106 Mortgage Secrets All Borrowers Must Learn - But Lenders Don't Tell

Table of Contents

Preface to the Second Edition     xi
Introduction: Use OPM to Achieve All That You Really Want     xiii
Affordability Depends on You-Not a Lender     1
Affordability depends on you     2
How you choose your property and arrange financing can add (or subtract) tens (or even hundreds) of thousands of dollars to (from) your net worth     6
Separate the emotional from the financial     7
Align self-talk with your priorities     9
Envision the propert(ies) you would like to own 5, 10, or 15 years from now     15
Increase Your Borrowing Power     17
10,000 lenders set their own standards     17
You can make your qualifying ratios look better     20
Lift your qualifying income     23
Reduce your debt     27
Use compensating factors to justify higher qualifying ratios     30
Never fib to a lender     32
Can't qualify? Enlist a cosigner, co-borrower, or co-owner     34
Let tenants pay your mortgage     36
Don't change your loan status     42
Slash Your Cost of Interest     43
Many borrowers who want a fixed-rate loan should choose 15 years, not 30 or 40     44
Lower interest rates mean big savings     48
Lower ratesmagnify borrowing power     49
ARMs sometimes offer greater borrowing power, lower costs, with risk you can manage     51
State and local housing finance agencies offer lower-interest mortgage loans     53
Assume a low-interest-rate mortgage     54
"Assume" a nonassumable mortgage     57
Save {dollar}1,000s with a Mortgage Credit Certificate (MCC)     61
Seek employer assistance, or seek an employer who gives assistance     62
Obtain a lower interest rate; pay points     63
Negotiate a buydown with the sellers     64
New homebuilders offer mortgage incentives     66
How to borrow jumbo amounts without paying jumbo rates     66
Your after-tax cost of borrowing may not be as low as you've been told     69
The Risks and Rewards of ARMs     73
ARMs do not necessarily present more risk than fixed-rate loans     73
For the short term, ARMs usually cost less     78
ARMs for the long run: How to lower costs and alleviate risk     80
You can (sort of) forecast interest rates     81
Low teaser rates: Bait or bargain?     84
Your start (teaser) rate isn't your contract rate     86
There's no one best index     88
Don't ignore the margin      91
All caps aren't created equal     92
That flashy convertible could prove a clunker     93
APRs tell you nothing about ARMs-and very little about fixed rates     94
Perfect Your Credit Profile     97
Emphasize all eight Cs of loan approval.     98
Credit scores influence, but do not determine, the terms and costs of your loan     103
Your credit score doesn't necessarily represent your credit strength     104
Discover your credit scores     105
Improve your credit scores     107
Garbage in, garbage out (GIGO)     109
Most credit repair firms (or deceptive tactics) can't fix your credit or boost your credit scores     113
Bogus credit counselors can scam you, too     114
Credit counselors and debt management firms do not improve your credit record or boost your credit scores     115
Bankruptcy (Chapter 7) doesn't necessarily ruin your credit     116
Your ex-spouse can ruin your credit (and other tales of double counting)     118
The Lowdown on Low Downs     121
You can buy with little or nothing down     121
No matter how much you earn, FHA may hold the key to your financing needs     122
Discover FHA's best-kept secret: The 203(k) program     126
Too many vets pass up VA loans     129
The USDA offers a prime choice for low- to moderate-income homebuyers     131
Community lending goes mainstream     131
Not-for-profit housing groups help moderate-income people own their own homes     134
Local governments assist with down payments     136
Even Fannie and Freddie accept little- or nothing-down loans     138
Cut the cost of PMI by learning where rates break     138
Before you obtain a PMI little- or nothing-down loan, understand the cost you'll pay     139
Reduce the higher cost of low down payments with a second mortgage (piggyback loan)     141
Use pledged collateral to eliminate PMI     142
Search for sellers with low-equity assumables loans     144
Avoid PMI with a higher interest rate mortgage     144
Win Big Savings with Seller Financing, Foreclosures, or REOs     147
Sellers can nearly always beat the banks at their own game, but you must do more than ask     151
Ask the seller and lender to cooperate with a refi blend     153
Bridge the assumable gap with a seller second     154
Avoid the bang of a bursting balloon     155
Buy on the installment plan     156
Try it before you buy it     159
Buy and lease simultaneously      161
Beat high interest rates with wraparound financing     164
Don't dillydally with due diligence     165
Negotiate a preforeclosure workout     168
Buy (carefully) at a foreclosure sale     171
Locate a foreclosure pro     171
HUD may hold the keys to your home or investment property     173
VA offers REO deals (with financing) to both veterans and nonveterans     175
Let Fannie or Freddie treat you to below-market financing     177
Buy and finance directly with a lender     179
Beware of Those Fine Print "Gotchas"     183
It's a jungle out there     184
Tell your loan rep to take out the garbage     187
Don't place blind faith in the good faith estimate     189
What's the real cost of a no-cost mortgage?     191
Con you prepay without restriction or penalty?     193
An assumable loan may offer less than you've assumed     196
Appraised value doesn't necessarily equal market value     198
Sometimes lenders signal appraisers to lowball their value estimates     200
Appraisals do not forecast the future     202
Achieve the Lowest Interest Rate Available     205
Refuse to yield to oversized yield-spread premiums (YSPs)      205
Red and yellow, black and white, do lenders treat them all alike?     207
Rate quotes: Fact or fiction?     208
what rate will you get at closing?     210
Achieve your best rate     213
Industry pros and government agencies need your help     215
How to (almost) vanquish tricks of the trade     220
Manage Your Property and Financing for Maximum Return     225
Treat your home and your financing as an investment     226
Monitor opportunities to refinance     233
Use refinancing to create other benefits     236
Refinance and invest the proceeds     238
Never buy biweekly baloney     243
Cancel your PMI-Get a refund from FHA     246
Should you negotiate out of escrow?     248
Just say no to home equity loans     250
Trouble, trouble, what to do?     254
Conclusion: You Con Live on the House     259
Index     265