Mortgage Maryland

Avoiding Mortgage Scammers

2008-01-09T17:29:00.000-08:00

Many people blame the recent explosion of mortgage foreclosures and national mortgage industry trouble on greedy buyers moving into homes they cannot afford, but the simple truth is that an abundance of factors have played their hand. Equity thieves are making matters much worse by conning homeowners who have fallen behind in their payments. Once a homeowner or mortgage borrow falls behind, the scammers contact them and promise to help them secure new financing in order to save their mortgage. But for some reason, it does not quite work out for the homeowner.

The scam is extremely complex, involving many parties including the appraiser of the home, mortgage broker, and even straw borrowers, and it is known in the world of mortgages as “Equity Stripping.” Basically, the scammer convinces the homeowner to sign the title of the house over to a posing buyer, who will take out a new mortgage for all of the homes current value. The con artist makes it appear as though the paperwork only promises the “buyer” the right to rent the home with the option to buy, but the rabbit hole doesn’t stop there.

After closing costs on the new mortgage, there is a sizeable amount of money left over because of the equity already in the home. The broker pockets this money, using a second straw buyer to purchase the home at the appreciated value of the home. After closing this these closing costs and fees, the scam broker then pockets another check for the amount of the appreciation on the home. All the while, the original homeowners know nothing about the second buyer, nor do they know about the fact that payments have not been made by the first straw buyer. Without a quib, the home goes into foreclosure, and the homeowner is left without a home or any of the equity they might have had.

This is an incredible lucrative scam that is popping up hundreds of cases around the country. It is a basic violation of trust, against people who are so incredibly desperate to save their home from foreclosure. They want to believe there is an easy way out, and are usually willing to suspend their disbelieve for the possibility that it might actually work. One way to protect against this kind of fraud is to avoid mortgage brokers that approach you during time of foreclosure. Do your research and explore the background of particular mortgage brokerages or individuals so that you trust their knowledge and integrity completely. This may be on of the most crucial financial decisions you ever make. Take your time and make the right choice.

About the Author: Peter Dellane is the President of Ability Mortgage Group, LLC, A leading Maryland Mortgage company, offering low costs zero point mortgages. For more information on Mortgage Maryland rates and programs please visit www.marylandsmortgage.com.

Getting a Mortgage with Bad Credit

2007-12-30T07:30:00.000-08:00

Bad credit can be one of the most financially difficult things a family or individual can deal with. Once you have lost most of your credit worthiness, it is extremely difficult to pull yourself out of a financial pit, but there is hope. Of course there are many agencies out their to help you, as well as many strategies to utilize for ending your financial woes, but applying for a bad credit mortgage is not usually the first thing people consider. For many people it is simply a matter of unfamiliarity with bad credit mortgages and how they can help.

A mortgage for someone with bad credit is designed to re-establish your credit worthiness by giving you the opportunity to be responsible in making monthly payments toward equity in a property. Of course interest rates are much higher, but the important thing is that you are moving forward by displaying responsible credit management. A bad credit mortgage can be like a second chance if you have a history of poor financial management, and after your credit score improves, you can always refinance to a mortgage that has a more reasonable interest rate.

The first step in establishing a bad credit mortgage is finding the right lender. Some lenders specialize in bad credit mortgages more than others, so it is important to find someone that is willing to work with your specific circumstances, and with the competition for lenders in the United States there is a lender out there for everyone. Check your credit score before visiting such a lender so that you can give them an idea of where you stand and can help provide you with the right loan specifications.

There are a number of advantages of applying for a bad credit mortgage, some of which are often overlooked. As I mentioned before, these can help clean up your credit score by making responsible monthly payments, secondly, they can give you some help with high interest debt, such as credit cards. Your existing debt can be rolled into your new mortgage to consolidate your bills into one monthly payment. Ultimately, the idea of a bad credit mortgage is to leverage your way out of bankruptcy and complete credit destruction. However, the most important consideration for signing on the dotted line is whether or not you will be able to make your monthly payments. This is the single most important part of receiving a bad credit mortgage. What good will it do if you go negligent on your new mortgage, which has abnormally high interest rates. Rather than taking a step forward, this would be a huge step back and will surely force you into foreclosure or bankruptcy.

If your income has reached a level that you believe you can make consistent monthly payments on a mortgage, then you might consider a bad credit mortgage to help put your credit score back together. Again, not all lenders provide these services, so shop around and find someone that can truly meet your needs and help you get back on the right track.

About the Author: Peter Dellane is the President of Ability Mortgage Group, LLC, A leading Maryland Mortgages company, offering low costs zero point mortgages. For more information on Mortgage Maryland rates and programs please visit www.marylandsmortgage.com.

Saving Money on a Home Mortgage

2007-12-30T07:00:00.000-08:00

Everyone wants to save money right? Well you wouldn't know it by how many people pass up thousands of dollars in savings on a new mortgage. Whether you are seeking Maryland Mortgages or looking for real estate in a prime market like Los Angeles, you can save thousands of dollars just by reading the fine print, paying attention, and making wise mortgage decisions. It may seem crazy, but many people are in such a rush to move into a new home that they have little concern for the thousands they might save, thus unknowingly lose money without even realizing what they might have done to change it.

Down payments are one of the major things homebuyers simply walk right past in today's mortgage climate. Unfortunately, they do not realize how much money a sizeable down payment can save them. Had they known, many buyers would have put off buying until they had a down payment to make. Not only will down payments reduce the interest you will owe on the loan (since the mortgage will actually be smaller), the lender will also give you a better rate based on your ability to responsibly save money. All told, a good down payment may seem like a pain, but it can save you thousands of dollars.

Shopping around for the right interest rate is another strategy that people overlook. They are so excited to finish the deal that they pass up a great interest rate that might have been right next door. The mortgage interest rate describes how much money must be paid along with actual repayment, and when you consider the size of most mortgages, a single percent can make a huge difference. Remember that interest rates are negotiable. Smart borrowers will often shop several lenders and communicate their findings back to their preferred lender, in which case, that lender is persuaded to lower their interest rate in order to secure the loan.

Homebuyers should also consider installments versus traditional monthly payments. If you can afford it, making slightly larger payments every two weeks rather than every month can save money. This reduces the principal faster, thus lowering the amount of interest that will be required. The idea is to get your mortgage paid off as quickly as possible. That might mean making additional payments when you have a growth in income, but you must make certain that your mortgage does not have prepayment penalties and fees, and you should also consider whether these payments are going toward your principle or interest only.

These are just a few simple ways to save some money on a mortgage, and there are many more strategies to consider. Educate yourself, take your time, and make the right decisions to save you and your family a great deal of money.

About the Author: Peter Dellane is the President of Ability Mortgage Group, LLC, A leading Maryland Mortgages company, offering low costs zero point mortgages. For more information on Mortgage Maryland rates and programs please visit www.marylandsmortgage.com.

Credit Repair for Your First Mortgage

2007-12-30T06:59:00.000-08:00

A first home is an exciting thing for everyone, but the first mortgage can be a little scary. Purchasing your first home can introduce many new concerns and cautions, and one of those is how it will impact your credit rating. Whether you have outstanding credit and want to maintain it or you have bad credit and want to repair it, purchasing your first home will certainly make a difference, and by making wise decisions, you will be in a secure place for purchasing your next home, investing in a business, or simply displaying financial responsibility.

