Cover Story: Have you ever sat down and calculated the amount of money you spend on rent vs. what you could be saving as a homeowner? The numbers are staggering. If you are paying $1000 per month for an apartment and your rent increases 5% every year, then over the next five years you will pay your landlord $66,309! Whether it be renting an apartment or a house, you gain no equity by shelling out this monthly housing expense and you certainly won’t benefit when the property value goes up! However, if you were to purchase your own home, you would be well on your way toward building equity within that same five-year period. By choosing a fixed-rate loan program, you can have the comfort of knowing that your monthly mortgage payment will never go up. In fact, you would have the option of refinancing to a lower interest rate at some point in the future should interest rates drop, and this would cause your monthly mortgage commitment to go down. In addition to building equity, there are tax advantages that come into play with home ownership. Depending on your tax bracket, owning a home is often less expensive than renting after taxes. Interest payments on a mortgage below $1 million are tax-deductible, and your mortgage consultant should help you evaluate the tax advantages of various loan scenarios, and share this information with your tax consultant to glean feedback on your behalf. The two primary mortgage types are fixed rate mortgages and adjustable rate mortgages (ARMS). The first step when shopping for a mortgage is determining which is right for you. With a fixed rate mortgage, your monthly payments will be steady. Although the amount of principal and interest paid each month will vary, the total payment remains the same which affords the homeowner stability from month to month. The main advantage of a fixed rate loan is protection from sudden increases in interest rates. The disadvantage to fixed rate loans comes at the time when interest rates are high because then qualifying for a loan is more difficult because payments are less affordable. In contrast, with an adjustable rate mortgage, your payments will vary over time due to a varied interest rate. The appeal to an ARM is that the interest rate is set below the market rate on a comparable fixed-rate loan. This initial interest rate remains constant for a fixed period of time, after which the interest rate adjusts at a pre-arranged frequency. The fixed rate period can vary anywhere from 1 month to 10 years with shorter adjustment periods usually carrying lower initial interest rates. The advantages to an ARM include lower monthly payments, flexibility in payment options which allow you extra money for personal savings such as a 401K plan, and the enjoyment of borrowing at a lower interest rate without the need to refinance. However, the disadvantage to an ARM is that your monthly payment may change often over the duration of the loan and if you have a larger loan and interest rates rise, your payment could also go up. Credit cards are the bane of many people’s financial existence. And if you haven’t kept up on the latest news, you might not be aware that credit card minimums are on the rise. Forty-three percent of us pay off our credit card balances in full every month. The rest of us don’t. So, take note, that minimum is likely to go up. Of course, in the long run, this is a good thing. The reason is that you’ll have a better shot at paying off your balance. Say you have a $10,000 balance with an annual interest rate of 30 percent. You’d owe 2.5 percent interest for the month…that’s $250. But if the minimum due is only 2 percent, you’d owe just $200, which is not enough to cover the $250 in interest. The extra $50 would be added to your balance. Welcome to the world of negative amortization. Consumers used to have a shot at chipping away at some of their principal balance when the average minimum payment was around 4%. But this was before sky-high penalty rates and universal default policies, which let the card issuer hike your rate if your credit score goes down due to your relationship with another lender entirely. To find out when minimum payments on your accounts will go up, check your mail and read your statements closely. Issuers must give cardholders at least 5 days’ notice before changing the terms of their card agreements. Even though paying a higher minimum may be painful in the near term, it will be a relief in the long run. Credit remediation is a subject consumers often face with fear and trepidation. This is understandable considering most home shoppers know very little about the whole credit scoring process. Sub-prime borrowers are apt to find themselves at a loss when trying to find ways to upgrade their credit history. The good news is there are ways to improve less-than-perfect credit scores and obtain a loan for the home you really desire. The first step is making sure you have a current copy of your credit report which you may now receive free annually due to the amended Fair Credit Reporting Act. Since entries may vary across bureaus, request a report from each of