Purchasing a house or a piece of property is one of the biggest investments you can make in your lifetime. Your home is the place where you feel safe, and where memories are created.
For many homeowners, a mortgage is an expense that ranks at the top of monthly financial duties. In many cases it might represent the biggest bill you have to pay on a regular basis.
But what exactly is a mortgage?
And how does it work?
It’s not uncommon in today’s world for homeowners to have a vague understanding of their own mortgage and its many components.
Starting from the beginning, a mortgage is a loan made by a bank or lending institution. The principal is the actual amount of money that you borrow from the bank. The interest is the fee you pay to the lending institution or bank for borrowing their money.
Generally there are two types of mortgages – one is a fixed rate and the other is an adjustable rate mortgage (ARM). The fixed rate mortgage has an interest rate that will never change for the life of the mortgage.
Conversely, the ARM has an interest rate that varies over time, and it can fluctuate depending upon several other factors, including the economy, the state of the housing market, and the stock market. ARMs can be tricky to understand, and aren’t typically recommended for first-time buyers.
At the beginning of a mortgage term, which can range from 10 years to 30 in most cases, you’ll be making payments every month. The majority of each payment will go towards the interest, and a smaller part will pay the principal.
Over the time of the loan, the formula changes and more of your monthly payment will go towards the principal versus the interest.
Another component to the mortgage payment is property tax. This tax is calculated by the government every year and varies depending upon where your home is located. Taxes are used to fund everything from police departments to maintenance on bridges and roadways.
Part of the money you pay every month is collected by the lender and placed into what’s known as escrow. This money is then paid out at the end of the year to take care of the taxes.
Insurance represents another piece of the mortgage payment and is collected every month and also placed in escrow. There are two types of insurance, one is for property and protects your home against threats like fire and flood.
The second type of insurance is Private Mortgage Insurance and must be paid by borrowers who put down less than 20% of the actual price of the home or property. Known as PMI, this insurance allows the lender to sell the mortgage to other borrowing institution, who purchase them with the assurance that the debt will be paid.
Mortgages are key for anyone who wants to own a home. Knowing how they work, and what to budget for them each month is financially responsible and key to making sure your home or property is secure.
Contact my office for more information by either email or phone, 410.491.0200.
Our customers save money and close their loans quickly because we employ the most advanced mortgage technology available.
Wednesday, January 23, 2013
Friday, January 18, 2013
Big News! The CDA Increased Its Down Payment Help to $6500!
Big News!! The CDA (Maryland Mortgage Program) now offers an additional $1500 in down payment assistance (DSELP) if a buyer is purchasing a short sale/foreclosure! This makes the total help you can receive $6500!!
Contact our office by phone, 410-491-0200, or email if you would like more information on this program.
Wednesday, January 16, 2013
Tax Legislation Notice
Our friends at Thomas & Libowitz, P.A. recently released an article explaining the most recent tax legislation. We hope you find it helpful.
The recently enacted 2012 American TaxPayer Relief Act is a sweeping tax package that includes, among many other items, permanent extension of the Bush-era tax cuts for most taxpayers, revised tax rates on ordinary and capital gain income for high-income individuals, modication of the estate tax, permanent relief from the AMT for individual taxpayers, limits on the deductions and exemptions of high-income individuals, and a host of retroactively resuscitated and extended tax breaks for individual and businesses. Here's a look at the key elements of the package:
The recently enacted 2012 American TaxPayer Relief Act is a sweeping tax package that includes, among many other items, permanent extension of the Bush-era tax cuts for most taxpayers, revised tax rates on ordinary and capital gain income for high-income individuals, modication of the estate tax, permanent relief from the AMT for individual taxpayers, limits on the deductions and exemptions of high-income individuals, and a host of retroactively resuscitated and extended tax breaks for individual and businesses. Here's a look at the key elements of the package:
- Tax Rates. For tax years beginning after 2012, the 10%, 15%, 25%, 28%, 33% and 35% tax brackets from the Bush tax cuts will remain in place and are made permanent. This means that, for most Americans, the tax rates will remain the same. However, there will be a new 39.6% rate, which will begin at the following taxable income thresholds: $400,000 (single, $425,000 (head of household), $450,000 (joint filers and qualifying window(er)s, and $225,000 (married filing separately). These dollar amounts will be inflation-adjusted for tax years after 2013.