Regardless if you have a good or bad credit score, buying a home can get you into serious debt and fast, but it doesn’t have to be that way. Many people battling high interest rates on their mortgage, high living expenses, taxes, and existing debts, find themselves scrambling to pay their bills. Some of these first time buyers find themselves too deep in debt to climb out and are forced to foreclose on their mortgage or make some other very difficult decision that will greatly impact their credit score. This does not have to be the case. With some responsible planning and foresight, buying a home should only increase your credit score as well as your financial quality of life.

Living below your means is a key concept for first time buyers. It is tempting to buy a house that is just a little beyond your means because of the status or comfort it gives you. This is a typical mistake for people trying to keep up with their pears or already living a little beyond their budget. You must determine what your actual income is in order to know what kind of mortgage your monthly income can support. You should not try to stretch yourself too thin. This will only start the backpedaling process that usually ends badly. This goes for other expenses too, like repairs, utilities, furniture, or even renovations. Living beyond your means will only bring you stress and even bankruptcy.

Choosing an open or closed mortgage is another big decision first time buyers must consider. Open mortgages make it possible to pay the loan back at any time during the mortgage, and in the case of selling the home, there will be no added fees associated with paying the mortgage off early. However, the interested rates are higher than a closed mortgage, and the interest rates can change. A closed mortgage offers fixed interest, and is often a better option for those on a tighter budget.

One of the best things a first time buyer can do is save up as much liquid for a down payment as possible. The more you can put down on a mortgage, the smaller the mortgage will be, thus shrinking your monthly payments. However, you should not spend every dollar you have, rather, it is also a good idea to have a nice cushion of savings to cover you in emergencies or rainy days. They will inevitably come, and if you do not plan for them they can destroy your mortgage and your credit along with it. This kind of responsible planning and consideration will help you move into your first home without fear and stress, and will send you on your way to financial security.

About the Author: Peter Dellane is the President of Ability Mortgage Group, LLC, A leading Maryland Mortgages company, offering low costs zero point mortgages. For more information on Mortgage Maryland rates and programs please visit www.marylandsmortgage.com.

New Maryland Mortgage Law

2007-12-20T18:41:00.000-08:00

As of January of 2007, the state of Maryland passed a new law regarding mortgage originators. This law requires that all home loan originators employed by mortgage brokers in Maryland must be licensed. In order to receive said license, a candidate must complete an application, undergo a thorough criminal background check, and if they have less than three years of experience in the mortgage business, they must take a forty hour course regarding the regulations, ethics, and trade information. A two-year license is $300, and there is also a one-time fee of $100. If the forty-hour course is necessary, it may cost up to $500. Some mortgage lenders are also required to acquire this license for operation, however, those loan originators who work for licensed mortgage brokers and banks are exempt because they are covered by the Old Line State’s Department of Labor, Licensing and Regulations, or DDLR.

Under state law, it is now a felony to operate without this new license, punishable by a $25,000 fine and up to five years in jail, but even with such a consequence some loan originators continue to attempt to dodge the inconvenience of obtaining a license. According to the deputy commissioner of the DLLR, there are over twelve thousand Maryland mortgage and loan originators and the Department of Labor has only received eight thousand license applications. One way that some companies are dodging the bullet is by getting a license for only one of the loan officers and funneling the paperwork for all of the other employees through their signature. These unlicensed employees then continue doing their own paperwork and loan origination but simply refrain from signing any of the documents.

It is the belief of some companies under violation that the State of Maryland is too understaffed to be able to enforce this law, but the state has begun making examples of those ignoring the law by avid investigation and prosecution. The State is also coming down on those who are waiting too long to submit their applications. Though the punishment level may seem severe, Maryland also issues a warning letter to those in question requiring them to cease doing business after December 1st.

If you are looking for a Maryland mortgage broker or loan provider, it is important to make sure they are open and honest with the state and that they require all of their loan originators to have the proper licensing to operate within the State of Maryland. This licensing is intended to protect the public by providing them with proper loan origination.

About the Author: Peter Dellane is the President of Ability Mortgage Group, LLC, A leading Maryland Mortgage broker company offering low costs zero point mortgages. For more information on Mortgage Maryland rates and programs please visit www.marylandsmortgage.com.

Why Pay On Someone Else's Mortgage?

2007-11-30T16:35:00.001-08:00

Renting a home or apartment is simple and requires very little investment, but is it really worth the convenience if you are planning to stay put for a couple of years anyway? What many renters simply don’t consider is the fact that they are making other people rich by pumping more and more equity into their property, never to see any return on all of those payments.

Did you know that there are people who are buying homes, not making any monthly payments and then keeping all of the increase in equity of that home when they decide to sell? How is that possible? Well, it is made possible by you, the renter. Landlords purchase property with the intention of renting that property in order to cover the monthly payments. As time goes on, their renters continue to pay on their mortgage and build equity in their home, and all the while they are doing virtually nothing but making sure the property is maintained. All renting is either building equity in your landlord’s property, or in the case that your landlord owns the property out right, you are simply putting cash directly in his pocket.

Most landlords make it a goal to keep a renter who is willing to pay enough to cover their mortgage payment. Of course this may prove more or less difficult depending on the times and the economy, but many landlords are able to accomplish this fairly painlessly, and once they do, they have a free ticket to getting rich. Not only will they gain all of the equity you build by making monthly payments, but the longer they can hold onto the property at no cost to them, the more they will be able to sell it for in the future. In the end, they will make back the increase in value of the home, along with all of those payments you made while renting.

With so many mortgage and loan options on the market today, most people can find a home and a mortgage at a similar monthly payment to their rent. This makes sense considering rental rates follow the average mortgage payments fairly closely, for obvious reasons. So the question is, why would you pay on someone else’s mortgage when you can afford your own for the same monthly payments? There are a few reasons to rent. One being uncertainty of location. If it is highly possible that you will relocate within two years, then renting may be a temporary solution. Credit problems are another reason many people are forced to rent.

If a home and mortgage are at all possible, they are something you should seriously consider. Building home equity is one of the most proven methods for building financial security, whatever your career path. Instead of never seeing the money used for monthly housing costs again, pump that money into your own investment and make yourself rich, rather than your landlord.

About the Author: Peter Dellane is the President of Ability Mortgage Group, LLC, A leading Maryland Mortgage company offering low costs zero point mortgages. For more information on Mortgage Maryland rates and programs please visit www.marylandsmortgage.com.

The Beauty of Home Equity Loans

2007-11-26T20:42:00.001-08:00

Tough financial times seem to come to everyone, and what separates success from failure, are the choices you make during those difficult times. That is why home equity loans are a strong possibility for those struggling to make ends meet. Maybe you just lost your job, or perhaps you or someone in your family had an uninsured medical emergency, whatever the case, if you already have equity in your home, a home equity loan can really bridge the gap without destroying you financially.

Of course the best option is have a reserve fund for such “rainy days” that should only be used for a sudden crisis. Unfortunately, most people do not start putting money away until it is too late. However, if you have been paying on a mortgage, it is almost as if you have been putting money away all the while. Home equity loans are one of the best loans for emergency use. Credit cards have incredible compounding interest rates while home equity loans use the equity in your home as collateral in order to provide you with great fixed interest rates.

