Sensing an opportunity to capture a share of the eager first-time homebuyer market, some Baltimore-area banks, including Carrollton Bank of Baltimore and Maryland National Bank, are launching or expanding discount mortgage programs for low- or middle-income buyers.
"The economy has really been down in the last couple of years, and there are a lot of families and individuals who are close to being able to purchase their first home but need help getting over the financial hump," said Bud Kretzschmar, director of marketing for Carrollton, which just unveiled its First Time Home Buyer Mortgage Program.
Maryland National is also advancing aggressively on the first-time market through the bank's community development department.
On April 6, it will launch its Home Ownership Made Easy program, better known as "HOME," for first-time buyers in Anne Arundel County. The bank already has started similar pro
grams in Baltimore and in Prince George's and Baltimore counties.
"HOME isn't just designed to get someone to own a home," said Vickie Tassan. She said the program also arranges for both pre-purchase and post-purchase counseling for homebuyers that helps them manage their finances and debts after the purchase.
"Everybody would like to own a home and this eliminates some of the hurdles for first-time buyers," said Ms. Tassan, noting that final details have yet to be worked out.
Carrollton Bank has committed $1 million to its program, said S. D. Miller, a senior vice president at the bank. He said a qualifying family's income can't exceed $30,000 and that the maximum loan is $60,000. But those eligible for the program will pay less mortgage interest and will be required to make a smaller down payment than other borrowers who take a standard Carrollton mortgage with a 25-year term.
Yesterday, for example, the typical Carrollton borrower would have paid 9.15 percent interest on the bank's standard 25-year mortgage, while a first-time buyer coming through the program would have paid 8.9 percent interest.
The regular mortgage customer would have paid 2.75 points to close the loan, while the first-timer would have paid 1 point. In addition, the first-time buyer would be required to put 10 percent down on the loan, compared with 20 percent for a regular customer. (A point is 1 percent of the mortgage amount.)
Mr. Kretzschmar said the bank is hopeful that the first-time homebuyer program will help the bank build market share and gain bank customers in many areas. "Hopefully, the mortgage customers will do their banking with us, including their checking accounts and savings accounts," he said.
Ms. Tassan said Maryland National's new Anne Arundel program also will provide financial benefits to homebuyers, including low down payments, below-market interest rates and low mortgage-origination fees. The household income ceiling for the Maryland National program is expected to be $43,500, she said.
Maryland National said details of the plan remain incomplete and asked that those interested in obtaining mortgages wait until nearer April 6, when the program begins.