Cover image for How to save thousands of dollars on your home mortgage
Title:
How to save thousands of dollars on your home mortgage
Author:
Johnson, Randy, 1937-
Personal Author:
Edition:
Second edition.
Publication Information:
New York : Wiley, [2002]

©2002
Physical Description:
xiv, 290 pages : illustrations ; 23 cm
General Note:
Includes index.
Language:
English
ISBN:
9780471223276
Format :
Book

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Summary

Summary

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


Author Notes

Randy Johnson is President of Independence Mortgage Company


Table of Contents

Forewordp. ix
Introductionp. xi
Part 1 Background
1 The Structure of the Mortgage Industryp. 3
Key Pointsp. 3
Why the Mortgage Market Is Differentp. 4
Rise of the Secondary Marketp. 5
Loan Servicingp. 6
Where the Money Comes Fromp. 7
Credit Enhancementsp. 9
Conclusionp. 10
2 How Lenders Influence Borrowers' Choicesp. 12
Key Pointsp. 12
How We Get Informationp. 12
Controlling Your Access to Informationp. 14
Conclusionp. 15
3 How Lenders Market Loansp. 16
Key Pointsp. 16
A Rose by Any Other Name ...p. 16
Mind Gamesp. 17
Telemarketing and Direct Response Marketingp. 20
The Future of Marketing in the Mortgage Industryp. 21
4 How to Choose the Right Loanp. 23
Key Pointsp. 23
Goal Orientationp. 23
Fitting the Loan into an Overall Financial Planp. 24
Loans Are Sold, Not Boughtp. 25
Types of Loansp. 25
The Price of Money Plus the Price of Insurancep. 26
The Yield Curvep. 27
Fixed Rate versus Adjustable Ratep. 29
Real Risk versus Perceived Riskp. 30
Individual Case Historiesp. 33
Loan-Term Worksheetp. 40
5 For First-Time Homebuyersp. 44
Key Pointsp. 44
Programs, Programs, Programsp. 45
Qualifying Issuesp. 47
100 Percent LTV Loansp. 51
Preapprovalp. 52
Summaryp. 52
6 The Lowdown on ARMsp. 53
Key Pointsp. 53
How Important Are ARMs?p. 53
ARM Terminologyp. 55
The Indexesp. 60
Assumability of ARMsp. 65
Comparing ARMsp. 65
Part 2 Choosing a Lender and Getting Approved
7 Qualifying 101p. 71
Key Pointsp. 71
Overviewp. 71
Employment and Income Stabilityp. 72
The Qualifying Modelp. 74
Setting Standardsp. 81
FHA and VAp. 82
Summaryp. 84
8 Creditp. 85
Key Pointsp. 85
What's in the Report?p. 86
Credit-Scoring Systemsp. 89
Credit Problemsp. 92
Hints on Repairing Creditp. 94
Taking on the Systemp. 96
Maintaining Good Creditp. 101
Credit-Repair Agenciesp. 104
9 Bank, S&L, or Broker?p. 106
Key Pointsp. 106
Independent Broker versus Employee Loan Repp. 107
An Important Economic Principlep. 108
The Denial Ratep. 109
Bad-Apple Brokersp. 110
Credit Unionsp. 111
Warning about Call Centers, Telemarketing, and Direct Mail Advertisersp. 111
Summaryp. 112
10 Shopping for a Loan and Negotiating with a Lenderp. 114
Key Pointsp. 114
The American Shopping Mentalityp. 115
A Better Methodp. 117
Selecting a Competent Loan Repp. 122
How to Find a Good Repp. 124
How to Negotiatep. 127
Filling in the Blanks: Forms and Applicationsp. 131
Locking In Your Loanp. 132
The Value of Timingp. 134
Relationships with Real Estate Agentsp. 136
11 APR, Buy-Downs, and Discount Pointsp. 139
Key Pointsp. 139
Truth or Consequencesp. 140
APR and Adjustable Rate Mortgagesp. 144
Understanding Rate-versus-Fee Alternativesp. 144
Rates versus Fees on ARMsp. 150
12 What to Do When You Run into a Problemp. 152
Qualifying Problemsp. 153
Down Payment Problemsp. 154
Employee Transfersp. 155
Credit Problemsp. 156
Appraisal Problemsp. 156
Other Problems: Bugs and Rugsp. 158
Conclusionp. 159
Part 3 Locking and Closing
13 How Lenders Can Cheat Their Customersp. 163
Key Pointsp. 163
Whom Do You Trust?p. 164
Lenders Profit at Your Expensep. 166
Regulator Protectionp. 169
Servicing Released Fees and Yield-Spread Premiumsp. 170
Institutionalized Cheatingp. 172
Conclusionp. 175
14 Closing Costs, Lender Fees, and Other Feesp. 176
Key Pointp. 176
Legitimate Feesp. 177
Garbage Feesp. 181
Other Settlement Itemsp. 182
Conclusionp. 184
Part 4 Advanced Topics
15 Qualifying 201p. 187
Key Pointsp. 187
Self-Employed Borrowersp. 187
Variable Incomep. 188
Other Exceptional Qualifying Situationsp. 191
EZ Qualifier and Stated-Income Loansp. 195
Not So Easyp. 196
Conclusionp. 197
16 Refinancingp. 200
Key Pointsp. 200
Should You Consider a Refinance?p. 201
The Refinance Trapp. 204
Refinancing Examplesp. 207
Other Refinancing Informationp. 212
Conclusionp. 214
17 Fifteen-Year Loans and Accelerated Payoffsp. 215
Key Pointsp. 215
A Mortgage Is a Toolp. 216
Benefits of a 15-Year Loanp. 217
Alternative Rapid Amortization Programsp. 221
Summaryp. 223
18 Equity Lines, Seconds, and Reverse Mortgagesp. 224
Key Pointsp. 224
The Advent of Equity-Line Loansp. 225
Traditional Second Trust Deedsp. 229
High Loan-to-Value Equity Lines and Secondsp. 230
Tax Restrictionsp. 231
Piggyback Loansp. 232
The Reverse Mortgagep. 234
Conclusionp. 236
19 No-Cost and Zero-Point Loansp. 237
Key Pointsp. 237
How Zero-Point Loans Are Marketedp. 237
Borrower Beware!p. 238
Flippingp. 241
Prepayment Penaltiesp. 243
Should You Ever Consider a Zero-Point Loan?p. 244
Conclusionp. 246
20 Technology: The Internet and Softwarep. 247
Key Pointsp. 247
Backgroundp. 248
The Mortgage Industry On-Linep. 249
How Internet Lending Started and How It Is Working Outp. 249
A Business Modelp. 250
The Promise for Consumersp. 251
Websitesp. 252
Search Enginesp. 256
Actually Funding a Loan from an Internet Lenderp. 256
The Future of the Mortgage Industry On-Linep. 257
Computers and the Mortgage Businessp. 259
A Real-Life Examplep. 260
Other Resourcesp. 261
Putting It into Practicep. 262
Conclusionp. 263
21 Epilogue: On the Need for Reform and Other Thoughtsp. 264
Forms, More Forms, and Reformsp. 264
Recommendationsp. 266
What Is Really Important?p. 268
Historical Interest Ratesp. 268
Conclusionp. 270
Appendixp. 271
Glossaryp. 275
Indexp. 285