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Mortgage 2e » (REV)
Authors: Johnson
ISBN-13: 9780471223276, ISBN-10: 0471223271
Format: Paperback
Publisher: Wiley, John & Sons, Incorporated
Date Published: July 2002
Edition: REV
Author Biography: Johnson
RANDY JOHNSON is President of Independence Mortgage Company and has personally originated over $600 million in residential loans. He is also the author of How to Find a Home and Get a Mortgage on the Internet, available from Wiley. Visit his Web site at www.loan-wolf.com.
Book Synopsis
Find The Home Mortgage That’s Right For You
Finding the right mortgage can be complex, confusing, and frustrating. But that doesn’t mean you have to settle for anything other than the terms you want. This indispensable and newly updated second edition of How to Save Thousands of Dollars on Your Home Mortgage spells out everything mortgage hunters need to know in clear and accessible terms. It covers more loan alternatives than any other book and examines the importance of discount points. It offers complete details on virtually every mortgage option currently available, what advantages each option offers, how to choose the right one for your needs, and how to save money in the process. New information in this edition will help you use the Internet to find a home and get a mortgage, examine automated underwriting models and conforming loan limits, and weigh new shopping strategies. Easy-to-read charts and graphs, helpful sample forms, and numerous examples will help you understand:
- First-time buyers programs
- APR, buy-downs, reverse mortgages, accelerated payoffs, and zero point loans
- Refinancing strategies
- Closing costs, lender fees, and other expenses
- How to dispute credit report errors and fix credit problems
- How to use the Internet for loan analysis
Table of Contents
| Foreword | ix | |
| Introduction | xi | |
| Part 1 | Background | |
| 1 | The Structure of the Mortgage Industry | 3 |
| Key Points | 3 | |
| Why the Mortgage Market Is Different | 4 | |
| Rise of the Secondary Market | 5 | |
| Loan Servicing | 6 | |
| Where the Money Comes From | 7 | |
| Credit Enhancements | 9 | |
| Conclusion | 10 | |
| 2 | How Lenders Influence Borrowers' Choices | 12 |
| Key Points | 12 | |
| How We Get Information | 12 | |
| Controlling Your Access to Information | 14 | |
| Conclusion | 15 | |
| 3 | How Lenders Market Loans | 16 |
| Key Points | 16 | |
| A Rose by Any Other Name ... | 16 | |
| Mind Games | 17 | |
| Telemarketing and Direct Response Marketing | 20 | |
| The Future of Marketing in the Mortgage Industry | 21 | |
| 4 | How to Choose the Right Loan | 23 |
| Key Points | 23 | |
| Goal Orientation | 23 | |
| Fitting the Loan into an Overall Financial Plan | 24 | |
| Loans Are Sold, Not Bought | 25 | |
| Types of Loans | 25 | |
| The Price of Money Plus the Price of Insurance | 26 | |
| The Yield Curve | 27 | |
| Fixed Rate versus Adjustable Rate | 29 | |
| Real Risk versus Perceived Risk | 30 | |
| Individual Case Histories | 33 | |
| Loan-Term Worksheet | 40 | |
| 5 | For First-Time Homebuyers | 44 |
| Key Points | 44 | |
| Programs, Programs, Programs | 45 | |
| Qualifying Issues | 47 | |
| 100 Percent LTV Loans | 51 | |
| Preapproval | 52 | |
| Summary | 52 | |
| 6 | The Lowdown on ARMs | 53 |
| Key Points | 53 | |
| How Important Are ARMs? | 53 | |
| ARM Terminology | 55 | |
| The Indexes | 60 | |
| Assumability of ARMs | 65 | |
| Comparing ARMs | 65 | |
| Part 2 | Choosing a Lender and Getting Approved | |
| 7 | Qualifying 101 | 71 |
| Key Points | 71 | |
| Overview | 71 | |
| Employment and Income Stability | 72 | |
| The Qualifying Model | 74 | |
| Setting Standards | 81 | |
| FHA and VA | 82 | |
| Summary | 84 | |
| 8 | Credit | 85 |
| Key Points | 85 | |
| What's in the Report? | 86 | |
| Credit-Scoring Systems | 89 | |
| Credit Problems | 92 | |
| Hints on Repairing Credit | 94 | |
| Taking on the System | 96 | |
| Maintaining Good Credit | 101 | |
| Credit-Repair Agencies | 104 | |
| 9 | Bank, S&L, or Broker? | 106 |
| Key Points | 106 | |
| Independent Broker versus Employee Loan Rep | 107 | |
| An Important Economic Principle | 108 | |