the three major credit bureaus, Equifax, Experian and Transunion. It’s also important to know what your credit score is. Most A-Paper scores generally begin around 680, but don’t despair if you come up shy because there is always room for improvement. Increasing your score just 5 points can save you a significant amount of money. If credit repair is what you need, Marathon Mortgage Solutions is here to assist you. With an experienced credit counselor on hand, we can help severe or complicated credit issues. Marathon Mortgage breaks through the credit scoring myths and helps heal the negative effects of credit delinquency. Our experienced loan officers can even help rid you of all your credit card debt. We have options that become your solutions. With real estate values soaring and interest rates staying low, it makes perfect sense for many homeowners to refinance or take out a home equity line of credit to pay off their credit card debt. The median home price in the US is now over $200,000 and real estate values have risen an average of over 12 percent nationwide this year. This means the average homeowner has gained $24,000 in home equity. And if this same homeowner has 2 credit cards with a balance of $10,000 each, under the new guidelines, the minimum payment would be $400 on each one totaling $800. By using the home equity in their home to pay off the debt, they’d lower their monthly expenses by at least $800, get rid of their high interest credit card debt, and the interest on the mortgage is tax deductible while the interest on the credit cards is not. Most times, a refinance loan can lower your monthly mortgage payments as well. There doesn’t seem to be a reason why NOT to wipe out your high interest credit card debt by using the equity in your home. Marathon Mortgage prides itself in its unparalleled customer service and professionalism. Among the many loan options we provide including 107% Financing, Jumbo Loans, Construction Loans, Cash Out, 40-Year Amortization Term and No Doc Loans, we are proud to announce our signature “Pick Your Payment”™ mortgage. If you’re self-employed or hold a commission only job with a fluctuating income, this may be your loan of choice. With the “Pick Your Payment”™ mortgage, you have four options to choose from: 1) Minimum Payment, 2) Interest Only Payment, 3) Full Principle & Interest Payment (based on a 30 yr. Mortgage) and 4) 15-Year Payment. This mortgage works off of the Cost of Savings Index (COSI) or the Monthly Treasury Average (MTA). These indexes are historically shown to be more stable than the more well known Prime Rate Index. Our “Pick Your Payment”™ program allows you extra cash flow for personal investments such as college, retirement and high interest credit cards. And as an added bonus, we provide a bi-monthly option which allows you to pay half your monthly payment once every 14 days increasing your total payments to only one more per year, but decreasing your overall mortgage by 7 years! At Marathon, we invest full dedication to our clients and train our staff to be the best in the industry. With hundreds of lenders to choose from, our mortgage specialists will not rest until they find the best solution for you. If building the home of your dreams is what you choose, Marathon can team you up with a builder best suited to fit your needs. As nationwide licensed mortgage specialists, we work for you and ensure a smooth experience from pre-qualification to closing. We are aware each person needs his or her own customized loan program and we make that possible. We understand the significance of this decision and will not take it lightly. We will treat you as we would want to be treated, with efficiency and respect, along with a tailored program just right for you! As president and owner of Marathon Mortgage Solutions, Inc., Tiffany Porter-Holtzman had never envisioned opening up a mortgage company until her entrepreneurial spirit clashed with a very personal, long and arduous home-buying process. It was then in the summer of 2001 that she dreamed up a company that would put homebuyer’s needs first. She used herself as an example and executed a plan of action. With interest rates going down and a strong real estate market, she knew her company would be based in her hometown of Pittsburgh, Pennsylvania. Her intention was never to reinvent the wheel, but just make it easier to use. The birth of Marathon Mortgage Solutions, Inc. came in April 2004. With such a young company, Tiffany knew she needed a collaboration of educated and experienced minds. With the help of her husband and co-owner, Kenneth Holtzman, she hired on a staff that holds more than 25 years of experience in the mortgage industry. Tiffany and her staff aim to please and share a very simple idea, put the customers’ needs first and make good things happen! Locally owned and operated, Marathon Mortgage Solutions is located at 2301 East Carson Street on Pittsburgh’s Historic South Side. (412) 572-5127. For more information on Marathon’s services, please visit our Web Site at www.marathonms.com and sign up for our monthly newsletter.