Maryland home equity loan
Out of a population of roughly 5 million in Maryland 67.7 % have their own homes and the rest live in rented homes. Average household income as computed in 1999 comes to $52,868 per annum. An average value of a home was estimated to be $146,000. Most of the people are living in their homes for more than 5 Years. Recently there has been an upward trend in the price of real estate. This has resulted in an enhanced equity in the homes. Now many more people have started qualifying for a bigger loan which can get for them a bigger house or money for home improvements or can pay off their old loans and make more money available to them for other purposes like education , vacation etc. These are possible by taking loans known as Maryland Home Equity Loans
The basis of this loan is that it allows you to borrow money against the value of home. If your home is worth $200,000 and the mortgage payments and other loans total to say $100,000 then you can qualify for up to $100,000 Maryland Home Equity Loan. But mere qualifying for this loan does not mean that it is good for you to go for it on the advice of a salesman working for some lender company. There seem to be plenty of such sales people in market today. Maryland Home Equity Loan is considered to be a dangerous loan and one should be very sure of repayments as this is the only type of loan where you stand a chance to loose your home, if you are unable to pay back due to some untoward happening like illness , accident etc.
To get an idea of the loans and the interest rates available the average for a 30 year loan is 5.98 %.A chart also gives the rates for different types of loans:
• 30 Year Fixed 6.00%
• 15 Year Fixed 5.71%
• 1/1 Arm 5.18%
• 3/1 Arm 5.66%
• 5/1 Arm 5.76%
Following is a list of some of the lender companies in Maryland. The chart gives the rates they are charging. One can easily get a rough idea from this as to what is available in market and this knowledge makes it possible for an individual not to be taken for a ride by some unscrupulous sales agent.
Company Rate APR Fees:
• Kurandamortgage.com 5.875% 5.974% $935
• Mortgage Capital 6.000% 6.083% $1,416
• Home Owners Mortgage 6.000% 6.023% $605
• LOWE'S MORTGAGE 5.875% 5.991% $1,608
• Achieva Home Loans 6.125% 6.205% $1,268
• Annapolis First Mortgage 6.000% 6.083% $1,725
• VirtualBank 6.125% 6.149% $761
• Granger Mortgage Company 5.875% 5.988% $1,492
• HomeLoanQuotes.com 6.250% 6.326% $951
• East Coast Financial Corp. 5.875% 5.927% $372
• Worldwide Financial Resources 6.125% 6.165% $730
Mortgage rates depend upon the Wall street securities rates. A borrower should keep abreast of the interest rate movements and should watch
1. Todays rates
2. 30 Day rate trends
Both are generally available on net in the form of graph etc.If care is taken on this side a good amount of money can be saved. These are long term loans and hence even a small difference does a lot of saving. A tool generally used to compare different types of loans is Annual Percentage Rate (APR ). It is required by law for the lending companies to disclose this rate. With this rate the true cost of loan to the borrower is expressed and shows the fees and other costs which normally can be hidden.
Points and fees:
Points are a fee that is decided by the lender for choosing the rate of interest. Each point is normally 1 % of the loan amount. As an example in one of the deals the rates offered were
• 3.25 points for 7.5 %
• 0 points for 8.25 %
• +2.25 for 9 %
This means that if an interest of 8.25 % is accepted by the borrower then there is no fee and if he chooses 3.25 points then his interest will be fixed at 7.5% but at the start of loan he will have to pay 3.25%of total loan amount this means if he takes a loan of $100000 then in start he will pay $3250 extra. The third possibility is in case he agrees to 9% loan then the company will give $2250 to him and will adjust this against all fees to be paid by him in start. This type of loan is called no cost loan
Local newspapers normally carry information about these deals and must be read before any deal is finalized.
Some of the fees attachd to home equity loans are as follows :
1.Loan origination fee
2.Underwriting fees
3.Broker fees
4.Transaction, settlement, and closing costs
5.application fee
6.appraisal fee
Some fees are paid at the start of the loan and some others at the end. It is very important to know exact estimate of all fees. A clear written statement by the lender at the start of the deal is a thing all borrowers must ask for. Without this lot of confusion can arise in end. There have been cases where a 15 year loan was carried on for 18 years on some pretext or other. These are termed as balloon payments and one should be very careful about them throughout the loan period and checking should be done every now and then.
The three day rule:
To safeguard against any fraudulent practice the govt. gives you a chance to get the whole deal scrutinized by an expert if you have not done it already. It is a legal right of a customer to walk away from the deal if anything is found wrong with the postulates of the documents just signed and finalized. The lender is to be informed in writing within 3 days.The holidays and Sundays are not included. The lender must cancel its security interest and return all fees including the application and appraisal fee that was paid to open the account in case the deal is called off.
Conclusion:
Maryland Home Equity Loan is a very useful loan if properly handled. If this is utilized for home improvements then it increases the price of home still further. But one should never forget that home loans are dangerous loans and adequate precautions are necessary before going for them.
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