Another option is a home equity line of credit. This is different from a loan in that it is simply a line of credit, but it is a line of credit with your home equity as collateral. This means that you will only be charged the interest for the balance until you choose to pay it off, which might even be when you decide to sell your home or refinance your mortgage. Some mortgage brokers and financial institutions will allow you to open a home equity line of credit and keep a zero balance until the time you need it. In the case of an emergency, all you need to do is write a check from your line of credit, giving you a great amount of flexibility and safety.

Both home equity loans and lines of credit are very easy to use and have little or no maintenance. Because of the competitive nature of the loan market, many institutions will charge you little or now usage fees and charge zero closing costs. But the best part is yet to be mentioned. The interest on home equity loans is also tax deductible, just like your mortgage, so getting a home equity loan is really a very cheap option for getting the cash you need without breaking the bank later.

Sometimes life throws you a curve ball and you have to figure out how to pick up the pieces. Home equity loans have helped millions of people by allowing them to tap into the most valuable asset to their name. Take the time to consider a home equity loan or line of credit whether you are already having those “rainy days” or if you just want to protect yourself for those to come.

About the Author: Peter Dellane is the President of Ability Mortgage Group, LLC, A leading Maryland Mortgage broker company offering low costs zero point mortgages. For more information on Mortgage Maryland rates and programs please visit www.marylandsmortgage.com.

Struggling Mortgage Lenders

2007-11-26T20:37:00.000-08:00

The mortgage industry is in more trouble now than it has been in years. The rate of defaults and foreclosures is higher than ever, and mortgage lenders are closing down or laying-off employees to cover the losses. But how did it come to this when only a few years ago the mortgage industry was booming with all time record sales? And how low will the industry go before things start to pick up?

The decline began only a little over a year ago when mortgage lenders began reporting a rapid increase in the rate of defaults and foreclosures. Along with this came the closing down of many smaller mortgage industry players, thus creating a higher demand for the secondary market. This secondary market is the true source for a majority of the industry’s economy, and many minor as well as major sub-prime mortgage lenders began to buckle under the pressure, closing down or declaring bankruptcy. As of the later part of August of this year, Accredited Home Lenders (AHL), out of San Diego, CA, stopped accepting new loan submissions. That means no more loan approvals, resulting in a loss of over 1500 jobs. But this isn’t the only major lender in trouble. HSBC Group announced the closing of a mortgage financial office, resulting in a loss of over 500 jobs, Impact Mortgage cut over 100 jobs, and Delta Financial intends to cut over 300 jobs in 2008. The list goes on and on, even some of the largest mortgage lenders such as Countrywide and Capital One Financial Corp. are borrowing billions to maintain operations, laying off hundreds, and even closing down certain markets. All told, over a hundred of some of the largest lenders have drastically cut their operations or closed their doors.

So how is this happening? Many people speculate that the two major causes of the industry’s decline is the low housing market (nationwide) and the sad but true story of how many people are getting into mortgages that they simply cannot afford. This is obviously gross negligence on the part of the lenders. By trying to make a sale, they are allowing people to take on a loan that is really beyond their means, forcing these people to eventually default or foreclose. This is not a winning scenario for anyone, but it also cannot be blamed entirely on lenders. The national economy also impacts the ability of the average person to make their house payment. When people are losing their jobs or taking cuts in pay, this obviously puts stress on their pocketbook.

It is extremely uncertain when the business will begin to turn around, judging by how these major players are adapting, and though this may be a bit frightening to the mortgage lender, it doesn’t mean that it is a bad time to buy a new home or get a mortgage. On the contrary, lenders are still looking to approve loans for responsible individuals. So if you have a good credit score and an adequate income, this might be a great time to buy, especially with the housing market at a national low.

About the Author: Peter Dellane is the President of Ability Mortgage Group, LLC, A leading Maryland Mortgage company offering low costs zero point mortgages. For more information on Mortgage Maryland rates and programs please visit www.marylandsmortgage.com.

Mortgage Refinancing Options

2007-11-09T22:05:00.002-08:00

Today’s refinancing possibilities are virtually endless. People are able to accomplish almost any option conceivable in regards to refinancing loans or mortgages as veteran homeowners. However, most of these options can be summarized into two basic types of refinancing, “Cash-Out” and “No-Cash-Out.”

Cash-Out refinancing is just like it sounds. The purpose of refinancing is to obtain cash out of the equity you already have in your home. Using this cash to pay debts, remodel, or make investments consolidates these expenditures into the mortgage that you already have. The amount that can be borrowed using cash-out refinancing is directly determined by the difference in the balance of your mortgage versus the amount your home is actually worth in the buying market. Cash out refinancing can be just what many people need to survive through difficult financial times. It is extremely helpful for a homeowner to have the possibility of extracting this equity from their home before the problems become too great. Debts can be paid and revolving accounts satisfied so that the homeowners credit is not ruined. Another great thing about using this equity is that the interest paid on a mortgage is tax deductible, while the interest rates on most credit cards and revolving accounts are not deductible.

Rate and Term Loans, or “No-Cash-Out” refinancing, is the best way to lock in a new interest rate. If after paying on a mortgage for several years, the prime interest rates drop, then you might want to consider refinancing to lower your payments and fix the interest at a better rate. This type of refinancing is only useful if you are not planning on taking out cash from the equity of your home. The purpose of no-cash-out refinancing is not to consolidate debts or make home improvements. You are simply refinancing with the hopes to have a smaller monthly payment on the same mortgage you already have, which is only made possible by a drop in interest rates.

Refinancing can be extremely helpful to people who are already making monthly mortgage payments. Whether times are tough or you are simply looking to lower your payments, refinancing makes it possible to reorganize your loan to better server your needs. In terms of dept consolidation, cash-out refinancing is one of the best ways to most efficiently pay those debts by lowering the interest rate to that of your mortgage and giving you one simple monthly payment to make. For most homeowners and potential buyers, it is simply comforting to know that the most important loan or investment they will probably make is subject to some renegotiation.

About the Author: Peter Dellane is the President of Ability Mortgage Group, LLC, A leading Maryland Mortgage company, offering low costs zero point mortgages. For more information on Mortgage Maryland rates and programs please visit www.marylandsmortgage.com.

Second Mortgages and Lines of Credit

2007-11-09T22:05:00.001-08:00

Most homebuyers have very little trouble purchasing a home with the assistance of a mortgage. A mortgage allows them to make monthly payments toward the price of the home while enjoying the use of that home in the mean time. Mortgages make it possible for people to make the kinds of investments that will change their lives. Depending on the income and credit score of a homebuyer, the mortgage process has become fairly simple, provided that the skills of an effective mortgage broker are utilized. Some years down the road however, many homebuyers are ready to make another investment, consolidate debts, remodel the house, or consider the purchase of a new property. This is the point at which a home equity line of credit or a second mortgage should be considered.

