You Can't Refinance: Now What?

Many people across Arizona are caught between a rock and a hard place. Because property values have declined in the last few years, many people owe more on their mortgage than their home is now worth.

Sometimes, much, much more.

If you owe up to 125% of your home’s value, there may be a program that will allow you to refinance and take advantage of lower rates. What if you owe more than 125% of your home’s value? Even surety companies are becoming more reluctant to issue bonds.

It is time to get creative on how to save money each month on your mortgage payment.

cant refinance

Back in April, we went over how your mortgage payment is made up of PITI – or Principal, Interest, Taxes and Insurance.  If you are in a situation where you can’t refinance, that means that reducing your Principal and Interest are “out” for now — but what about Taxes and Insurance?

The good news is that you can still save money on your taxes and insurance.

Taxes – Your taxes are set by the government for the community you live in. This number is easily found at the Maricopa County Assessors office and can also be disputed if you think the assessed value of your home is too high.

Insurance – Not only should you shop around for homeowners insurance quotes from companies that you know and trust, but you should also takes steps like combining your car insurance and homeowners insurance into one policy, install one of the best home alarm systems available and make sure you are maximizing every available discount.

Just by shopping around a little, you might be surprised at how much you can save on insurance alone.

Even though you are currently in a situation where you cannot refinance and save money on your principal and interest, don’t let it deter you from trying to save money on your overall mortgage payment each month — which is really your ultimate goal.

Especially in these tough times.

FHA Kiddie Condo Loan: Helping Take The Financial Bite Out Of College

Let’s face it: college isn’t getting any cheaper.


Every spring, when high school graduation rolls around, parents and high school seniors alike start actively making plans for the big transition to college.

There are many advantages to living on campus for that first year of college, but many parents and students choose to have their newly-minted-high-school-graduate live off campus for whatever reason.

And if you find yourself in this situation, where you are planning on living off campus, there is something simple that you can do to help take the financial bite out of college: buy a home with the FHA kiddie condo loan. The FHA kiddie condo program is really just a regular FHA loan with a nickname – mainly because it is used for these college-aged-kids living situations.

FHA Kiddie Condo Loan Highlights:

The FHA Kiddie condo loan allows non-occupant co-borrowers — which means that  parents can purchase a condo using their credit and their income but are not required to live in the property – only the co-borrower is required to live in the property.

The property is not considered to be a second home or an investment property. Because the property is not an investment property, interest rates for the program are the same as regular FHA interest rates –currently in the low 5% range. An additional benefit of the Kiddie Condo loan is that it allows the occupant to charge rent to roommates!

Right here by ASU, with interest rates low, property values down and the government giving an 8000 tax credit to first time homebuyers… it can take just a little bit of the financial bite out of going to college.

Scottsdale Mortgage Rates for May 8 2009

Buy Low + Brains = Profit

Everyone who knows me knows that I am not exactly the sharpest knife in the drawer. I am not exactly sure if it was a nature or nurture problem, but somehow I have always seemed to be a little late to the good-ideas-parties that other people have.

Until now.

I stumbled on something this week that I suspect I am not too late on – and so being the suddenly-enlightened-genious that I am, I thought I would share.

Did you know that there are unbelievable deals out there on Phoenix area homes?

Sure, you read about it in the paper – or maybe you have heard of someone who is making money by investing in real estate now… but for whatever reason, you have been on the sidelines.

It might be time to get into the game.

Case in point:

This home was bank owned. The investor bought it for $24,000 in cash directly from the lender.

The investor then hired a Phoenix trashout company to remove all of the debris and do some remodeling so that the property is move-in-ready.

Total cost for the remodeling and trashout?

Somewhere around around $6,000.

$24,000 + $6,000 = $30,000. Let’s say that he decides to get a mortgage for the $30,000. His total PITI payment for a $30,000 mortgage assuming a higher than normal rate and estimating high for taxes is around $350.

Think you can rent out a 3 bedroom 2 bath house for more than $350 in Phoenix, Arizona?

I know you can.

The biggest decision you might have to make at that point is whether you want to rent it out or sell it for more than $30,000.

Phoenix Mortgage Rates for May 1 2009

Fannie Mae HomePath Loan Program: Great Deals!


As the number of bank-owned properties here in Arizona continues to grow, so does the number of homes that Fannie Mae owns. As you can imagine, with any significant pool of homes that are owned by a lender, there are some homes that are immaculate and move-in ready and there are some homes that are in need of “a little work” before they are liveable.

The good news is that if you are in the market for a home and want to get a *smoking* deal on a house, Fannie Mae has designed two loan programs for homes that are currently owned by Fannie Mae and the loan programs are f-a-n-t-a-s-t-i-c.

One loan program is designed for homes that are currently owned by Fannie Mae and are move-in ready. The other loan program is designed for homes that are currently owned by Fannie Mae and in need of repair. The official name of the two loan programs are the Fannie Mae HomePath Mortgage and the Fannie Mae HomePath Renovation Mortgage.

Fannie Mae HomePath Mortgage Loan Highlights

The Fannie Mae HomePath mortgage loan is designed for people who are planning on making the property their primary residence and want to buy a home that is owned by Fannie Mae and found on the HomePath website.

