%. Rates for conventional loan programs assume a loan-to-value of 80%.
  • Loan amount is $417,000 for all programs (appraised value of $522,000), except for the high balance ($561,200 loan and $722,000 value), and Jumbo ($700,000 loan and $1,000,000 value)
  • Mortgage rates and APR subject to change
  • 30-year fixed, 15-year fixed, 30-year high balance, Manufactured, Jumbo
  • FHA, FHA 203k, Manufactured, USDA, VA

CCL Market Update: Housing Starts, Jobless Claims, Consumer Confidence, Loan Programs and Rates

Reports on the housing market continue to improve this week, with news that housing starts rebounded 4.4% in December after a 4.5% decline in November. This has been attributed primarily to the increase in single-family permits, which has risen 4.5% compared to a year ago. In fact, groundbreaking for single-family homes is at its highest level in nearly seven years, which may signal that construction will contribute much more to U.S. economic growth in 2015. The increase in construction of single-family homes indicates that the industry is beginning to focus on the biggest part of the market, and may have been encouraged by gains in employment and consumer confidence.

Numbers for the groundbreaking of multi-family homes fell 0.8%, and multi-family permits fell 11.8%. However, since single-family houses accounted for 64% of all housing starts in the past year, all groundbreaking in 2014 increased 8.8%, the highest since 2007. An increase in home construction is due to a higher demand for new homes, and some developers are saying that the demand is the strongest since the recession, which ended in June 2009. Low mortgage rates, gradually easing credit standards and a general improvement in the job market should continue to lead to improvements in the housing market.

Unemployment claims are inching higher in this week’s reports. Jobless claims at the beginning of January have been largely attributed to the expected annual post-holiday layoffs. The claims reported for January 17 totals around 307,000, which is generally considered a healthy level. Additionally, the ratio of unemployed people for every job opening is the lowest since early 2008, and job openings are nearing 14-year highs.

January has thus far seen an improvement in American consumers’ expectations for the economy, reaching the highest level in the last four years and likely due to the low gas prices and improved job market. Of those polled by the Bloomberg Consumer Comfort Index, 36% said the economy is getting better, up from 32% last month. Economic gains were largely reported among women, full-time workers, 18-34 year-olds, and Democrats, although advances were also reported from married adults and those with at least some college education.

In the 2015 State of the Union address on Tuesday evening, President Obama stated that the U.S. is now ready to move past the recession of the last 15 years. He stressed that “middle-class economics works” and that “this country does best when everyone gets their fair shot, everyone does their fair share, and everyone plays by the same set of rules.”

Next week will bring updated reports on new home sales, jobless claims, and consumer confidence levels.



Loan Program News

The biggest news on the loan program front continues to revolve around the lower annual mortgage insurance premiums that will be offered by the Federal Housing Administration (FHA). In the recent State of the Union address, President Obama once again discussed the lowering of mortgage insurance premiums as a way to expand homeownership in the U.S.  Read more about the changes offered by the FHA here.

Fannie Mae’s new “3% down” program remains of interest as well.  This option is beneficial for first-time buyers and current homeowners looking to refinance alike, and you can learn more about it here.



Mortgage Rate News

This week saw mortgage rates rise ever so slightly in some of the loan programs, while others remained unchanged. The 30-year Fixed Conventional rates rose marginally from 3.500% (3.570% APR) to 3.625% (3.663% APR), which shows an increase of less than ⅛ of a point in APR. The 30-year High Balance, Manufactured, Jumbo, and FHA 203k programs similarly showed slight increases. The 15-year Fixed, 30-year FHA, VA, and USDA programs all had numbers unchanged from last week’s rates.

Check out our Mortgage Rate Update page for more information about current mortgage rates.

For a more specific and personalized rate quote, give us a call at 805.543.LOAN!


New Fannie Mae “3% Down” Program Means Even More Options for Homebuyers

Fannie Mae announced in mid-December 2014 that they would be offering a brand new low down-payment option for homebuyers.  This new policy—referred to as the “expanded LTV” program by Fannie Mae—allows for loan-to-value (LTV) ratios greater than 95%, and a maximum of 97% LTV. The program was implemented the weekend of December 13, 2014.

The new 3% down program was created with the goal of assisting first-time homebuyers who may have the qualifications to receive a Conventional loan, but do not have the resources to front a 5% or higher down-payment. While the program is geared toward loans in the MyCommunityMortgage (MCM) program, first-time buyers not qualified for MCM are also eligible for the 3% down option.

Pundits often question the rationality of lowering down payment requirements so soon after the Great Recession was driven by loose mortgage lending guidelines.  When asked how 3% own payments promote responsible borrowing, Daniel Podesto, CFO for Central Coast Lending, is quick to point out the radical difference in home prices since “responsible” lending guidelines were implemented with the formation of Fannie Mae in the 1930s.  “In California and many other coastal real estate markets, where homes cost upwards of $500,000, a three percent down payment is $15,000 plus closing costs plus impounds.  That’s $25,000 to buy a home.”  Podesto continues, “This isn’t 1950 where homes cost $25,000 and a twenty percent down payment was only $5,000, or 1980 for that matter when homes cost $200,000 and a twenty percent down payment was $40,000.  Wages have not risen commensurate with home prices during that time period so the reduced down payment requirements keep homeownership affordable.”

