Mortgage Confidential: What You Need to Know That Your Lender Won't Tell You
Anyone who wants to get the best deal when financing a home needs to be armed with a little insider advice. The second edition of Mortgage Confidential lets readers in on what lenders really look for before they approve a loan, options they won’t often divulge, which costs they have control over, and little-known sources of down payment money. Including up-to-the-minute information on new licensing and disclosure rules and the latest eligibility requirements, the book shows readers how to:\...
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Now that you’re looking for a mortgage, don’t you wish you had a little insider’s advice? The ultimate guide to getting the best deal on mortgages, Mortgage Confidential lets you in on all the secrets of this complicated process. Completely updated with all-new, up-to-the-minute information on new licensing and disclosure rules and the latest eligibility requirements, the second edition gives you the confidence and information you need to successfully:complete the loan application to maximize your chances of approval • qualify for the lowest rates • avoid origination charges • steer clear of credit repair scams • pay zero closing costs • identify a “rip-off” loan program • determine whether paying “points” can save you money • refinance—even if your equity has dropped • and more!You’ll find out what lenders really look for before they approve a loan, options they won’t often divulge, which costs they have control over, and little-known sources of down payment money.When it comes to financing a home, there’s nothing like having a friend in the business. This comprehensive, easy-to-understand guide lets you in on all the confidential information you need to get the best mortgage for you.PRAISE FOR DAVID REED’S MORTGAGES 101:“Reed follows the question-and-answer format and covers just about every issue that can come up, from how much to put down to the various types of mortgages available. Perhaps the best thing Mr. Reed does is explain, simply, how banks determine your creditworthiness.” — New York Times “On my scale of 1 to 10, this outstanding home-mortgage book rates an off-the-chart 12.” — Robert J. Bruss, Inman News Service PRAISE FOR THE FIRST EDITION OF MORTGAGE CONFIDENTIAL:“This consumer-oriented book is easy to understand, but, more important, it includes mortgage secrets not revealed elsewhere.” — Los Angeles Times“Reed breaks down the lingo of the industry and provides good unbiased information that will help you ask the right questions and avoid getting snookered. If you don’t want to be like a third of homeowners who don’t know what type of loan they have, get this book.” — Michelle Singletary, Washington Post, nationally syndicated columnistDAVID REED is the author of several books, including Mortgages 101. As a senior loan officer, he has closed more than 2,000 mortgage loans. He is a columnist for Realty Times and a member of the Mortgage Speakers Bureau.
Introduction\ The mortgage process is extremely confusing. Besides the fact that there\ are lots of terms bandied about that are not used anywhere other than in\ home loans, there are so darned many people involved in the transaction.\ And these people have their own vocabulary. If you don’t know what\ they’re talking about, you are more susceptible to falling for things like:\ Misleading marketing\ Incomparable rate quotes\ Bait-and-switch tactics\ This is not to say that all lenders are crooks. Nor are all loan officers\ out to get you. Far from it. It’s just that because the mortgage process is\ so bewildering and can happen so quickly, it’s hard to catch up, much\ less understand the entire process. Loans can be very complicated—so\ complicated, in fact, that even the loan officers who are explaining them\ to you don’t always fully understand them.\ The average loan officer might close 80 loans per year. That’s a lot.\ But you might buy only two or three houses in your entire lifetime. That\ means that your loan officer does on a routine basis what you do on very,\ very rare occasions.\ That’s no different from other occupations. Anyone can have a\ unique specialty or trade. Certainly doctors and lawyers have their own\ protocols, terminology, and business practices. And so do mechanics.\ And artists. And plumbers. In business life, everyone has something\ that’s unique to her industry.\ The difference is that while a mistake with a gardener might cost you\ fifty bucks for a new rosebush, a mistake on an interest rate could cost\ you thousands of dollars. Or qualifying for the wrong mortgage loan could\ mean that you’re in over your head, which could cost you your home. You\ can get a new rosebush. You can’t erase a foreclosure, and it’s difficult to\ erase a bad mistake when it comes to a mortgage loan. That’s why you\ need to know insider information—to protect yourself from costly mistakes\ and unethical loan officers.\ Go to any bookstore and peruse the books on mortgages. How many\ of them were written by loan officers? Five? Two? One? Most home loan\ books are written by columnists or authors who have never filled out a\ home loan application other than their own.\ They haven’t compared rate sheets from one lender to the next. Or\ sat down and objectively compared one loan program with another at the\ behest of a new loan applicant.\ I have. Not only do I write regular columns about home loans, but I\ have written several books specifically about mortgages. Mortgage Confidential\ now unveils information that consumers do not commonly know\ so that they can decide what’s right for them. Not only that, but Mortgage\ Confidential also pulls back the curtain on various loan officer practices\ that only the trained eye can identify.\ I’ve seen almost every situation imaginable. I’ve seen people attempt\ to commit loan fraud—consumers and loan officers alike. I’ve watched\ the interest-rate markets shake, rattle, and roll through various rate hikes\ and rate cuts.\ Every so often I’ll read a mortgage column in a popular newspaper or\ go online and look at what other people are writing about home loans.\ Now and then I’ll read something and yell out loud, ‘‘That’s wrong! You\ don’t know what you’re talking about!’’\ The thing about reading something that’s been printed, whether it be\ in a newspaper column, in a magazine, or in a book, is that the reader\ automatically assumes that what has been printed is correct. That’s not\ the case. And that’s why those who aren’t in the mortgage industry or\ those who just comment about it leave themselves open to error.\ There are a lot of assumptions about mortgage financing that have\ reached urban myth status.\ Don’t refinance your loan unless the rate is 2 percent below your\ current one. Wrong.\ You need perfect credit to get a mortgage. Wrong.\ You can’t get a loan until your bankruptcy is seven years old. Wrong.\ You can’t get a loan until your bankruptcy is two years old. Wrong\ again.\ You need 20 percent down to get a mortgage. Wrong.\ The Fed controls your interest rate. Wrong.\ And on, and on, and on.\ This book will debunk all these myths and many more. Arm yourself\ with information, and you won’t get taken. Read on.
Contents Introduction....................1Chapter 1 Where Mortgage Loans Really Come From....................4Chapter 2 The Mortgage Loan Process....................36Chapter 3 Risk Elements....................59Chapter 4 Closing Costs....................77Chapter 5 Interest Rates....................97Chapter 6 Credit....................128Chapter 7 Loan Choices....................149Chapter 8 Refinancing....................169Chapter 9 Buying and Building New....................188Appendix Payment Tables....................205Glossary....................212Index....................225
