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Maryland Mortgage Rate Update
Maryland home foreclosures and rising mortgage rates restricted fixed rate refinancing until breakthrough refinance was introduced. FHA home mortgage loans will be the popular loan in 2008 and 2009 because it allows borrowers with bad credit another opportunity to refinance into an affordable payment with a fixed interest rate. The Senate recently passed laws enabling FHA loan limits to be increased to $417,000 and this will help thousands of Maryland homeowners qualify to refinance, when previously their loan amounts exceeded FHA loan guidelines.
By Evelyn Hall |
Maryland home foreclosures have posted triple-digit increases over last year, pushing the state into the top 20 for home foreclosures, according to RealtyTrac, a California-based company that compiles foreclosure data across the country. In 2006, Maryland ranked 41st in the country for foreclosures. This year, it ranks 16th.
In August alone, home foreclosures in Maryland increased more than 750% over August 2006. Currently, RealtyTrac lists more than 10,000 foreclosed properties throughout the state. Thousands more teeter on the verge of loan default.
With its proximity to Washington, DC and many business and military centers in Virginia, Maryland's housing market has historically done well overall. But even in areas like Baltimore, Annapolis, Frederick, Rockville and Hagerstown, the sub-prime mortgage crisis is hitting home.
- Fixed Rate Refinancing for Bad Credit
- Cash Out Refinance Loans to 95%
- Foreclosure Bail Out Loans to 70%
- Hard Money Refinancing to 70%
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Homeowners who bought their houses just a year ago using risky mortgage products negative amortization loans, adjustable rate (ARMs) or interest-only loans now face escalating loan payments and decreasing property values. Across the country, high-risk, no-equity loans put borrowers into expensive homes they probably couldn't have afforded with a conventional mortgage.
Now, the initial low-rate "teaser" terms have ended on many high-risk mortgages and borrowers are finding themselves unable to make mortgage payments at the new higher rates. Some homeowners may see their monthly payment increase $1,000 or more. Faced with unmanageable increases, homeowners have few options: refinance for a better fixed rate, sell and possibly take a loss or default and suffer years of bad credit as a result.
Adjustable rate mortgage payments combined with decreasing home equity and tighter mortgage lending guidelines are making it difficult for many borrowers to find good refinancing deals. Many don't qualify for home equity loans or lines of credit because their first loans were interest-only or 100% financing. Sub-prime mortgage lenders going out of business and traditional lenders going bankrupt have further tightened the market for distressed homeowners seeking to replace their high-interest flexible rate mortgages with lower-rate fixed mortgages.
Many borrowers may have been misled by lenders eager to make a quick buck regardless of the borrower's long-term ability to pay. Many more, however, knew the risks of their flexible rate mortgages but gambled that home values would continue to rise or that their own financial situations would improve by the time the rates inflated.
In Maryland, as in many other regions across the country, those homeowners are now feeling the pain of their gamble.
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