So many home owners and buyers begin inquiring into credit lines and second mortgages without even realizing the difference between these two loans. A second mortgage is actually a completely new mortgage that is not in association with the first mortgage. It is simply the second mortgage that a particular person is applying for. This type of loan is exactly the same as the first mortgage, requiring regular monthly payments with slightly higher interest rates and lasting just as long as the average first mortgage. Most people who have been through the mortgage process once before will have no trouble understanding and obtaining a secondary mortgage. Though the interest rates are somewhat higher, the fees collected on secondary mortgages are much lower, thus balancing them out to a similar cost as the first mortgage. The inability to repay a second mortgage will result in a foreclosure on the new investment, but will not impact the first mortgage.

A home equity line of credit involves the lender’s agreement to loan a maximum amount within an agreed period, using the homeowner’s equity as collateral for the loan. This line of credit allows the borrower to take only the amount of money that they need as they proceed in an investment or remodeling endeavor. This adds a great amount of flexibility to the use of the loan. There is also a monthly payment required on an equity line of credit, but these are most commonly interest only payments, then after 5 to 25 years, there will be a “draw period” when the borrowed money must be paid back. In the short term, a line of credit is great because the monthly payments are so much lower, but you will also pay out more interest over time. The main down side to a home equity credit line is that failure to repay the loan will result in foreclosure on the home used for collateral.

Both home equity lines of credit and second mortgages can then be refinanced or consolidated with the first mortgage or other debts to come up with one easy monthly payment. They are both effective ways of providing people with the investment capital they need for many types of investments, projects, or even debt consolidation once they have already bought a home.

About the Author: Peter Dellane is the President of Ability Mortgage Group, LLC, A leading Maryland Mortgage broker company offering low costs zero point mortgages. For more information on Mortgage Maryland rates and programs please visit www.marylandsmortgage.com.

Reverse Mortgages

2007-10-29T15:15:00.001-07:00

For those that have already been paying on their mortgage for a while or even own their home through some other method that wish to take a slow pay back for their investment. Instead of selling the home immediately and having to move to a new home, a reverse mortgage makes is possible for the lending institution to make payments back to the owner over time in order to eventually own the property again. This allows the resident to receive money regularly while still having the benefit of living in the home. Basically, this is just one way to utilize the equity you have built in to your home without having to move. A reverse mortgage arrangement is defiantly not the best decision for everyone, but in certain situations it can provide a nice level of continual security and comfort.

Why would someone want to use their home equity in this way? There are many things a reverse mortgages can be used for, but before you consider these, it is important to realize that a reverse mortgage can be changed. It is not an agreement set in stone, and you can usually renegotiate the mortgage again. With that in find, it might be helpful for some people to reverse their mortgage to make payments on intensive repairs that need to be done to the property. It is also common for people to utilize a reverse mortgage for the purpose of additional income during a career transition or other difficult time, and for some, reversing their mortgage helps provide a retirement. Basically, your mortgage will simply starting moving in the opposite direction until you decide to change it again and move forward.

There are however, more fees involved in reverse home mortgages, and many lenders (now becoming buyers) have restrictions on the amount of equity you can take from the home. The money coming back from a reverse mortgage will not last forever. The amount you can receive from such an arrangement depends on the amount of equity you currently have in the property and how long you plan on receiving these payments. Of course it makes sense that the lower monthly payments you require, the longer you will be able to receive them. This is the time to assess your financial situation and determine what it is you need and for how long you will need it. As a retirement strategy, know that you will be passing on the remainder of your mortgage onto your beneficiaries who must be able to qualify for your mortgage in order to keep the home. However, they will always have the option to sell the home for what appreciation and equity that might remain, or at least break even with the lender. Consider the advantage that they do not have to support you while you are still living.

The decision to enter a reverse mortgage should be carefully chosen and should fit the needs of your current financial needs, whatever those may be. You might also consider the appreciation of homes in your area and what benefits there are to simply continuing on your mortgage a bit longer. Reverse mortgages are not the answer for everyone, but they are a nice option to have.

About the Author: Peter Dellane is the President of Ability Mortgage Group, LLC, A leading Maryland Mortgage broker company offering low costs zero point mortgages. For more information on about Ability Mortgage group and programs please visit www.marylandsmortgage.com.

Condo Mortgages

2007-10-29T15:13:00.000-07:00

For some potential buyers, purchasing a condominium rather than a home just makes more sense. For those that don’t want responsibilities like leaky roves, plumbing problems, or keeping up a lawn, sharing the burden may sound much more appealing. This is exactly the case with condominiums. These multi-unit living alternatives first came in the form of apartment complexes that converted into permanent living, and they are now built with permanent living in mind. The space and comfort provided in many modern condos is very competitive to that of an actual house, and the advantage of permanent living versus renting a space is similar to renting a home versus purchasing a home. Instead of paying money every month into someone else’s investment, you are now contributing to your own mortgage, thus building equity and providing for a more secure future. Most people purchasing a condo will do it with the help of a mortgage, similar to most that buy a house, and though there are many similarities, there are some slightly different variables to consider when purchasing a condo unit.

Houses are considered to be larger investments in scale. This is due to the fact that home sale prices are usual higher than condos and thus the appreciation is somewhat greater. Of course, this is a gross generalization, as there are some condos that are worth far more than certain houses. But when comparing similar spaces, locations, and types of construction, home prices are generally more expensive. Apart from the actual sale price however, condos also require residents’ fees, which cover the maintenance expenses associated with keeping the complex in operation. These fees are collecting into an account known as a reserve fund to then be used for maintenance costs. It is very important to obtain information about this reserve fund before beginning the mortgage process. You should be able to request information about the balance of the reserve fund directly from the Condominium Board of Directors as well as the costs of scheduled repairs or maintenance. Some condo associations or boards have gotten themselves into a financial mess that you do not want to walk into. You will also need to factor in the cost of condo fees with your mortgage payment to determine what you can afford to pay on a monthly basis.

If the fees are reasonable and the reserve fund is healthy, you may be ready to make a purchase, assuming you like the unit and its location. At this point, you will go through the exact same steps as acquiring a home mortgage. Everything, down to the interest rates and the actual paperwork should be the same. If you are still shopping around, feel free to get some mortgage quotes from several brokers before you decide on the right one.

About the Author: Peter Dellane is the President of Ability Mortgage Group, LLC, A leading Maryland Mortgage broker company offering low costs zero point mortgages. For more information on about Ability Mortgage group and programs please visit www.marylandsmortgage.com.

Commercial Mortgages

2007-10-16T00:55:00.000-07:00

Using property to secure a loan is a very common practice for businesses, investments, and emergency purposes. The actual property used for a secured loan determines what kind of loan it will be. Most homeowners are familiar with residential loans in which the collateral for the loan is the equity they own in their home. In this way commercial are very similar. One major difference between a residential loan and a commercial loan is the collateral. In a commercial loan, the collateral is of a business nature, either in commercial real estate or business value. However, this is not the only differentiating factor in a commercial loan.

Commercial mortgages are not generally for the use of individual citizens, though in some cases they do include only one borrower. Generally, a commercial mortgage is a loan applied for by a business. Because it is a business applying for the loan rather than an individual, the credit worthiness of that business must be determined for the lender to determine the level of risk. Unlike finding an individual’s credit score, determining business credit is somewhat difficult. Many factors play into the equation, such as the revenues, expenses, debts, history, taxes, etc, and help lenders to determine the level of risk involved in granting a commercial loan to a particular business. Just like residential loans, the higher the risk, the more expensive the loan will be.

