Equity is created when the value of your home increases and/or when you reduce the amount you owe on your home through your loan payments. If your home does not increase in value and you make interest-only payments, you are not building equity. This may make it harder to refinance your mortgage. If the amount you owe on your home, along with the costs associated with selling it (such as the real estate sales commissions and closing costs) exceeds the sales price, you will not receive any cash when you sell, and will have to pay additional funds to your lender or to other parties when you pay off your mortgage.
These are fees that the borrower will incur if the mortgage is fully paid during a “prepayment penalty period.” 1st Mariner Mortgage products do not include provisions for such penalties. Most mortgages let you make additional principal payments with your monthly payment—this is not “prepayment” of the entire loan, and there usually is no penalty for these extra principal payments.
No Doc/Low Doc Loans
Lenders often charge more for “reduced documentation” loans due to increased risk. These loans typically have higher interest rates or other costs compared to “full documentation” loans that require full verification of income and assets. By verifying income and assets, the lender ensures affordable loan payments. 1st Mariner currently does not offer No Doc/Low Doc loans.
Your payments may increase greatly—perhaps even double—after an interest-only period or when payments adjust. We will advise consumers of potential increases in payment obligations, including circumstances in which interest rates or negative amortization reach a contractual limit. For example, our product descriptions may state the maximum monthly payment a consumer would be required to pay under a hypothetical loan example once amortizing payments are required and the interest rate cap has been reached. Such information may also describe when structural payment changes will occur (e.g., when introductory rates expire, or when amortizing payments are required) and what the new payment amount would be or how it would be calculated. Finally, these descriptions could indicate that a higher payment may be required at other points in time due to factors such as negative amortization or increases in the interest rate index.
On negative amortization loans, your monthly payments may not cover all of the interest due. When that happens, the unpaid interest is added to your mortgage balance, so that you would owe more on your mortgage than you originally borrowed. 1st Mariner currently does not offer loans that have a negative amortization feature.
Balloon Payment Feature
Some mortgages offer lower interest rates and payments for a specified period of time, generally three to ten years. After that period, the full balance of the loan is due. Very few people are able to pay off their mortgage balance all at once. For this reason, borrowers usually refinance at or before the date the balloon payment is due. If you qualify, sometimes the loan can be converted into a fully amortizing loan at that time. This type of loan may be appropriate for someone who plans to sell his or her home before the date the balloon payment is due. Falling real estate prices and increasing rates can affect a borrower’s ability to refinance or otherwise pay off the balance.
The following amounts may be included in your monthly payment for the future disbursement of items such as, but not limited to, homeowner’s insurance, flood insurance, mortgage insurance and property taxes. On loans where monthly escrows are not collected, please be aware that the borrower is responsible for all tax and insurance payments. These costs can be substantial and need to be planned for in your budgeting process. When considering a mortgage loan, please ask about the escrow requirements.
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Find out how 1st Mariner Mortgage can help you with your residential mortgage. If you are interested in a VA loan, contact our VA loan specialists to learn more today. Our representatives are ready to assist you.