The Everything Guide to Mortgages Book

by Holton, Lisa

• ISBN13: 9781598696110
• ISBN10: 1598696114
• Format: Paperback
• Copyright: 2008-08-01
• Publisher: Everything

Summary

Finding the right home can be easy. Finding the right mortgage-one you can afford-can be a challenge. You need to arm yourself with the latest information so you can make the right decision for you and your family, especially in the current housing market. In plain English, finance expert Lisa Horton shines a light on the confusing world of points, interest rates, and credit scores. Whether you're buying your first home, trading up to a larger one, or buying a rental property, you'll find all you need inside. Learn how to: Save for a down payment and prepare to borrow Understand credit reports and credit scores Deal with banks, mortgage brokers, and online lenders Refinance a mortgage The Everything Mortgage Book teaches you how lenders work, how different kinds of loans are structured, and what they're best for. You'll also learn which mortgage practices and loans you should avoid. Whether you have a great credit history or a poor one, you'll be able to get the best loan for your most important purchase-your home. Lisa Holton is the author of How to be a Value Investor, The Essential Dictionary of Real Estate, and the Encyclopedia of Financial Planning. She is a contributing writer for the Financial Planning Association on consumer finance and retirement planning issues. Ms. Holton heads the Lisa Company, a writing, editing, and research firm. She lives in Evanston, IL.

Author Biography

An Adams Media author.

Table of Contents

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