Tips and Traps When Mortgage Hunting | Tips & Traps

Tips and Traps When Mortgage Hunting

Authors: Robert Irwin

Published: 2005

ISBN: 9780071448925 0071448926

Contents

Acknowledgments

1. How Do I Get a Purchase Mortgage?

Find the Loan or Find the House?

Alice’s Open House

Al, the Mortgage Broker

Enter PMI

The Credit Rating

The Mortgage Payment

The Dreaded Closing Costs

No Closing Cost Mortgages

Getting the House

Manipulating the Mortgage

The Final Mortgage

The Closing

HUD-1 Disclosures

2. Mortgage Selector

Fixed-Rate Mortgage

Fixed-Rate Mortgage with Balloon

Adjustable Rate Mortgage (ARM)

Fixed Rate with ARM

Fixed Rate/ARM with One-Year Adjustments

Low-Rate Teaser Adjustable

Capped Interest Rate ARM

Capped Payment ARM

Adjustable with One-Time Conversion to Fixed

Interest-Only Mortgage

Low-Down/No-Down Conforming Mortgage with PMI

Low-Down/No-Down Mortgage without PMI

No Down Plus Closing Costs Covered Mortgage

125 Percent Mortgage

Low/No-Documentation Mortgage (Liar’s Loans)

Jumbo Loan

Bad Credit Mortgage

Second Mortgage—Home Equity Loan

Seller’s Mortgage

401(k) Loan

Biweekly Mortgage

Bridge Loan

Construction Loan

FlexiLoan

No Credit Mortgage

Land Loan

Reverse Equity Mortgage

FHA-Insured Mortgage

VA (Veterans Administration) Mortgage

40-Year Mortgage

3. Critical Questions to Ask When Getting a Mortgage

Can I Buy for Nothing Down?

How Do I Determine the Mortgage Payment?

Should I Put More Money Down, If I Can?

What Are Points?

Where Do I Get a Mortgage?

How Long Does It Take to Get a Mortgage?

What Is Preapproval and Should I Get It?

How Do I Lock in a Low Interest Rate?

How Much Will My Mortgage Fees Cost?

Can I Get a Bigger Mortgage Than My Lender Offers?

Is There Any Advantage in Getting a Shorter-Term Mortgage?

How Is a Mortgage Different from a Car Loan?

How Much Information about Myself Must I Tell the Lender?

What Are the Steps Involved in Getting a Mortgage?

What’s the First Thing I Should Do to Get Started?

4. How Do I Get Preapproved?

Does Preapproval Really Help with the Purchase?

What Should Go into the Preapproval Letter?

Who Should Issue the Commitment Preapproval Letter?

How Much Does the Preapproval Letter Cost?

5. Where Do I Get a New Mortgage?

Should I Try a Bank or an S&L?

What Is a Mortgage Banker?

What Is a Mortgage Broker?

Credit Unions

Online Lenders

What Are Secondary Lenders?

What Is the Different between a “Conforming Loan” and a “Portfolio Loan”?

What Is a “Portfolio Loan”?

How Do I Get a Mortgage, Fast?

6. Loans for Prime and Subprime Borrowers

How Do Lenders Evaluate You?

How Do You Stack Up?

Do You Fit the Profile?

Who Actually Sizes You Up?

What’s Underwriter Approval?

Should You Get Discouraged?

Subprime Mortgages

How Much Will It Cost for a Subprime Mortgage?

Quick Quiz—Rate Yourself

7. Can I Improve My Credit?

Can I Explain Away a Problem?

Some Explanations a Lender Might Accept

What If the Credit Reporting Agency Made a Mistake?

Will the Credit Agency Correct the Mistake?

What If I Have Little or No Credit?

Where Do I Begin to Establish Credit?

What If I Need to Establish Credit Instantly?

Should I Consider a Cosigner?

8. Mortgages for the Self-Employed—No-Doc Loans

How Do I Prove My Income If I’m Self-Employed?

What Are Mortgages without Documentation?

Other Alternatives for the Self-Employed

9. Can I Cut My Mortgage Costs?

Is There Any Government Protection for Me?

What Is the Good Faith Estimate?

What Other Disclosures Will I Be Given?

What Can I Do If I Find Something Wrong?

When Should I Check Out the Costs?

What Are Typical Mortgage Settlement Costs?

What about a Prepayment Penalty?

What If I Want to Complain about a Lender?