Most commercial mortgages also have different terms than residential mortgages. In a common residential mortgage, it might be paid back over a 30 year term with equal payments. Commercial mortgages are usually paid off in much shorter amounts of time, and the payments are smaller with a large balloon payment at the end of the term. In a commercial mortgage, the business might be responsible for paying of 25% or more of the loan in a lump sum at the end of the loan, but in the mean time, the loan payments are much lower than a fixed mortgage.

Because commercial mortgages are generally more risky for lenders, many commercial loans have higher interest rates than other secured loans. It is not uncommon for the rate to be one or two points higher than the current residential rate, but similar to any mortgage, the interest is tax deductible. Though commercial loans may seem like a larger risk, sometimes it is exactly what a business needs to really get off the ground or grow in size. The goal of any business venture is to make that money back and more, so factoring in the costs of commercial loans into your projected sales and revenues will help determine if a commercial loan is worth the risk. A successful business should be making its value back very quickly. If this is not the case, a commercial loan may not be the best idea for your business.

About the Author: Peter Dellane is the President of Ability Mortgage Group, LLC, A leading Maryland Mortgage broker company offering low costs zero point mortgages. For more information on Mortgage Maryland rates and programs please visit www.marylandsmortgage.com.

Mortgages and the Debt to Income Ratio

2007-10-16T00:54:00.000-07:00

The most heavily weighed factor in mortgage qualification is your debt to income ratio, or your DTI. This will determine the size of loan you can actually afford. Your DTI is basically the percentage of income that is already claimed by monthly expenses, including rent, bills, car payments, and other loan payments. By taking the amount of monthly expenses and dividing that by your total income, anyone can calculate a debt to income ratio. In order to qualify for particular mortgages, this number must lower than the maximum level, which for most lenders is around 45%.

Here is an example of a DTI. For someone who has an annual income of $120K, their monthly income is $10K. If that person’s monthly liabilities totaled to $4K, then their DTI is 40%. The DTI ratio is then broken into greater detail by separating it into two figures. One figure represents al expenses or liabilities against income, while the other only accounts for a housing payment versus income. Continuing with the previous example, the top figure (including all liabilities) would be 60% if their housing payment was $2K per month, their bottom figure (accounting only for the housing payment) would be at 20%. If a lender requires the top number to fall under 45% and the bottom number to fall under 30%, the person in the example would not qualify.

Some borrowers strategize to pay of debts with their new mortgage. This is definitely an effective way to consolidate debt, but it will not change your DTI. The monthly payments on credit card debt or other revolving accounts will still be considered as part of your debt to income ratio when it comes to qualifying for a mortgage. This is actually designed to protect borrowers and lenders by discouraging the refinancing of credit card debt into a new mortgage only to run the bills back up on those accounts afterwards. By considering these accounts as part of a person’s DTI, the lender is able to see a more accurate representation of that person’s ability to handle debt. This is the case unless the borrower has sufficient verified assets to cover the additional debt that will be refinanced into their new loan.

Most lenders choose to avoid loans that require full documentation if they doubt the potential homeowner’s qualification based on their documented annual income. So lenders offer what are known as reduced documentation loans such as Stated Income/Verified Assets loans, or SIVA as well as No Ratio loans, which require no income or verified assets. Though some people are leery of the legitimacy of a reduced documentation loan, they are actually very helpful tools in certain situations. For those borrowers who have recently increased their annual income and cannot show documented income for that amount over the last two years because it was only recently they obtained it. These loans are also helpful to self-employed borrowers that might have complicated tax schedules.

The debt to income ratio is not only a determining factor in loan application but it is also a great way for people to determine what kind of mortgage they can afford prior to going through the application process. It saves time to understand your DTI situation before beginning the search for a new home.

About the Author: Peter Dellane is the President of Ability Mortgage Group, LLC, A leading Maryland Mortgage broker company offering low costs zero point mortgages. For more information on Mortgage Maryland rates and programs please visit www.marylandsmortgage.com.

Qualifying for a Sub-Prime Mortgage

2007-10-16T00:50:00.001-07:00

If your credit score is not so good, it is easy to feel like there is no way you can get a mortgage, when in fact you may qualify for a sub-prime mortgage loan. Before you get too excited, spend some time to learn more about sub-prime loans and how to go about qualifying for one.

In the history of money lending, the industry has been very stiff and static. Previously there was very little negotiation for those without a history of employment, adequate income, and good credit. Over the years, lending has become a more competitive industry, thus developing other options for those who do not fit the perfect barrowing profile. Sub-prime mortgages were created specifically for those who have problems with their credit score. The Fair Isaac Corporation, or fico, calculates your credit score based on your credit history that is noted in a report. Any score over 713 is considered good credit, while anything below 600 is not good. Americans’ average credit score is somewhere around 725.

Sub-prime mortgages are designed for people who have a credit score lower than 620. Because these individuals are considered a higher risk, due to their credit history, the loan will cost a bit more than a traditional mortgage. Since the lender is taking a risk that the individual will make the payments, they should have some compensation right? One of these additional costs will come in the form of a higher interest rate. How much higher is determined by an individual’s specific credit and debt to income ratio situation. This rate can range anywhere from just one point or even four points higher than the prime rate. This is one way the lender will make more profit in exchange for taking a higher risk by granting the loan. The great thing about any mortgage though, which remains true for sub-prime mortgages, is that all interest payments are considered tax write-offs at the end of the year.

Another common cost for a sub-prime mortgage is the amount paid at the beginning of the loan. A lender will quite possible charge your more percentage points of your loan up front to take the absolve some of the risk in association. Any sub-prime lender wants to get as much money on the front end as possible, but they will also be willing to work with individuals to find the perfect fit. These percentage points are also tax deductible.

Almost every sub-prime loan is different from the next because it is designed to work with many different situations. So it is worth considering if you are having some credit score issues but want to begin the best investment of your life in real estate. By talking to a mortgage broker you can take a look at various loan programs they can offer and find the best fit.

About the Author: Peter Dellane is the President of Ability Mortgage Group, LLC, A leading Maryland Mortgage broker company offering low costs zero point mortgages. For more information on Mortgage Maryland rates and programs please visit www.marylandsmortgage.com.

Why is the Length of Your Mortgage So Important?

2007-09-27T16:59:00.001-07:00

The most commonly discussed variable in mortgages is the interest rate, and while interest rates definitely have a huge influence on the cost of a mortgage, the length of a mortgage is just as important. The majority of mortgages are set in 30-year terms or 15-year terms, and most people pay little attention to the differences, other than the number of years they will be paying it off. Anyone considering a new mortgage should know what the real differences are in mortgage terms in order to make the right decision for their situation and avoid wasting money.

The length, or term, of a mortgage is a very basic but critical mortgage decision. A mortgage term not only determines how long someone will carry payment obligations, but it also sets the amount of interest they will pay during the full term of the loan. This not only affects the total cost of the loan but also impacts an individual’s ability to build equity in their property. Of course, the longer period of time it takes to pay off a loan, the higher the amount of total interest will be and the longer it will take to build equity. However, many people take advantage of a longer mortgage to reduce the monthly payments. A mortgage length decision is greatly determined by a qualifier’s current financial situation.

