No points, closing costs could mean higher rate

REAL ESTAATE MAILBAG

August 14, 1994|By MICHAEL GISRIEL

Q: I am currently negotiating to buy a house. I've noticed that some mortgage lenders are advertising mortgages with "no points, no closing costs." How is this possible? Is there something that needs to be put in my purchase contract that would qualify me for these mortgages?

* Ernestine Jones, Baltimore

A: Any mortgage lender can, and many do, offer a variation of the "no points, no closing costs" mortgage. Here's how it usually works:

The purchase contract with the seller of the house must first be negotiated so the seller will be paying all the transfer taxes, documentary stamps, and loan points, if any. The other normal closing costs and fees are paid for by the lender -- which charges a slightly higher interest rate to make up for the closing costs.

This arrangement is used every day by many lenders to help meet the needs of both buyers and sellers.

Is the borrower getting something for nothing? No. In some cases, the borrower might even be paying more. These no-cost mortgages may not work for everyone, but they are available.

Q: I am the owner of several ground rents in Baltimore City. How far back can I go to obtain unpaid ground rent. Also, when the homeowner does not pay the rent on time, what legal rights do I have? What is the Maryland law that governs this area?

) Alan F. Walsch, Salisbury

A: Under Section 8-111 of the Real Property Article of the Maryland Annotated Code, a ground rent owner is entitled to demand and recover up to three years' back rent but with no additional interest or late charges.

Further, under Section 8-107 of the same article, if a demand for payment of ground rent is not made for 20 consecutive years to the homeowner, then the ground rent is presumed to be extinguished and of no further effect.

If the ground rent payment is more than six months in arrears, then the ground rent owner may file suit to take title to the house. However, the owner of the house has a right to pay the ground rent and the ground owner's expenses and keep title to (( the house up until the time a forfeiture decree is signed by a judge.

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