A Great Booklet to Check Out

10. How Can I Cut My Mortgage Payments?

Using a Balloon Payment

What Are 5/30, 7/30, or 10/30 Mortgages?

What Is a Buy-down?

Who Gets Charged for the Buy-down?

What Are the Types of Buy-downs?

What Is an Adjustable Rate Mortgage?

What’s the Big Advantage?

What’s a Convertible Mortgage?

How Does a Convertible Mortgage Work?

11. Introduction to No-Down Payment Mortgages

What Is LTV and CLTV?

Are You a Prime Borrower?

What about Government Loans?

What about Closing Costs?

What If I’m Not a Prime Borrower?

12. Can I Cut or Eliminate Points?

Do You Believe in the Tooth Fairy?

Why Points?

Trading Interest for Points

Should You Pay the Points or Pay a Higher Interest Rate?

The Bottom Line?

What about Zero-Cost Mortgages?

13. What Is a Jumbo Mortgage?

Getting a Jumbo Loan

Where Do I Get a Jumbo?

Why Are They Also Called Portfolio Loans?

Can a Jumbo Be in Any Format?

14. Should I Opt for a Biweekly Mortgage?

What about a “Biweekly” Mortgage?

How Do I Establish a Biweekly Mortgage?

Can I Set Up a Biweekly Payment Schedule Myself?

Why Not Simply Get a 15-Year Mortgage?

Will I Have Higher Payments?

Still Don’t Get How to Save Money by Paying Off Sooner?

Is There a Better Way?

What’s the Advantage?

15. Can I Get the Seller to Finance Me?

How Does Seller Financing Work?

Will Sellers Cooperate?

Can Creative Financing Cut My Monthly Payment?

Can Creative Financing Cut My Costs and Red Tape?

What Is a Wraparound?

How Does a Wrap Work?

What Are the Ideal Conditions for a Wrap?

What If the Seller Wants to Wrap a Nonassumable?

What to Include When You Ask for Seller Financing

Will a Seller Give Me a First Mortgage?

Contract of Sale

How Do I Negotiate with the Seller?

16. Should I Consider an FHA or a VA Mortgage?

FHA Mortgages

VA Mortgages

Impound Accounts

Maximum Loan Amounts

17. What’s the Advantage of an Early Payoff?

Can You Pay It Off?

Should I Consider Equity Return?

How Do I Make the Payoff Decision?

What about Tax Savings?

The Problem with Real Estate Is Lack of Liquidity

What’s the Value of a Paid-Off Home?

18. How Do I Cancel My Private Mortgage Insurance?

How Much Does It Cost?

Must You Pay PMI for the Life of the Mortgage?

How Do I Get the PMI Removed If My House Has Appreciated in Value?

Is There Any More Government Help Coming?

19. First-Time Home Buyer and Other Special Programs

What If I’m a First-Time Home Buyer?

Programs Other Than MCC

How Do I Find Out about the Various Mortgage Programs?

20. Reverse Equity Mortgages

How Does a Reverse Equity Mortgage Work?

What Happens If You Outlive the Equity in the Property?

FAQs on Reverse Equity Mortgages

21. Does a New Mortgage Affect My Taxes?

Are Points Deductible?

Can I Deduct the Points in the Year I Pay Them?

Can I Deduct Interest Paid on a Mortgage?

What about the Tax Considerations When I Refinance?

What about Tax Consequences When I Sell?

What about the “Up to $500,000 Exclusion”?

How Does Mortgage Interest Compare to Personal Interest?

What about Mortgages That Are Forgiven?

What about Late Payments on a Mortgage?

What about Interest on a Mortgage That Is Over and Above the Value of the Property?

22. When Should I Refinance?

What If Interest Rates Are Falling?

What Are the Problems Associated with Refinancing?

Should I Get a Debt Consolidation Mortgage?

What about Home Equity Loans?

23. Understanding Adjustable Rate Mortgages

What’s the Teaser Rate?

Beware of Underqualifying Because of Teasers

What’s the Index?

How Do I Decide Which Index to Use?

What’s the Margin?

What Is the Adjustment Period?

What about Interest/Payment Rate Caps?

Are Interest Rate Caps Beneficial?

What about Monthly Payment Caps?

How Do You Find Out If Your Mortgage Has Negative Amortization?

What Are the Steps?

24. How Do I Prepare for the Loan Closing?

Who Should I Take to the Closing?

What Should I Bring to the Closing?

What Should I Challenge?

What Will I Need to Sign?

Appendix A Amortization Table

Appendix B Mortgage Terms

Index