New Maryland Mortgage Law

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?

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.

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.

Condo Mortgages

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

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.

Avoiding Mortgage Mistakes

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.

Your Mortgage, a Great Place to Invest

If you are a homeowner looking for a wise investment opportunity, you don't have to search very far. Real Estate is one of the greatest investments you can possibly make, and if you already have a mortgage on a home, putting in more money than the required payments is a wise decision. Every dollar paid towards your mortgage gives you more equity in your home, and that equity is almost guaranteed to rise in value. If you were to invest in a stock, your hope would be that the value of those shares would increase, and with real estate, it is only a matter of time before the value goes up, but even if your home does not increase in value, the sheer numbers of paying a mortgage early produces an incredible return. An investment made in your own mortgage is safe, easily accessible, tax free, and almost guaranteed to pay off at a great percentage. If you are considering a new mortgage, the same is true. Not only is it a great investment opportunity, but it will provide a home in the mean time. How many stock options can do that?
If you have a mortgage and a little extra money left over for investing every month, putting that money back into your mortgage can give you returns of up to 200%. Who wouldn't take these kinds of numbers for investment? Not only that, but it is tax-free as well! Money saved in the bank or used on stocks, bonds, and mutual funds is all taxable income, while payments toward a mortgage is not considered income at all.
By paying a little extra on your mortgage every month as a long-term investment, you gain equity and lesson the length of the mortgage. Think of an example of paying an extra $25 per month on your mortgage. If your monthly payment is $665 over 30 years, at 7% interest, the mortgage would be paid off 39 months early. Multiply those 39 months times the monthly payment, and you get $25,935, and subtract this amount by the number extra monthly payments of $25 (321 months x $25 = $8025). This is a savings of $17, 910. If you divide these savings by 321 months, the monthly tax-free growth is $55.79. On a yearly basis, this is an average growth of $669.50, and when you divide that by the $300 dollar annual investment ($25 x 12 months) you can see that there is over a 200% return. Of course, the more you invest, the better the return.
This is not even taking into account the increase of the home's value. In some regions, homes have been known to more than double in value over a decade, and with the growing population this is only going to increase. By building this equity faster, you also open the possibility of borrowing money against the equity for other investments, like building another home.
Investing is your own mortgage is one of the smartest ways to provide for your future. Everyone knows that real estate is one of the safest investments you can make, so why not start with the mortgage you already have?

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 please visit www.marylandsmortgage.com.

Finding the Right Mortgage Terms

Many people in the market for a new home are now using mortgage loan calculators, which are free of charge and easily found online. It is a great convenience to quickly find a rough idea of possible monthly payments, and for this reason, calculators are a worthy service. Mortgage calculators are even found on many online property listings providing simple comparison. To fully utilize these inexpensive tools however, it is important to understand the different types of mortgage terms and which ones are right for your situation.
Fixed-rate mortgage terms are the most commonly chosen mortgages of homebuyers, especially if they are planning on staying in the home for a long time. "Fixed-rate" describes the fact that the interest rate on the loan will remain exactly the same for the duration of the loan. So whether it is a twenty or fifty-year loan, the interest rate will never change.
ARMs, or Adjustable rate mortgages, have a much wider range of term agreements. The basic idea of an ARM loan involves an introductory period where the rate is fixed, and once that period of time is over the interest then adjusts according to current market levels. At this point, the interest on an ARM loan may change as often as every year. A two-step mortgage also has an introductory rate, but the interest will only adjust one time. Both of these terms can be expressed with a number system where the first number represents the time period of the introductory interest rate while the second number refers to how long that rate must stay the same without adjusting to the market. For example a 5/25 means that the introductory interest rate will last for fiver years and it must remain at the new amount for the next 25 years. A 7/ 1 means that the loan may re--adjust to the market every single year after the seven year introduction.
One last type of loan terms is known as the Balloon Mortgage. These are more popular for those looking to build or remodel a home who are not planning on staying in the house for the duration of the loan. In a balloon mortgage, there is a very low introductory rate that lasts for approximately seven years, and then the remainder of the loan must be paid. If the loan is $100k, and the introductory payments account for $10k, then the remaining 90k must be paid in full to the lender. This is ideal for the customer that planes on keeping the house for a very short period of time or plans to sell.
Understanding the basic mortgage terms will help tremendously in the search for a great Maryland mortgage that will give you the financing you need to live in the house of our dreams. Think about your goals for owning a house and how long you plan to stay so that you can find the Mortgage terms that are best for you.



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