- Estate Tax. See this explanation and more in the original article here.
Monday, January 14, 2013
The CityLIFT Program Explained
Many people would rather own a home than rent one. The choice is easy; you are investing your hard earned money into home equity rather than a putting it into a landlord’s pocket. But the truth of the matter is that many people have been impacted by our economy’s financial crisis and no longer have sufficient savings for a down payment on a home. For this reason, Neighborhood Housing Services of Baltimore has implemented CityLIFT.
The CityLIFT program provides up to $15,000 in down payment assistance or closing cost funds to eligible homebuyers who are purchasing a home within Baltimore’s city limits.
Although Wells Fargo partnered with NeighborWorks America to provide the funding for this grant, eligible homebuyers do not have to go through Wells Fargo to issue the loan. In fact Carrollton Bank is now an approved CityLIFT lender.
CityLIFT assistance requires obtaining a first mortgage. A first mortgage is just a different type of mortgage that has priority over all the other claims of the property. It does not mean that you have to be a first time homebuyer. If you currently own a home, you must sell it before closing on your new home with CityLIFT assistance. Your current home cannot be rented or leased.
Eligible CityLIFT homebuyers must be at or below 120% of the Area Median Income for Baltimore City. There are different income limits depending on the size of your household. In addition, any borrower on the mortgage must also be an occupant of the house.
CityLIFT funds are structured as a “soft second” mortgage. It is a 0% interest loan which is forgiven 20% each year for 5 years. This is why part of the program requirements are that homebuyers must agree to maintain the home as their primary residence for at least 5 years.
In order to close on the house, potential CityLIFT participants must complete homebuyer education through a third party counseling agency that has been approved by the Department of Housing and Urban Development (HUD). Some of the topics that are covered in the CityLIFT counseling session are budgeting and credit, financing a home, shopping for a home, and maintaining a home.
If you believe that you qualify or are interested in learning more about CityLIFT assistance please contact our team and we are happy to assist you. You can contact us by phone, 410.491.0200, or email, sepstein@carrolltonbank.com.
You can find a packet that explains the program here.
The CityLIFT program provides up to $15,000 in down payment assistance or closing cost funds to eligible homebuyers who are purchasing a home within Baltimore’s city limits.
Although Wells Fargo partnered with NeighborWorks America to provide the funding for this grant, eligible homebuyers do not have to go through Wells Fargo to issue the loan. In fact Carrollton Bank is now an approved CityLIFT lender.
CityLIFT assistance requires obtaining a first mortgage. A first mortgage is just a different type of mortgage that has priority over all the other claims of the property. It does not mean that you have to be a first time homebuyer. If you currently own a home, you must sell it before closing on your new home with CityLIFT assistance. Your current home cannot be rented or leased.
Eligible CityLIFT homebuyers must be at or below 120% of the Area Median Income for Baltimore City. There are different income limits depending on the size of your household. In addition, any borrower on the mortgage must also be an occupant of the house.
CityLIFT funds are structured as a “soft second” mortgage. It is a 0% interest loan which is forgiven 20% each year for 5 years. This is why part of the program requirements are that homebuyers must agree to maintain the home as their primary residence for at least 5 years.
In order to close on the house, potential CityLIFT participants must complete homebuyer education through a third party counseling agency that has been approved by the Department of Housing and Urban Development (HUD). Some of the topics that are covered in the CityLIFT counseling session are budgeting and credit, financing a home, shopping for a home, and maintaining a home.
If you believe that you qualify or are interested in learning more about CityLIFT assistance please contact our team and we are happy to assist you. You can contact us by phone, 410.491.0200, or email, sepstein@carrolltonbank.com.
You can find a packet that explains the program here.
Wednesday, January 9, 2013
We Are An Approved CityLIFT Lender!
We are proud to announce that we are now an approved CityLIFT Lender!
The CityLIFTSM program in Baltimore is designed to provide $15,000 in down payment assistance grants to new Baltimore homebuyers and homebuyer education programs in areas most impacted by the financial crisis. This is a “soft second” mortgage that is forgiven over a 5 year period.
