Table of Contents

The Top Ten Things You'll Need to Borrow Successfully     x
Introduction     xi
The Mortgage Business (Mortgages 101)     1
What Is a Mortgage?     2
Where to Get a Mortgage     5
How Mortgage Demographics Are Changing     6
Popular Mortgages     9
The Subprime Mortgage Scare     12
How Lenders Make Their Money     13
Federal Loan Programs and How They Work     14
Preparing to Borrow     19
Why Owning Is (Generally) Better Than Renting     20
Before You Borrow     21
How the Federal Reserve Affects Mortgage Rates     22
What Should Your Mortgage Payment Be?     24
Estimating the Expenses of Owning Property     25
What Determines Your Borrowing Power     28
How Do I Prepare Information for a Mortgage Application?     29
The Difference Between Prequalification and Preapproval     31
Set Savings and Spending Goals Early     32
Why a Financial Planner Can Help     33
The Down Payment     35
Down Payment Practices and Today's Troubled Loans     36
What Is Equity and Why Is It Good?     37
The Legacy of the Home-Equity Boom     38
Why Having Some Down Payment Is Important     39
Where to Go for That Down Payment     40
Where Not to Go for That Down Payment     41
Understanding Lenders' Ratios     42
All About Private Mortgage Insurance (PMI)     43
Understanding All the Costs of Home Ownership     44
Why Home Ownership Feels So Good at Tax Time     45
Other After-Purchase Expenses     46
Understanding Your Credit Report     49
What a Credit Report Is-And Isn't     50
The Credit Reporting Agencies     52
Correcting a Credit Report     53
Why Your Partner's Credit History Is Important     54
How Divorce Affects Buying a New Home     55
Credit Counseling Versus Credit Repair     56
Things You Should Repair in a Credit Report     60
What Is a Credit Score?     61
Credit Scores Defined     62
What a FICO Score Is Made Of     63
How Does a Mortgage Lender Use Your Credit Score?     65
Ways to Keep Your Credit Score Healthy     66
What Poor Credit Scores Really Cost You     67
How Much Credit Can You Take On?     68
Secret Credit Scores?      69
Forget "Problem Credit" Lenders     70
The Consequences of Bankruptcy     71
Why Focus on Bankruptcy?     72
What Is Bankruptcy?     72
Types of Bankruptcy Filings     75
Recent Changes in Bankruptcy Law     76
Bankruptcy Doesn't Make Home Ownership Impossible     79
Smart Credit Moves Before You Apply for a Mortgage     80
When You Are Ready to Apply for a Mortgage     82
Fair Lending Laws-Knowing Your Rights     83
History of Fair Lending Laws     84
Women As Borrowers in the Past     88
What Is Predatory Lending?     89
Federal Protections Against Fraud     91
How to Spot Shady Lending Practices     92
The Bursting of the 2007 Mortgage Bubble     94
Where to Complain     94
What Will This Loan Cost?     95
Review All the Paperwork     96
Two Categories of Fees     97
What's a 1003?     100
The FTC's Mortgage-Shopping Worksheet     102
The Inverse Relationship of Points and Interest Rates     104
Why APR Doesn't Tell You Everything     105
The Good Faith Estimate (GFE)     106
Avoid Unnecessary Insurance     106
Lender Focus: Banks and Mortgage Bankers     107
What Is a Mortgage Bank?     108
Building a Relationship with a Bank     109
Pros and Cons of Dealing with Banks     111
How to Find the Best Bank Lenders     111
How Interest Rates Are Set     112
How to Compare Loan Offers from Banks     113
What's a Correspondent Lender?     116
Ten Questions to Ask a Mortgage Banker     116
Lender Focus: Mortgage Brokers     119
What Does a Mortgage Broker Do?     120
Mortgage Brokers and Their Share of the Mortgage Business     120
How to Find a Mortgage Broker     124
Pros and Cons of Dealing with Mortgage Brokers     124
Ten Questions to Ask a Mortgage Broker     125
The Low-Down on Locking in Rates     126
Lender Focus: Online Lenders     129