Current homeowners with an existing Fannie Mae loan are also able to take advantage of the new program in order to refinance their home. Homeowners whose homes have lost value, but were unable to qualify for the Home Affordable Refinance Program (HARP), may be eligible for the 3% down option.

There are certain criteria in order to qualify for Fannie Mae’s new loan program. The loan must be a fixed-rate loan with a term of up to 30 years, and high-balance, adjustable-rate, and HomeStyle Renovation loans are not permitted. The property in question must be a one-unit principal residence, meaning single-unit homes that are primary residences. Multi-unit homes, vacation homes, and manufactured housing are not allowed with this program. For homebuyers, at least one borrower must be a first-time buyer in order to be eligible for the 3% down option. MCM loan participants must have an income concurrent with the median income limits listed in Fannie Mae’s Selling Guide. There are, however, no income limit requirements for non-MCM borrowers. MCM borrowers must have 18% mortgage insurance coverage, but non-MCM borrowers need 35% mortgage insurance coverage. Additionally, for those eligible for MCM loans, Fannie Mae is also allowing reserves to come from gifts (read more about gift giving guidelines in our FAQ section).

Some who are familiar with Fannie Mae’s options may wonder if the current “expanded LTV” program is simply a revival of the Conventional 97 program that was retired in 2013. However, this new version of the 97% LTV option differs from the Conventional 97 program, as it is more forgiving toward homebuyers and allows homeowners to refinance to today’s mortgage rates.

This new low down-payment option has again leveled the playing field between Fannie Mae and other government agencies who offer loans requiring little or no money down, such as the FHA loan option. It is extremely beneficial for today’s homebuyers to have more options when looking to minimize their down-payment.

Jason Grote, President of Central Coast Lending, reminds homebuyers, “The biggest advantage of this new Fannie 97 program over FHA is that the mortgage insurance can be removed when the LTV reaches 78%, either by principal pay-down or home value appreciation, unlike FHA mortgage insurance which remains in place for the life of the loan.”

Call us at 805.543.LOAN to talk to a loan officer and determine if this new program is right for you!


Mortgage Matters Radio: January 17 (’15)

Guest: Wes Burk (Patterson Realty).

Central Coast Lending SoundCloud (full episode downloads). January 17, 2015 (link to full episode).


FHA Drops Insurance Premiums in a Bold Move to Energize New Homeowners

Time to call your real estate agent and start scanning the MLS.  Potential homebuyers can once again start watching the market after the Federal Housing Administration (FHA) announced some impressive changes to their annual insurance premiums.  President Barack Obama announced during a press conference last Wednesday that the FHA’s 1.35% annual premium will fall below the single digit threshold to 0.85 percent.  A drop said ”to expand responsible lending to creditworthy borrowers,” according to the White House.

Not only was this news a boom to many of the Nation’s Home Builders (whose stock values rose at the news), but mortgage bankers also praised the decision. “It couldn’t come at a better time,” said David Stevens, CEO of the Mortgage Bankers Association. ”February is the beginning of the spring market. I think it will have a definitive impact particularly in the first-time homebuyer market.”

While this is great news for the nation, we’re sure the big question on your mind is “What does this mean for me in the way of my monthly mortgage?”  With the median home value in San Luis Obispo County being $485,000, a 0.5% annual insurance premium drop could equate to an estimated monthly savings of $195.01.  If you’re interested in learning more, or getting a specific rate on your home, contact one of our loan officers at 805-543-5626.

Julián Castro, U.S. Department of Housing and Urban Development Secretary, stated ”This action will make home ownership more affordable for over two million Americans in the next three years”.  A pretty powerful statement proving the FHA is serious about turning the market around for the ever important New Homebuyer and Credit Conscience markets.

Lowering the premium will no-doubt bring a volume of buyers back to the FHA, but with that also comes a certain amount of risk.  As many will remember, the FHA’s volume had reached near-epic levels toward the beginning of the housing crash; however that, ultimately, came at a high price.  Rebuilding it’s fund the FHA had to more than double its annual insurance premium and raised qualified average credit scores.  That action, of course, made it harder and harder for borrowers to afford an FHA loan.

Any mortgage professional will agree that, even with interest rates falling to near record lows, volume has been sparse.  Combine that with the ever diminishing investor community and it’s clear The Obama administration is making a strong push to boost  individual mortgage-dependent homeownership.

Julián Castro continued, “Since 2009, the Obama administration has taken bold steps to reduce risks in the mortgage market and to protect consumers. These efforts have made it possible to take this prudent measure while also ensuring FHA remains on a positive financial trajectory. By bringing our premiums down, we’re helping folks lift themselves up so they can open new doors of opportunity and strengthen their financial futures.”