- No First-Time Homebuyer Requirement
- Can use in conjunction with CDA loans and grant programs
- Can use in conjunction with one other city-based program
STUART EPSTEIN - 410.491.0200
*Rates and program details are subject to change.
Wednesday, January 2, 2013
The Return of the Housing Market – This Time It’s for Real!
In the past five years the state of our nation’s economy has been tumultuous, to say the least. Everyone – from politicians to financial experts – has their own views on which economic indicators are the most accurate for determining true growth.
Of course the housing market is one of the top indicators mentioned, along with the bubble that burst several years ago, and almost doomed the nation to another depression.
But lately, this market is showing real signs of growth – not the kind of rapid expansion that leads to bubbles, but dependable, measurable progress that benefits the economy, and more importantly, people looking to purchase homes.
The Commerce Department recently released numbers in October that indicate builders broke ground on homes at a rate of 894,000. That’s a 3.6% increase from September!
While it’s definitely a great start, delving deeper into another indicator brings even more good news. That indicator is the cost to rent a house and the cost to purchase one.
The price to rent a house and buy one should rise at the same rate over an extended period of time, but when rents rise faster than home prices, it’s a strong sign that the housing market is picking up steam.
Rising rents shows that people realize that the money they’re paying for rent could be used to pay a mortgage. Owning a property is always a smart investment, and because it’s a long-term commitment buyers usually feel secure in the stability of their job and the national economy.
Housing markets across the country are already showing an improved comeback, and unlike other events in the past, it’s a steady growth. This is much better than a bubble because bubbles – as we all know – burst.
Taking a look closer to home shows that the same phenomena in nationwide markets are also true in our area. The growth has been stable, and as new homes are built and purchased, the positive ripple is felt throughout the economy.
Now that we’ve established the housing market is beginning to show signs of growth, it’s worth looking at what purchasing a new house can bring to a person’s overall financial situation.
Of course, purchasing a house is an investment, but remember it’s an investment that will increase in value over the years. Even better, it’s an asset that pays immediate dividends in terms of a place to live and raise a family.
Local homebuilders are already breaking ground on new homes, and that means the inventory is expanding. This provides potential buyers with many opportunities, including the option of having a home designed and built specifically for you.
Whether you’re purchasing an existing home, or looking at new developments, you need a lender that provides excellent financial packages with competitive rates and dependable, accurate insight into the housing market.
Of course the housing market is one of the top indicators mentioned, along with the bubble that burst several years ago, and almost doomed the nation to another depression.
But lately, this market is showing real signs of growth – not the kind of rapid expansion that leads to bubbles, but dependable, measurable progress that benefits the economy, and more importantly, people looking to purchase homes.
The Commerce Department recently released numbers in October that indicate builders broke ground on homes at a rate of 894,000. That’s a 3.6% increase from September!
While it’s definitely a great start, delving deeper into another indicator brings even more good news. That indicator is the cost to rent a house and the cost to purchase one.
The price to rent a house and buy one should rise at the same rate over an extended period of time, but when rents rise faster than home prices, it’s a strong sign that the housing market is picking up steam.
Rising rents shows that people realize that the money they’re paying for rent could be used to pay a mortgage. Owning a property is always a smart investment, and because it’s a long-term commitment buyers usually feel secure in the stability of their job and the national economy.
Housing markets across the country are already showing an improved comeback, and unlike other events in the past, it’s a steady growth. This is much better than a bubble because bubbles – as we all know – burst.
Taking a look closer to home shows that the same phenomena in nationwide markets are also true in our area. The growth has been stable, and as new homes are built and purchased, the positive ripple is felt throughout the economy.
Now that we’ve established the housing market is beginning to show signs of growth, it’s worth looking at what purchasing a new house can bring to a person’s overall financial situation.
Of course, purchasing a house is an investment, but remember it’s an investment that will increase in value over the years. Even better, it’s an asset that pays immediate dividends in terms of a place to live and raise a family.
Local homebuilders are already breaking ground on new homes, and that means the inventory is expanding. This provides potential buyers with many opportunities, including the option of having a home designed and built specifically for you.
Whether you’re purchasing an existing home, or looking at new developments, you need a lender that provides excellent financial packages with competitive rates and dependable, accurate insight into the housing market.
Subscribe to:
Posts (Atom)