Why Pay On Someone Else's Mortgage?

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

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

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

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

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.