106 Mortgage Secrets All Borrowers Must Learn -- But Lenders Don't Tell (Paperback, 2)

Preface to the Second Edition xi

Introduction: Use OPM to Achieve All That You Really Want xiii

1 Affordability Depends on You—Not a Lender 1

SECRET #1 Affordability depends on you. 1

SECRET #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

SECRET #3 Separate the emotional from the financial. 7

SECRET #4 Align self-talk with your priorities. 9

SECRET #5 Envision the propert(ies) you would like to own 5, 10, or 15 years from now. 15

2 Increase Your Borrowing Power 17

SECRET #6 10,000 lenders set their own standards. 17

SECRET #7 You can make your qualifying ratios look better. 20

SECRET #8 Lift your qualifying income. 23

SECRET #9 Reduce your debt. 27

SECRET #10 Use compensating factors to justify higher qualifying ratios. 30

SECRET #11 Never fib to a lender. 32

SECRET #12 Can’t qualify? Enlist a cosigner, co-borrower, or co-owner. 34

SECRET #13 Let tenants pay your mortgage. 36

SECRET #14 Don’t change your loan status. 42

3 Slash Your Cost of Interest 43

SECRET #15 Many borrowers who want a fixed-rate loan should choose 15 years, not 30 or 40. 44

SECRET #16 Lower interest rates mean big savings. 48

SECRET #17 Lower rates magnify borrowing power. 49

SECRET #18 ARMs sometimes offer greater borrowing power, lower costs, with risk you can manage. 51

SECRET #19 State and local housing finance agencies offer lower-interest mortgage loans. 53

SECRET #20 Assume a low-interest-rate mortgage. 54

SECRET #21 “Assume” a nonassumable mortgage. 57

SECRET #22 Save $1,000s with a Mortgage Credit Certificate (MCC). 61

SECRET #23 Seek employer assistance, or seek an employer who gives assistance. 62

SECRET #24 Obtain a lower interest rate; pay points. 63

SECRET #25 Negotiate a buydown with the sellers. 64

SECRET #26 New homebuilders offer mortgage incentives. 66

SECRET #27 How to borrow jumbo amounts without paying jumbo rates. 66

SECRET #28 Your after-tax cost of borrowing may not be as low as you’ve been told. 69

4 The Risks and Rewards of ARMs 73

SECRET #29 ARMs do not necessarily present more risk than fixed-rate loans. 73

SECRET #30 For the short term, ARMs usually cost less. 78

SECRET #31 ARMs for the long run: How to lower costs and alleviate risk. 80

SECRET #32 You can (sort of) forecast interest rates. 81

SECRET #33 Low teaser rates: Bait or bargain? 84

SECRET #34 Your start (teaser) rate isn’t your contract rate. 86

SECRET #35 There’s no one best index. 88

SECRET #36 Don’t ignore the margin. 91

SECRET #37 All caps aren’t created equal. 92

SECRET #38 That flashy convertible could prove a clunker. 93

SECRET #39 APRs tell you nothing about ARMs—and very little about fixed rates. 94

5 Perfect Your Credit Profile 97

SECRET #40 Emphasize all eight Cs of loan approval. 98

SECRET #41 Credit scores influence, but do not determine, the terms and costs of your loan. 103

SECRET #42 Your credit score doesn’t necessarily represent your credit strength. 104

SECRET #43 Discover your credit scores. 105

SECRET #44 Improve your credit scores. 107

SECRET #45 Garbage in, garbage out (GIGO). 109

SECRET #46 Most credit repair firms (or deceptive tactics) can’t fix your credit or boost your credit
scores. 113

SECRET #47 Bogus credit counselors can scam you, too. 114

SECRET #48 Credit counselors and debt management firms do not improve your credit record or boost your credit scores. 115

SECRET #49 Bankruptcy (Chapter 7) doesn’t necessarily ruin your credit. 116

SECRET #50 Your ex-spouse can ruin your credit (and other tales of double counting). 118

6 The Lowdown on Low Downs 121

SECRET #51 You can buy with little or nothing down. 121

SECRET #52 No matter how much you earn, FHA may hold the key to your financing needs. 122