| The Denial Rate | 109 | |
| Bad-Apple Brokers | 110 | |
| Credit Unions | 111 | |
| Warning about Call Centers, Telemarketing, and Direct Mail Advertisers | 111 | |
| Summary | 112 | |
| 10 | Shopping for a Loan and Negotiating with a Lender | 114 |
| Key Points | 114 | |
| The American Shopping Mentality | 115 | |
| A Better Method | 117 | |
| Selecting a Competent Loan Rep | 122 | |
| How to Find a Good Rep | 124 | |
| How to Negotiate | 127 | |
| Filling in the Blanks: Forms and Applications | 131 | |
| Locking In Your Loan | 132 | |
| The Value of Timing | 134 | |
| Relationships with Real Estate Agents | 136 | |
| 11 | APR, Buy-Downs, and Discount Points | 139 |
| Key Points | 139 | |
| Truth or Consequences | 140 | |
| APR and Adjustable Rate Mortgages | 144 | |
| Understanding Rate-versus-Fee Alternatives | 144 | |
| Rates versus Fees on ARMs | 150 | |
| 12 | What to Do When You Run into a Problem | 152 |
| Qualifying Problems | 153 | |
| Down Payment Problems | 154 | |
| Employee Transfers | 155 | |
| Credit Problems | 156 | |
| Appraisal Problems | 156 | |
| Other Problems: Bugs and Rugs | 158 | |
| Conclusion | 159 | |
| Part 3 | Locking and Closing | |
| 13 | How Lenders Can Cheat Their Customers | 163 |
| Key Points | 163 | |
| Whom Do You Trust? | 164 | |
| Lenders Profit at Your Expense | 166 | |
| Regulator Protection | 169 | |
| Servicing Released Fees and Yield-Spread Premiums | 170 | |
| Institutionalized Cheating | 172 | |
| Conclusion | 175 | |
| 14 | Closing Costs, Lender Fees, and Other Fees | 176 |
| Key Point | 176 | |
| Legitimate Fees | 177 | |
| Garbage Fees | 181 | |
| Other Settlement Items | 182 | |
| Conclusion | 184 | |
| Part 4 | Advanced Topics | |
| 15 | Qualifying 201 | 187 |
| Key Points | 187 | |
| Self-Employed Borrowers | 187 | |
| Variable Income | 188 | |
| Other Exceptional Qualifying Situations | 191 | |
| EZ Qualifier and Stated-Income Loans | 195 | |
| Not So Easy | 196 | |
| Conclusion | 197 | |
| 16 | Refinancing | 200 |
| Key Points | 200 | |
| Should You Consider a Refinance? | 201 | |
| The Refinance Trap | 204 | |
| Refinancing Examples | 207 | |
| Other Refinancing Information | 212 | |
| Conclusion | 214 | |
| 17 | Fifteen-Year Loans and Accelerated Payoffs | 215 |
| Key Points | 215 | |
| A Mortgage Is a Tool | 216 | |
| Benefits of a 15-Year Loan | 217 | |
| Alternative Rapid Amortization Programs | 221 | |
| Summary | 223 | |
| 18 | Equity Lines, Seconds, and Reverse Mortgages | 224 |
| Key Points | 224 | |
| The Advent of Equity-Line Loans | 225 | |
| Traditional Second Trust Deeds | 229 | |
| High Loan-to-Value Equity Lines and Seconds | 230 | |
| Tax Restrictions | 231 | |
| Piggyback Loans | 232 | |
| The Reverse Mortgage | 234 | |
| Conclusion | 236 | |
| 19 | No-Cost and Zero-Point Loans | 237 |
| Key Points | 237 | |
| How Zero-Point Loans Are Marketed | 237 | |
| Borrower Beware! | 238 | |
| Flipping | 241 | |
| Prepayment Penalties | 243 | |
| Should You Ever Consider a Zero-Point Loan? | 244 | |
| Conclusion | 246 | |
| 20 | Technology: The Internet and Software | 247 |
| Key Points | 247 | |
| Background | 248 | |
| The Mortgage Industry On-Line | 249 | |
| How Internet Lending Started and How It Is Working Out | 249 | |
| A Business Model | 250 | |
| The Promise for Consumers | 251 | |
| Websites | 252 | |
| Search Engines | 256 | |
| Actually Funding a Loan from an Internet Lender | 256 | |
| The Future of the Mortgage Industry On-Line | 257 | |
| Computers and the Mortgage Business | 259 | |
| A Real-Life Example | 260 | |
| Other Resources | 261 | |
| Putting It into Practice | 262 | |
| Conclusion | 263 | |
| 21 | Epilogue: On the Need for Reform and Other Thoughts | 264 |
| Forms, More Forms, and Reforms | 264 | |
| Recommendations | 266 | |
| What Is Really Important? | 268 | |
| Historical Interest Rates | 268 | |
| Conclusion | 270 | |
| Appendix | 271 | |
| Glossary | 275 | |
| Index | 285 |
Subjects
Business Books
Personal Finance & Investing Personal Credit & Loans
Business Books Real Estate Mortgage Guides & Tables
Personal Finance & Investing Personal Credit & LoansBusiness Books
Real Estate Mortgage Guides & Tables