Principally, homebuyers seek a mortgage based on the most amount of money they can qualify for at the lowest monthly payment. Depending on your income and living expenses, it is worth considering the amount of interest that will be paid off over the course of a loan and explore other mortgage lengths. The monthly payments on a fifteen-year mortgage will usually run around 25% higher than those of a thirty-year loan. However, if you can afford the extra monthly expense, you will be paying less interest in total and building equity into the home at a much faster pace.

To even think about making this decision, a buyer must determine their buying goals and consider the possibilities for reaching those goals. If it is a buyer’s principle interest to build equity in a property and pay lest interest overall, a shorter mortgage term will better serve their needs. Of course for some buyers who simply want to move into the home they want at the lowest monthly obligation, a longer mortgage is more appealing. There is no correct decision when it comes to choosing a mortgage term. Buyers must evaluate their circumstances and weigh the factors of interest and equity versus monthly payments. In today’s mortgage industry there are a number of loan types to choose from. Take the time to settle on the best one.

Mortgages Are Great Assets!

2007-09-13T22:58:00.000-07:00

No one wants to be in debt, so when it comes to owning a home, people want to pay off mortgages and be "free and clear," but this is not necessarily the best scenario. In fact, having a big mortgage can actually be a huge asset. The value of a home will shift regardless of the amount of money you have in home equity. For this reason, all of that equity is really just sitting in your home without collecting any interest. If you had no equity, but invested the money elsewhere while having a huge mortgage, the appreciation of the home would still make you money, while all of that cash would collect interest at the very least.
If you use credit cards or have any other loans, you are paying a huge percentage to borrow that money. It is much more economically beneficial to borrow money against your home equity. If you have outstanding debts, pay them off using your equity because even at an 8 percent interest rate on a mortgage, the government subsidizes one third of the interest on your mortgage, lowing that to 5.4 percent. Who wouldn't rather pay 5.4 in interest on their loan versus 20% or even more? There is no reason to leave all of that equity in your home.
If you have paid off a home, or have a great deal of equity, take the money out now rather than waiting until it is needed. If you use that equity to invest in other endeavors or simply let it collect interest, you will still have the home and make regular mortgage payments. However, if a crisis arose or you suddenly needed the money, the only option would be to sell the home. This would simple give you back what you put into the home along with the appreciation, and if it is rushed, you might not get the best price. The worst part about this is that you lose the home. If you take the money out of the home beforehand, you can make interest on it or use it, while still securing the home with a monthly payment. Don't forget, you will still be making money on the appreciation of the home if and when you decide to sell.
Taxes are another great reason to keep a big mortgage. If you pay cash for a home or put down a sizable down payment, you are not paying interest on that purchase and therefore the interest is not tax deductible. Also, only the first $100K will be tax deductible if you decide to take out a home equity loan. However, if ninety percent of the home purchase was mortgaged, the entire amount would be deductible. If you then have the cash to pay of the mortgage, you can always return to a home equity loan.
Though mortgages and debt might seem dangerous to some, they are actually the best way of borrowing money. It is amazing how no one seems to be very scared of credit cards, while the interest rates are absolutely outrageous. Borrowing money through a mortgage is a great investments and is almost always much more secure.

About the Author: Peter Dellane is the President of Ability Mortgage Group, LLC, a leading provider of the great Maryland Mortgage rates and low costs zero point mortgages. For more information on the bestmortgage loans Maryland has to offer, please visit www.marylandsmortgage.com.

Getting Mortgage Help from Parents

2007-09-13T22:57:00.000-07:00

In the United States, real estate prices have jumped dramatically in recent years adding half or doubling the price for similar size homes. This has come as quite a problem for many working young people who are finished with school, have a great job, but still cannot afford to get into a mortgage for a home or a condo. For this reason, many parents are stepping in to help their kids secure good mortgages in order to build their future financial security. Not only that, but parents can also benefit greatly by helping their children buy real estate by making some extra income through appreciation.
Even though the housing market flattened off slightly this year, credit application grew tougher, and young people are still finding it extremely difficult to secure a mortgage. Mortgages backed by parents are one of the simplest and healthiest ways for young people to get the mortgage they need while still making some extra retirement income for Mom and Dad. Unlike interest-only loans, piggyback mortgages, or adjustable-rate loans, a mortgage backed by parents is much less risky and will be much more affordable.
There are many different ways to go about setting up a parent-supported mortgage. Parents can agree on an equity-sharing arrangement based on certain terms. This should come in the form of a written contract that determines the responsibilities of both parties and can manifest in many ways. For example, the parents might agree to cover down payment in exchange for a percentage of the home's equity appreciation. Often times, the child will still cover the monthly payments, and in a zero down situation, the parents might simple require a percentage of the equity appreciation in exchange for making the loan possible with a co-signature. This way, both parties will make money, and the kid can move into a new house with payments they can afford. Sometimes parents co-sign for the loan and other times they only appear in the written contract, depending on the situation. If the child is having difficulty obtaining a loan with a good rate, then it is often necessary for the parent to co-sign.
This type of loan requires everyone to be extremely responsible and cannot work without a level of trust. Obviously, if the child cannot make the house payments, then the payments will fall on the parents, or go into foreclosure. There must always be clear communication, and it is not a bad idea to get an attorney involved to make sure the documents are drawn up correctly and are bound legally.
When it comes time to sell the house for a profit, everybody wins. This is a great way for young people to build some home equity (as well as credit), and it can be a very lucrative investment for parents. Think about sitting down as a family and discussing a mortgage to bring some financial security to the kids.

About the Author: Peter Dellane is the President of Ability Mortgage Group, LLC, A leading Maryland Mortgage company offering low costs zero point mortgages. For more information on Mortgage Maryland please visit www.marylandsmortgage.com.

Getting Ready for Closing?

2007-09-01T22:59:00.001-07:00

You are so close that you can taste the end of the home buying process, and it is time to get ready to close the deal. Nobody wants to hit a snag or have any problems in these final stages, so it is important to make the right preparations. The goal is to have your real estate transaction finish smoothly and on time.
Take the time a few days before the closing date to go over your entire final closing statement. This might also be known as your HUD-1 Statement, depending on what area of the country you live in. Consider all of the calculations you see in this statement, and make certain that you receive credit for all deposits and any other credits the seller might owe through other agreements. Analyze all of the fees, including those associated with the lender, the title, and escrow, and make sure they line up with everything you have previously discussed and agreed upon. Though it may seem silly, you should also go ahead and check all of the arithmetic on the final statement. Believe it or not, mathematical errors actually do occur in closing documents.
Next, carefully review all documentation, looking for any inconsistencies. Look over the guarantee of title, reading all of the fine print about the description of the property, liens, encumbrances, or any other factors that might be included. If you find anything that you do not agree with, have it removed. The escrow or title agent should have the proper vesting that you have chosen so that you may take title in the way you choose. Changing the vesting takes a great deal of time, and if it is not noticed until closing, it can delay the entire transaction.
Even if you have looked at the property over a hundred times, make one last inspection to make sure everything is in order. Everything should be exactly how you are expecting it at this time. All agreed repairs and maintenance should be complete, so it is wise to double check so that you do not find a big surprise on move in day. If there are any conditions in your purchasing agreement, these things should be complete.
Protecting your interests in a real estate transaction is extremely important. A small miscalculation or oversight might end up costing a good deal of money and affect your entire mortgage. Double check everything from arithmetic to interest rates, to fees and the property itself. When you come across one small mistake, you will be glad you did.

