Simplifying Mortgage Payments and Strategies to Lower Them with Loan Officer Carson Maples

Interest rates, the total amount owing, and some taxes—that’s all most people think impacts their monthly mortgage payments. 

But, in reality, your monthly payments are a little more complex. 

Not only do you pay back the principal and interest on your loan, but there are a variety of fees, insurance options, and taxes that contribute to your monthly homeownership costs.

Luckily, loan advisors can often employ strategies to help reduce monthly payments and optimize your mortgage rate. 

To simplify a complex topic, we talked with local loan officer Carson Maples of 101 Home Loans. Here are his expert insights.   

SOMO Village: Monthly mortgage rates can get complex. So, what’s your initial process when working with homebuyers? 

Carson Maples: My team’s approach is to always try to have an initial phone conversation with you. The goal is to know what your ideal monthly payment is—what you can afford. 

The other thing to discuss is what your lifestyle is like so we don’t get you a custom mortgage that will change your lifestyle too much. 

For example, you might really enjoy going out for dinner or drinks a lot, which can be kind of expensive. You might spend $300.00 a month doing that, so having an additional $300.00 on your mortgage payment might be a big deal. 

But there might be someone else who really enjoys being at home and brings their friends there, or they might just not be very social people. Those people might be okay with a slightly higher mortgage payment. 

So, an initial conversation is important to know your unique goals and financial situation before we dive into the specifics. 

Break it down for us—what exactly goes into a monthly mortgage payment? 

At a base level, your monthly mortgage payment is made up of: 

• Principle and interest on the money that you’re borrowing at the specific rate that you get at the time. 
• Property taxes paid to your municipality. 
• Homeowner’s insurance, which is kind of like your car insurance, but for a home. 

From here, there are additional expenses that you could potentially have depending on your downpayment and where you buy a home. This includes: 

• Private mortgage insurance (PMI): If you put less than 20% down, you could have an additional monthly cost of PMI that’s charged by the lender since the loan is slightly riskier to them. This can often be taken off once you are paid up to the 20% value of your home. 
• Homeowners Association (HOA) dues: These are fees for condos and apartments and can vary a lot. HOA dues cover maintenance and upkeep of the facilities, including things like swimming pools and gyms. 
• Mello-Roos tax: This is a California tax applied to some homes for infrastructure purposes, such as paving roads and sidewalks. This is typically applied in newer neighborhoods. 

Finally, there are some additional things in our part of Sonoma County that can be added: 

• Fire insurance: Because of the very real threat of fires in our county and state, some insurance companies won’t even insure specific areas without fire insurance. It’s called the California FAIR Plan.
• Earthquake insurance: This is optional here in Sonoma County and not as popular as somewhere like San Francisco. 
• Flood insurance: This is also optional, but more common for homes near the river in Sonoma County. 

While most people know about the three basics—principle and interest, property taxes, and homeowner’s insurance—it’s these additional fees, dues, and taxes that can make a significant impact on what you’re actually paying each month. 

What are some considerations when it comes to lowering your mortgage payments?

Given the variety of fees, dues, and taxes that make up monthly mortgage payments, it can all get expensive. There are some considerations you have to make to lower your monthly payments. 

For example, HOA dues can be upwards of $1,000 per month on certain condos here. If you’re looking at a place with a nice gym or pool, those super high HOA dues pay for the maintenance of the facilities. I always advise that if you’re not planning on using the facilities, it might not be the best option. 

Another consideration is how the HOA dues and Mello-Roos taxes interplay together. For example, some new developments in the Rohnert Park area have a Mella-Roos tax of $4,700.00 per year as well as a $100.00 per month HOA. So, you’re adding another $500.00 to your monthly payments. 

If it’s the right complex for you, then that’s great. But you could also look at increasing your purchase price—if you’re spending another $500.00/month on dues, you could maybe add another $100K to your purchase price and buy something bigger. 

A final consideration is where you’re buying a home. Houses in Hidden Valley, for example, are very high-fire areas. So while the prices are cheaper, they come with expensive fire policies that increase your monthly payments. 

These are the sorts of things we can talk about in that initial meeting to understand more about what you’re looking for and your financial situation. 

What strategies do you employ to reduce mortgage payments for clients? 

It really starts from that initial conversation and getting to know what you’re looking for. For example, I’d start with some questions about what you’re comfortable paying monthly and then ask questions about your family, where you want to live, and things like that. 

So if you’re comfortable paying $4,000 a month, have three children, and only want to live in Santa Rosa really narrows things down for me. I know that you’ll need a larger house and, based on location, you probably don’t need fire or flood insurance. I can then start to look at how to best advise you.  

Based on what you’ve told me, I can get quotes from local insurance agents and show you what the numbers are looking like. 

I can also start to employ some specific strategies. Customization is key because each client’s situation is different. That said, there are a few common strategies we use: 

• Buying down interest rates: Some buyers have the option of temporarily decreasing your interest rate by buying down the mortgage for an upfront fee. For example, someone might buy down the interest rate for $5,000 and get a quarter-percent better interest rate.
• Buying out mortgage insurance: If you put down less than 20% on a house and have to pay private mortgage insurance, some lenders offer the option for a monthly paid premium or a single-paid premium. This means you can pay it on a month-by-month basis or all in one lump sum. So, if you have an extra chunk of cash available but still can’t reach the full 20% down payment, you should consider where that money is best used. If you put that cash towards your down payment, this might reduce your monthly mortgage costs by $50 to $100, but you’ll still have to pay in the ballpark of $200 per month for insurance, So, it might be a better option to use that cash to pay off your insurance premium all at once.
• Getting seller credits: This is available now in our high-interest market. Seller credits are funds the seller gives you from the proceeds of the sale to help with your house. It can go towards things like closing costs, buying the interest rate down, or a temporary buy-down where the interest rate starts lower in your first years. 

These are some of the strategies we play around with when working with clients and a lot of it is dependent on the current market. 

I always say you want to “marry the house but date the rate”—your house is forever, but the interest rates are temporary. 

If you buy in a low-interest rate market, you might have lower rates, but you’re probably going to overpay for the house. But right now in this high-interest climate, you can get a good deal on a house and refinance in the future to a lower rate—it’s the best of both worlds. But these strategies all go back to the individual’s specific situation and what makes sense for them. 

If you are in the market for a new home or want to understand your mortgage rates better, reach out to Carson at 101 Home Loans. You can connect via email at  Carson@101homeloans.com or by phone at 707-799-3705.

If you’re interested in purchasing a home in Sonoma County, SOMO Village might be the perfect community for you. Download our project brief to find out why.

About Carson Maples

As a loan officer, I strive to make the mortgage process as simple and enjoyable as possible. I do this by providing a level of customer service and efficiency that is unmatched. I am available 24/7 to answer any questions and make sure you’re comfortable throughout the whole process. I am extremely knowledgeable on guidelines and very creative with making loans happen that most lenders can’t. I can close your loan quicker than any other lender and I am sincerely interested in you and your family’s best interest—it’s my promise to you that you will feel this from start to finish.