What's an Online Lender?     130
Exercising Caution Online     131
Ten Questions to Ask an Online Lender     134
Beware the Affordability Calculator     135
Use the Web to Shop Smarter     136
Practicing Safe Online Borrowing     137
Lender Focus: Friends and Family      139
Pros and Cons of Private Loans     140
Creating a Proper Private Loan Agreement     141
Selling Yourself as a Proper Borrower     146
Avoiding Problems Along the Way     147
Think About Your Relationship     148
Estate Matters...Matter     149
Setting Up and Maintaining a Private Mortgage Until Payoff     149
Conventional Fixed-Rate Loans     151
How Fixed-Rate Loans Work     152
Typical Fixed-Rate Loans     154
Other Types of Fixed-Loan Products     157
Major Mortgage Types     158
Risk Meter     159
Adjustable-Rate Mortgages (ARMs)     161
How ARMs Work     162
Types of ARMs     163
How ARM Rates Are Set     164
What Are Caps?     166
An ARM Checklist     166
The Reset Nightmare     168
Risk Meter     169
The World of Negative Amortization     171
What Is Negative Amortization?     172
How Negative Amortization Loans Work     172
Graduated Payment Mortgages     176
Interest-Only Loans     177
Zero-Down Mortgages     178
125 Percent Home-Equity Loans     179
Risk Meter     179
Home-Equity Loans/Lines of Credit, Balloons, Piggybacks, and More     181
How Special Situations Became Dominant in Mortgage Lending     182
How Home-Equity Loans and Lines of Credit Work     183
Balloon Loans     186
Piggyback Loans     187
Bridge Loans     187
Assumable Mortgages     188
Jumbo Loans     189
Construction Loans     189
Seller Financing     190
Smart Loan Management Going Forward     190
Risk Meter     190
Supporting Players in the Lending Process     191
Loan Officers     192
Loan Processors     193
Underwriters     194
Home Appraisers     196
Home Inspectors     197
Closers     198
Settlement Agents     199
What Happens at Closing?     199
Borrowing for Non-Traditional Properties     203
What's Non-Traditional?     204
How Cooperative Apartments Are Financed     204
How Vacation Property Is Financed     207
How Mobile Homes Are Financed     209
How Timeshares Should be Financed     210
What About Factory-Built Homes?     211
Borrowing As an Investor     213
Why Some Investment Property Means Riskier Borrowing     214
The Basics of Property Investment Finance     216
How Do I Know I'm Ready to Invest?     218
Getting Involved in Commercial Properties     219
Flipping Properties     220
Buying at Foreclosure     221
Stay Away from Debt     222
A Real Estate Investment Checklist     223
Risk Factors     225
Refinancing: How to Do It Right     227
What Does Refinancing Mean?     228
Should You Refinance?     228
Improving Your Refinancing Techniques     230
Check Those Refinance Costs     231
The Dangers of Cash-Out Refinancing     233
The Smart Way to Renovate     234
Balancing Real Estate Debt and Retirement     235
Debt Realities for Those Over Fifty     236
A Home Isn't a Nest Egg     237
Why a Financial Plan Is Essential     238
How Much Should You Save for Retirement?     241
Buying a Big House Is Not a Retirement Strategy     242
Putting Together a Lifetime Financial Advisory Team     242
Understand Reverse Mortgages Before You Leap     243
Avoiding the Worst-Case Scenario     247
When Bubbles Burst     248
The Lessons of the Subprime Debacle     249
Credit Cards: The Other Half of the Debt Headache     251
Understanding Foreclosure     252
Lenders May Negotiate...But Watch Out for Uncle Sam     254
Avoid Debt Trouble for a Lifetime     255
What's Next?     256
Glossary     259
Important Web Sites     267
Departments of Banking and Securities in All Fifty States     269
Federal Agencies That Oversee Most Mortgage Lenders     275
Budget Worksheet     277
Net Worth Worksheet     279
Index     281