What does this mean on a competitive front?  For some time the FHA was the only option for low down payment products (with a minimum 3.5% down), but Fannie Mae and Freddie Mac recently took a strong stance in the market-place by offering a new 3% down payment product. This move by the FHA will, once again, create a competitive landscape.

“This change will not only bring FHA back to relevance in the home purchase market,” says Dan Podesto, co-owner of Central Coast Lending, “it will create a tremendous refinance opportunity for anyone who procured an FHA loan with the higher monthly mortgage insurance premiums.”  FHA offers a Streamline Refinance loan program for any borrower with an existing FHA loan that has made a minimum of six on-time monthly payments and will save a minimum of 5% off their current monthly payment.  The program is called “streamline” because it requires no income or asset documentation and no appraisal; your current credit score with past FHA payment history is all that’s needed to qualify!

If you’re interested in what this change potentially means for you, contact one of our expert lenders to schedule an appointment today!

What are your thoughts about this move to ignite the housing market for 2015?  We’d love to read your comments below.



CCL Market Update: Holiday Sales, Housing, Loan Programs, Mortgage Rates

This week, the Retail Sales report exhibited the biggest increase since 2011. Sales this holiday season rose 4% from one year ago. Additionally, non-store holiday sales (online and e-commerce sales) rose 6.8% this season. Despite the favorable increase overall, December saw a slowing in consumer spending. However, the National Retail Federation is pleased with the increase in total holiday sales in 2013, and believes that consumers will continue to reap the benefits of an improved job market and low gas prices.

Investors continue to be concerned about the dropping oil prices creating a potentially deflationary environment.  Periods of deflation typically result in falling prices, job losses, and slow growth or depression.  Fueling these concerns was Thursday’s Consumer Price Index (CPI) showing prices declined 0.4% in December following a 0.3% decline in November.  The Federal Reserve target range for CPI is 1.5% to 2.0% annual growth.  These recent readings signal that the Fed will be in no hurry to raise interest rates.

Jobless claims rose from 297,000 in September to 316,000 in the week of January 10, making an increase of 19,000. It is typical for companies to let go of seasonal workers at the beginning of January, but the numbers indicate that there was a higher-than-usual number of firings this year. However, unemployment is still down from previous years, and economists are reporting that the labor market is fine.

The housing market in the U.S. is still on the up-and-up!  According to Trulia, housing is about 75% recovered in total, and the sales and prices of existing homes have contributed the most to the improving numbers. The involvement of the millennial generation (25- to 34-year-olds) is the slowest to recover, as it is only 46% back to normal levels.

Next week begins with a bank holiday on Monday to celebrate Martin Luther King Jr. Day.  Economic news is relatively light for the remainder of the week with only a few housing related reports expected to show continued price and sales gains.


Loan Program News

President Obama said Wednesday that the Federal Housing Administration (FHA) will be lowering its annual insurance premiums. As a part of the president’s efforts to “expand responsible lending to creditworthy borrowers,” the FHA will be dropping premiums from 1.35% to 0.85%. Lower insurance premiums should benefit the housing market by bringing more first-time buyers into the fold.

To learn more about options for first-time buyers, visit our FAQ section.


Mortgage Rate News

Mortgage rates are continuing to steadily decrease this week. The 30-year fixed dropped from 3.750% (3.766% APR) to 3.500% (3.570% APR) and the 30-year manufactured went from 3.750% (3.930% APR) to 3.625% (3.688% APR) between January 12 and 15. That’s a nice drop for only one week!

Freddie Mac has a weekly survey that tracks general rate movement across various lenders. The survey results for a 30-year fixed loan are portrayed in the graph blow:

freddie mac survey 1.16


Call us today at 805.543.LOAN to discover your personal mortgage options!


Mortgage Rate Update (January 16, 2015)

Mortgage rates for many of the loan programs are continuing to steadily drop. Give us a call at 805.543.LOAN to take advantage of today’s low rates!


Conventional Loan Programs

30-year fixed, 15-year fixed, 30-year high balance, Manufactured, Jumbo

 Conv Loan Rates

Specialty Loan Programs

FHA, FHA 203k, Manufactured, USDA, VA

Spec Loan Rates


Rates Directly to Your Inbox!

If you would like to receive a more detailed Mortgage Rate report, you can subscribe to our “CCL Rate Tracker.” The CCL Rate Tracker follows 10 loan programs and publishes three rate options closest to 1 point, par, and 1 rebate for each program every two weeks and delivers the results in an email. To sign up, please email [email protected]  with the text “Rate Tracker.”


Apply Online Today!

When you register for a Loan Center account, you can submit a loan application online and the sensitive information that you provide will be transmitted securely. Your account also enables you to easily modify your loan application and view the status of your loan. Any questions? Call us at 805.543.LOAN or email us here.


About the Loan Programs:



  • Mortgage rates assume purchase of a single-family, detached, owner-occupied, residential property, borrower credit score of 760, debt-to-income ratio of 35%, loan-to-value of 60%, and loan amount of $417,000 for most programs (High Balance is $561,200 and Jumbo is $750,000).
  • Mortgage rates and APR subject to change.