About the Author: Peter Dellane is the President of Ability Mortgage Group, LLC, A leading Maryland Mortgage company offering low costs zero point mortgages. For more information on Maryland mortgage rates please visit www.marylandsmortgage.com.

Mortgage Tax Advantage

2007-08-22T16:50:00.001-07:00

Walking in to sign your first mortgage may seem a little frightening as you consider the hundreds of thousands of dollars you are promising to pay back. Though this kind of financial deficit may seem a little crazy, it will actually help you to be more financially secure in the future. The most obvious advantage to a mortgage is the ability to own equity in a property that will undoubtedly increase in value over time, but there are several other factors that make mortgages and home buying a profitable situation. The tax advantages of mortgage debt are just one factor that is significant and often overlooked.
Of course, no one wants to have debt, but sometimes it is the ability to acquire debt that gives homeowners the freedom to make a lot of money. Not only do mortgages make it possible for so many people to even buy a home, they are also one of the largest tax write-off's a person can have. Even though you are in debt with a mortgage, you are not required to pay tax on the interest. If your mortgage payment is at all similar to what you would be paying in rent, this is a significant savings. All of the interest you paid on your mortgage payments can be "written-off" as non-taxable, which is like thousands of dollars in your pocket.
To take advantage of these savings, first tally the amount you paid in interest over the past year. This can be done by examining your mortgage or by simply conferring with your lender. This amount may then be used on your 1040 income tax form as a tax deduction, which is deducted from your total amount of taxable income. If your income was $60K and the interest paid was $5k, then you will now only be taxed for $55K of your total income. A large income tax deduction might even put your income in a lower tax bracket, requiring you to pay a smaller percentage over all. If you had been paying rent instead, you couldn't write off any of those monthly payments because rent is considered taxable income.
Even though debt can be a scary thing, mortgages are actually one of the best ways to put people on the path toward a stable and comfortable financial future. If you are hesitant to buy a home, try to calculate what you will save in taxes alone, according to the prime interest rate. Many people are already making monthly payments that are large enough to be house payments. Why not have that money going back into your own future while saving some money in taxes along the way?

About the Author: Peter Dellane is the President of Ability Mortgage Group, LLC, A leading Maryland Mortgage company offering low costs zero point mortgages. For more information on Mortgage Maryland please visit www.marylandsmortgage.com.

Stretching Your Budget

2007-08-22T16:49:00.001-07:00

When most homebuyers are beginning the search, what they can afford is the most important factor. Making this important financial decision will impact you and your family's future greatly, and it is important to consider every option. Right now, interest rates are low, and home prices are also leveling off, so it is a great time to enter the market, but "How MUCH house should you buy?" is the bigger question.
There are several opinions about buying a better house rather than moving into something that fits comfortably into your financial situation. Future plans definitely have an impact on this kind of decision. For example, if you plan to have children or expect a large income increase, then you might be thinking about getting a bigger house now. Even if you don't expect these things, it makes strategic sense to go ahead and buy a slightly larger space than you currently need. If you get a fixed rate mortgage, the amortization of a house will not change, giving you and your family a nice cushion against inflation, and if you begin to have more income over time while your loan payments remain at the same amount, your standard of living will continue to increase.
When homebuyers move into larger homes than they need, they will almost always have no problem growing into that larger space. This is a very important thing to consider, because the more equity you can put into your house and the more the market rises, the better off you will be when you sell. If you find yourself moving every year or two, you will most likely lose money every time you move. Staying in one house is much better financially, not to mention all of the moving expenses, fees, new loan costs, furniture, etc.
If you are more than confident about your future income increases, then you might consider a more expensive home and an interest only mortgage. An interest only loan reduces the payments greatly at the beginning of the loan so that when your income does increase greatly, you can handle the larger monthly payments. The benefit is that you will have the home to fit your future income now, rather than later. These kinds of loans are typical for young professionals in areas such as law or medicine who are confident in their economic future.
If you are considering stretching your budget on a new home, take every precaution to make sure you can keep your finances in good shape. Do not push yourself to the absolute limit, as this will cause unnecessary stress and possibly bigger problems. You must fully understand the mortgage you are considering and the financial responsibility that comes with it. Though there are many advantages to stretching your budget and getting a better home, there are few, if any, advantages to foreclosure. Take the time to make a personal budget so that you can be sure of what you can afford.

About the Author: Peter Dellane is the President of Ability Mortgage Group, LLC, A leading Maryland Mortgage company offering low costs zero point mortgages. For more information on Mortgage Maryland please visit www.marylandsmortgage.com.

Lending Regulations

2007-08-03T21:14:00.000-07:00

In order to protect consumers in the subprime market from unnecessary lending risks, lawmakers and other agencies are calling for tighter regulations on lenders. In the years 2005 and 2006, 20% of all subprime mortgages foreclosed, loosing almost $165 billion for American citizens in property wealth. Though the intentions of these guidelines are to protect people when borrowing money, it will also create some difficulty in qualifying for certain loans and mortgages.
Adjustable Rate Mortgages are the principle target for these new regulations. Though these types of loans provide low introductory rates, the payments become dramatically higher when the introductory period expires. For some situations, ARM loans are the perfect match. When building a house for selling purposes or remodeling before a sale, an ARM allows low payments in the beginning while requiring an adjustable rate later and often a final lump sum. However, some lenders have offered these teaser rates without truly warning the homeowner of the future ramifications. Because interest rates are steadily rising, some homeowners have found themselves stuck with a monthly payment that doubled following the introductory period, and as a result, many owners are forced into foreclosure. Recent regulations require that mortgage brokers and lenders explain sufficiently and transparently the risks involved in an adjustable rate mortgage. These disclosures must be candid and forward in order to fully warn borrowers of the realities of an adjustable rate loan.
"Stated incomes" are another issue of regulation. Previously, borrowers may use a "stated income" on their loan application rather than providing job history and income verification. In most cases, mortgage applicants will overestimate their income with hopes of a better loan qualification. This results in borrowers obtaining a loan they cannot financially support. It is now required that even stated incomes be verified, so that the accuracy is certain. Again, this may make it difficult for some borrowers to get the mortgage they want, but it will prevent more foreclosures overall.
Credit scores have always been a key factor in mortgage application, and now, many lenders are required to review an applicant's credit history for the past 24 months, rather than just one year. They are also required to take the lesser of two credit scores when another person is involved, such as a spouse, or sometimes they are able to simply take an average of the two. This will take into account the entire financial burden and responsibility of a household.
Though these regulations may seem to make the loan process more difficult, they are actually protecting many people from finding themselves in a bankrupt or foreclosure situation. By increasing the guidelines for mortgage application, the average borrower is more likely to be prepared for their qualified mortgage, and their loan is more likely to be a success.

