If you have been awake at all during the past month, you have heard about the meltdown of the subprime mortgage industry. Homeowners defaulting on loans, lenders closing their doors and the press sensationalizing the entire affair – it’s the makings of a soap opera. The sad part is that it’s not a TV show, and real families have been hurt.

Three parties are involved in a subprime, or nonconventional, loan:

1. A borrower who does not qualify for a mainstream loan, most often because he or she has credit issues
2. A lender willing to fund a loan to the at-risk borrower
3. A mortgage broker who brings the borrower and lender together

• If it’s not prime, it’s subprime.
  Subprime loans are rarely called subprime because the word has such negative connotations. You may hear them referred to as nonconventional loans or something else. When talking to your mortgage broker, ask if you qualify for a conventional loan first. If you don’t, you’ll end up considering a subprime, or nonconventional program.
• Know your risks.
  Discuss all the risks associated with a subprime loan before you commit to one. The most popular version is a 2/28 ARM, where your rate is low for the first two years but can jump drastically after that time period. These loans are great for borrowers who need to get their credit in line or who may anticipate a significant income jump within the near future.
• Remember all of your other expenses.
  Your mortgage is just one of the many things that falls under home expenses. One reason many borrowers have gotten into trouble is that they have underestimated the cost of electricity, fuel and other utilities as well as the cost of maintaining general upkeep on a home.
• Check your credit.
  If you know you will be in the market for a new mortgage by either buying or refinancing a home, do what it takes to get your credit in shape. Get a copy of your credit report well in advance of starting the process and then correct any errors, address any problems and do what it takes to raise your score. You may not even need a subprime loan in the end.
• Be realistic about your earnings potential.
  Low-income or poor-credit borrowers are not the only ones who have gotten into trouble with subprime loans. Many individuals have simply bought homes with mortgages they thought they could “grow into” as their income increased. While it’s always wise to consider your long-term earnings potential when buying or refinancing, understand that layoffs, illness and other surprises are part of life.
• Be skeptical.
  If it sounds too good to be true, it is! Like almost every industry around, the mortgage industry has its share of creeps who will prey on the most vulnerable in an effort to make a buck. Take the time to build a relationship with a mortgage broker, realtor and attorney who you can trust to look out for you and steer you away from programs that carry risky terms.

David Wade and I are getting to be buddies now, as he invited me to speak again on the Fox25 news about the Massachusetts market. Here's a look at our most recent chat!

The Grandeur of Your Garage

Is your garage a nightmare mess of gardening tools, sporting equipment, shovels and sleds, bikes and balls? Can you even fit your car inside? If you’re ready to turn your garage into a more manageable – maybe even an attractive – space, check out these suggestions.

• Think about how you would like to use your garage. Storage? Laundry room? Home gym or office? Maybe just to house your car? You have a lot of options.
• Start by getting everything off the floor and thinking “up.” Use the walls and rafters for storage to free up floor space.
• Take advantage of inexpensive shelving, pegboards, cabinets and overhead hooks to store your goods.
• Once the floor is clear, give it new life with a robust cleaning, stain removal and a coat of epoxy paint.
• Maximize lighting and install new electrical outlets or new windows if you want a brighter space.
• If you will be using your space year round, finish and insulate the walls for maximum comfort.
• Remember to get all necessary permits for work you have done on your garage.

Click here to read my “Mortgage Minute” in ForeclosuresMass.com's monthly newsletter. This month’s column: “Exercising Your Right To Rescind.”

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