SECRET #53 Discover FHA’s best-kept secret: The 203(k) program. 126

SECRET #54 Too many vets pass up VA loans. 129

SECRET #55 The USDA offers a prime choice for low- to moderate-income homebuyers. 131

SECRET #56 Community lending goes mainstream. 131

SECRET #57 Not-for-profit housing groups help moderate-income people own their own homes. 134

SECRET #58 Local governments assist with down payments. 136

SECRET #59 Even Fannie and Freddie accept little- or nothing-down loans. 138

SECRET #60 Cut the cost of PMI by learning where rates break. 138

SECRET #61 Before you obtain a PMI little- or nothing-down loan, understand the cost you’ll pay. 139

SECRET #62 Reduce the higher cost of low down payments with a second mortgage (piggyback loan). 141

SECRET #63 Use pledged collateral to eliminate PMI. 142

SECRET #64 Search for sellers with low-equity assumables loans. 144

SECRET #65 Avoid PMI with a higher interest rate mortgage. 144

7 Win Big Savings with Seller Financing, Foreclosures, or REOs 147

SECRET #66 Sellers can nearly always beat the banks at their own game, but you must do more than ask. 151

SECRET #67 Ask the seller and lender to cooperate with a refi blend. 153

SECRET #68 Bridge the assumable gap with a seller second. 154

SECRET #69 Avoid the bang of a bursting balloon. 155

SECRET #70 Buy on the installment plan. 156

SECRET #71 Try it before you buy it. 159

SECRET #72 Buy and lease simultaneously. 161

SECRET #73 Beat high interest rates with wraparound financing. 164

SECRET #74 Don’t dillydally with due diligence. 165

SECRET #75 Negotiate a preforeclosure workout. 168

SECRET #76 Buy (carefully) at a foreclosure sale. 171

SECRET #77 Locate a foreclosure pro. 171

SECRET #78 HUD may hold the keys to your home or investment property. 173

SECRET #79 VA offers REO deals (with financing) to both veterans and nonveterans. 175

SECRET #80 Let Fannie or Freddie treat you to below-market financing. 177

SECRET #81 Buy and finance directly with a lender. 179

8 Beware of Those Fine Print “Gotchas” 183

SECRET #82 It’s a jungle out there. 184

SECRET #83 Tell your loan rep to take out the garbage. 187

SECRET #84 Don’t place blind faith in the good faith estimate. 189

SECRET #85 What’s the real cost of a no-cost mortgage? 191

SECRET #86 Can you prepay without restriction or penalty? 193

SECRET #87 An assumable loan may offer less than you’ve assumed. 196

SECRET #88 Appraised value doesn’t necessarily equal market value. 198

SECRET #89 Sometimes lenders signal appraisers to lowball their value estimates. 200

SECRET #90 Appraisals do not forecast the future. 202

9 Achieve the Lowest Interest Rate Available 205

SECRET #91 Refuse to yield to oversized yield-spread premiums (YSPs). 205

SECRET #92 Red and yellow, black and white, do lenders treat them all alike? 207

SECRET #93 Rate quotes: Fact or fiction? 208

SECRET #94 What rate will you get at closing? 210

SECRET #95 Achieve your best rate. 213

SECRET #96 Industry pros and government agencies need your help. 215

SECRET #97 How to (almost) vanquish tricks of the trade. 220

10 Manage Your Property and Financing for Maximum Return 225

SECRET #98 Treat your home and your financing as an investment. 226

SECRET #99 Monitor opportunities to refinance. 233

SECRET #100 Use refinancing to create other benefits. 236

SECRET #101 Refinance and invest the proceeds. 238

SECRET #102 Never buy biweekly baloney. 243

SECRET #103 Cancel your PMI—Get a refund from FHA. 246

SECRET #104 Should you negotiate out of escrow? 248

SECRET #105 Just say no to home equity loans. 250

SECRET #106 Trouble, trouble, what to do? 254

Conclusion: You Can Live on the House 259

Index 265