About the Author: Peter Dellane is the President of Ability Mortgage Group, LLC, A leading Maryland Mortgage company offering low costs zero point mortgages. For more information on Maryland mortgage rates please visit www.marylandsmortgage.com.

Major Interest Rate Factors

2007-08-02T12:12:00.001-07:00

The interest rate you receive on a mortgage is a major defining factor in the cost of a loan, and there are three basic issues that determine this figure. Anyone applying for a mortgage should be aware of these factors in order to understand why and how they qualify for particular interest rates. Not only will this help an applicant to better understand their costs, it will most likely save some time and frustration along the way.
The prime interest is the foundation of all other interest rate determinations, and it is directly effected by the Federal Reserve "Discount Interest Rate". This is the interest rate that the Federal Reserve Bank charges eligible institutions (such as banks) for borrowing money in the short term, and it is determined by the boards of directors of the Federal Reserve Banks. The individual mortgage seeker has no control over this factor, but it will fluctuate according to the economy and other issues.
An individual's credit report, or credit history, also greatly affects their qualified interest rate. The credit bureau, as well as other consumer reporting agencies, keeps a record of bill payment history, arrests, bankruptcies, lawsuits, etc. Traditionally, this history is expressed as a number, or FICO score. This single number helps lenders and other institutions to quickly assess the credibility and responsibility of an individual to pay their debts. Credit scores greatly impact the interest rate charged for a mortgage or any other loan, but it can also be highly controlled by the individual. By making payments on time and keeping a responsible credit history, the interest rate will be extremely close to the prime rate. However, those who are a higher risk (with lower scores) receive higher interest rates accordingly. The more risk an institution takes with mortgage, the more expensive that mortgage will be.
Individual lenders and banking institutions compete to provide competitive interest rates while protecting their investments. All lenders need to make some profit, while offering reasonable rates to mortgage applicants. This natural competitive market is the third factor in determining an interest rate. Though it is also difficult to control, it certainly provides a dynamic and competitive atmosphere for finding the right mortgage.
Realizing the impact of these factors on interest rates will help you determine what a decent interest rate would be for your situation and possibly provide a strategy for receiving lower interest rates, the best strategy being a great credit score.

About the Author: Peter Dellane is the President of Ability Mortgage Group, LLC, A leading Maryland Mortgage company offering low costs zero point mortgages. For more information on Mortgage Maryland please visit www.marylandsmortgage.com.

Avoiding Mortgage Mistakes

2007-07-22T16:05:00.001-07:00

Settling on a mortgage is the largest monetary transaction most people will ever make, and surprisingly, the majority of people find out very little about the details of mortgages. It is wise to gather as much lending information as possible so that you can prevent many of the common mistakes homebuyers fall into.
Finding the right lender is the most important decision you will make in the mortgage process. You should be looking for someone who is an expert, experienced, and most of all, reputable. Being able to trust in your lenders competence as well as their honesty will keep the process relatively stress free. After all, shouldn't buying a new home be fun?
Do some research about current interest rates and consider what would be a reasonable interest rate for your mortgage, given your income and credit score. Buyers should be wary of special advertised rates as some lenders will claim those rates have expired, just before closing on the loan. You should have a printed copy of any "locked in" rates and make sure there will be enough time for your loan to close. This is yet another reason why having a reputable lender will make everything much better.
There are so many mortgage programs, and each program has pros and cons. Carefully consider your situation and decide which loan program will fit your situation. Some programs may have extremely low rates but are not fixed interest rates and can increase greatly over time or require a sizable final payment, while others have fixed interest over a longer period of time. For someone only planning to stay for a few years, a fixed rate mortgage is not necessarily the best option. The longer you plan to stay in a home, the better a fixed rate mortgage will be.
Many buyers attempt to wait for the lowest interest rates, and though this is perfectly fine in theory, many end up waiting too long and settling for a much higher rate. The longer someone waits, the longer they will be paying on the mortgage as well, so it is best to begin the mortgage process as soon as possible and try to lock in a rate sometime before closing.
It is important to negotiate problems with a property you are planning to mortgage before the loan closes. Give yourself plenty of time before closing to come to agreements about any work that needs to be done by the builder or any compensation that should be granted for future work. This will allow both seller and buyer some time to think about the options and come to an agreement. Do not let the cost of closing take you by surprise. Closing costs on a typical mortgage will range from 2 to 6 percent, which can be a pretty large chunk of change. Be sure to ask your lender for a good faith estimate that breaks down all of the potential costs. This is a good time to investigate all of the fees associated with closing. Some of these can be avoided if considered carefully.
These are just a few helpful hints for avoiding mortgage mistakes. However, do not let your mortgage research end here. The more you know, the more you will save, and when you consider the magnitude of a home mortgage, a small percentage of savings can mean thousands and thousands of dollars in your pocket.

About the Author: Peter Dellane is the President of Ability Mortgage Group, LLC, A leading Maryland Mortgage company offering low costs zero point mortgages. For more information on Mortgage Maryland please visit www.marylandsmortgage.com.

Credit History and Mortgage Qualification

2007-07-22T16:02:00.001-07:00

Credit history is often the greatest obstacles in purchasing a new home, and many Americans do not realize its importance until they are trying to qualify for a mortgage. Regardless of an individual's income and job history, anyone can be denied a mortgage on the basis of bad credit. A low credit score can immediately bar you from owning a home, and if not, it will almost certainly increase your interest rates, totaling to tens of thousands of dollars. This problem is easily avoided by taking good care of your credit, which means one of two things: Managing your existing debts and payments or starting a credit history.
Your credit score is determined by several factors. The length of your credit history in comparison to how often you borrow money and how successfully you pay it back are the most important factors. Credit scores are also determined by how timely your bills are paid, if you have ever defaulted on a loan, how much credit you have been offered, and if you have ever declared bankruptcy or had a foreclosure. All of these things greatly contribute to your total credit score, but surprisingly, the lack of credit history or credit accounts can result in a low credit score as well. This goes back to the length of credit history and serves to show us that creditors want to see a history of responsibility of debts.
If you have no credit accounts or debts, it is a wise decision to open a credit card account and use it to make some sort of monthly payments, like the electric or phone bill. Then pay off the bill entirely at the end of every month. This will prevent you from paying extreme interest on those borrowings while establishing a credit history of timely payments.
For people who already have credit histories, the challenge is keeping it looking great. It is helpful to begin by requesting a copy of your credit report and examining it to find any corrections that may need to be made. Once you have accounted for all of your credit history, try to keep credit cards only half way to the limit or even pay the entire balance each month. The most important thing to remember about credit cards is not to let them go past due. This reflects poorly on your credit score.
In some situations, an individual's credit is so poor that it seems impossible to turn it around, but there are many non-profit agencies dedicated to helping people solve their credit problems. These agencies help people to consolidate and pay off their debts so that they can have the credit score they need to get a good mortgage. Don't let your credit be the deciding factor in buying a new home. Take the time and effort to keep a good credit score.

About the Author: Peter Dellane is the President of Ability Mortgage Group, LLC, A leading Maryland Mortgage company offering low costs zero point mortgages. For more information on Mortgage Maryland please visit www.marylandsmortgage.com.