HomePath mortgage loan benefits include:

  • Low down payment and flexible mortgage terms (fixed-rate, adjustable-rate, or interest-only)
  • You may qualify even if your credit is less than perfect
  • Available to both owner occupiers and investors
  • Down payment (at least 3 percent) can be funded by your own savings; a gift; a grant; or a loan from a nonprofit organization, state or local government, or employer
  • No mortgage insurance
  • No appraisal fees
  • No declining markets policy
  • No more than 10 financed properties
  • No prepayment penalties

For those homes that are in need of a few repairs, Fannie Mae has the HomePath renovation mortgage.

HomePath renovation mortgages have these benefits:

  • Financing to fund both your purchase and light renovation
  • Low down payment and flexible mortgage terms (fixed-rate or adjustable-rate)
  • Down payment (at least 3 percent) can be funded by your own savings; a gift; a grant; or a loan from a nonprofit, state or local government, or employer
  • No mortgage insurance

If you are considering buying a home that is currently owned by Fannie Mae, be sure to look into the HomePath mortgage financing program.  In an effort to lower the inventory of houses they currently own, some of the best deals in a long time can now be had — whether the home is move-in ready or is in need of “just a little work”!

Phoenix Mortgage Rates April 17 2009


Save Money On Your Mortgage

Many times when I am working with people and talking about their mortgage payment, we get into the details of escrow accounts, taxes, insurance, mortgage insurance – etc. Generally, the discussion starts by someone asking a question like:

How much will my mortgage payment be for a $200,000 loan?

And because I can’t immediately say $1,834.43 for a 30 year fixed rate loan… that is where the discussion starts.

What Makes Up My Mortgage Payment?

The official mortgage-speak term for the numbers that make up your mortgage payment are PITI. PITI stands for Principal, Interest, Taxes and Insurance. PITI is broken down nicely on your Good Faith Estimate (you should always get one of these from your loan officer) down in the bottom right hand corner. It will look something like this:

Principal and Interest – The principal and interest are calculated based on your loan amount and whatever the interest rate is.

Taxes – Your taxes are set by the government for the community you live in. This number is easily found at the Maricopa County Assessors office and can also be disputed if you think the assessed value of your home is too high.

Insurance (Hazard) – This is the amount that you pay each month for your homeowners insurance. Normal people call it “homeowners insurance” – mortgage people call it “hazard insurnace”. These are the same thing. One of the quickest, easiest ways to save money on your mortgage each month is to check the homeowners insurance rates that you are paying and make sure that they are “in the ballpark” of what other companies are charging.

Insurance (Mortgage)Mortgage insurance is the amount that you pay to a private mortgage insurance company if needed. For government loans, it will be paid to FHA, for conventional loans requiring mortgage insurance, it will be paid to a private mortgage insurance company. Mortgage insurance is not for your benefit – it is for the benefit of the lender.

Once you know what numbers make up PITI – you now can break down the different ways to save money on your mortgage payment. Get the lowest interest rate possible with the lowest loan amount. Shop around for hazard insurance. Dispute your assessed value for tax purposes. Try to avoid mortgage insurance.

Do all of these things, and you will save money — and you might be surprised how much money I see people save just by shopping around a little bit.

Arizona Mortgage Rates for April 10 2009


Update on the Stimulus Package

As we have all heard by now, the Obama Stimulus Plan has been approved by the House and the Senate and will be signed into law.  Here is the Bill text: A & B which is all 1091 pages of legislation or you can read the Joint Explanatory Statement: A & B which is only 421 pages, all for your reading pleasure.

Preliminarily, this is what I know:

  • The loan limits are being raised to $727,000 in high cost areas, not sure how that will affect us here, in Arizona.
  • The home buyer tax credit will be raised to $8,000 with no payback, a true credit.
  • Fannie Mae has agreed to lift the cap of 4 investment properties eligible for loans and raised it to 10.
  • The $15,000 tax credit was eliminated from the bill.

I will take some time to read over the bill in the next few days and post my thoughts on the real estate related portions of the bill later this week.  In the meantime, I found a great article by The Washington Post about their take on how the stimulus bill will affect Americans.

FHA Loan Limit…Not as much as you think!

Only 5% down payment is needed for loans in excess of the FHA limit!

That’s right, in Maricopa county, the new FHA loan limit, beginning Jan. 1, 2009, is $271,050.  The minimum down payment for an FHA loan is 3.5%.

Many people think that 10% down is needed to get a loan in excess of the new FHA limit.  However, only 5% down payment is needed for loan amounts up to $417,000.

Today’s interest rates on a 30-year fixed mortgage, for loans between $271,050 – $417,000, is 5.75%, 5.804% APR.  For a one point origination fee, the rate is 5%, 5.141% APR.

Note that interest rates have been changing quickly, and can change within the day.  The quoted rates assume excellent FICO scores and 5% down payment.  Contact me for updated rates and to discuss your particular scenario.

John Rapasky is the President of the Counsel Mortgage Group, LLC.  He has been in the lending business for 7 years, and is also a licensed attorney, having practiced for 10 years, and practiced as a CPA prior to his legal practice.  John specializes on providing competent mortgage advice and providing loans that are right for you.

John is a contributor to this blog and can be contacted at or 480.502.1000.