Here are the important myths
about mortgage loans
(from Steiners How To Talk Mortgage
Myth: You can negotiate a better loan.
In the late 90’s lending industry, you can only negotiate
loans in the rare case where a seller Carries Back a First,
or you find one of the few remaining Portfolio
lenders who can tailor their Loan Programs.
percent of the loans that are available are offered by huge,
national lending institutions catering to the Secondary
Market. A skilled Loan Advisor will help you find
the Loan Program that best fits your needs, but he or
she can no more change significant Terms of that loan
than a car salesman can redesign a car.
give you the illusion of negotiation, many lenders currently
allow you to lower your Rate by paying more in
upfront Fees. Your Loan Advisor should also
suggest numerous ways to help you Qualify for a
higher Loan Amount, if you want.
have to oversee this process carefully, but the primary
skill you need to hone is hunting, not negotiating. Once you’ve
worked out what kind of loan you want, you need to hunt down
the best Loan Advisor and Loan Program.
the best loan for your home Purchase or Refinance
can save you many thousands of dollars. This book will arm
you with the weapons that you need.
Myth: The Loan Advisor is your
Even if you’ve been buddies with this man or woman for
years, the Loan Advisor always gets paid by the
lender. And, 99% of the time, he or she is paid by
or she won’t get paid, however, if you don’t find the
loan you want. The Loan Advisor therefore becomes a
hunting partner. Unfortunately, this partner is tethered to
his or her company. If that company doesn’t offer the loan
you need (and even the biggest Mortgage Brokers don’t
work with all Loan Programs), he or she has to
convince you to change your goals...or you have to get a new
misunderstand us. The Loan Advisor is crucial to your
hunt. Good ones are like good stock brokers. They not only
help you ferret out good Loan Programs, they provide
time saving and important help every step of the way. And
they like helping you. But they still always get paid by the
Myth: The sequence of events is: 1. Find a
house. 2. Negotiate the price. 3. Find a loan.
The reverse—decide on a loan with a monthly payment that
works for your budget, then go looking for a home in the
price range that matches your financing.
at it this way saves time, particularly when you get the
lender to give you a Pre-Approval commitment. The
strategy not only gives you peace of mind, it provides a
good negotiating tool with a seller, because your offer
includes the ability to close quickly.
Get a lender to Pre-Approve you, not just Pre-Qualify
you. Have them review your written Application and
give you the approximate amount they’ll finance in
settle for just a quick telephone Pre-Qualification.
You don’t want unexpected problems coming up when you go
back to the lender ready to take out your loan.
Regardless of a written Pre-Approval, you still must
make your Purchase offer contingent upon getting your
mortgage. Otherwise, rising interest Rates, a low Appraisal
or an unethical lender can leave you without your loan...
and a seller who can sue you for breach of contract.
Myth: Timing for a Refi is up to
We’re great believers in the concept (not exactly a myth)
that a Refinance should offer the blessings of time
the truth for us has been that nine times out of ten, we’ve
been Refinancing under the gun of a Second
coming due, the need for cash for some other reason, or—our
most stressful loan hunt experience—an Interest Rate
market that’s started moving up.
to do as we say do, not as we’ve done. Note the past tense—we’re
hoping to better our practices, too.
you’ve gone into your existing loan knowing you’ll want
to Refi within several years for whatever reason,
keep an eye on the Rate Sheets that appear regularly
in newspaper real estate sections or on the Internet (see
the National Money$ource Directory in the Appendix).
If you’ve got a deadline for a Refi, start the loan
hunt a good 18 months ahead of time. If Rates start
going down, start serious interviewing. Most loans don’t
have a Prepay Penalty, but you’re looking at big
problems if you don’t complete your Refi by your
Lenders hate being caught with a Rate Lock when Rates
start going up again significantly. If your Application
is being processed at such a time, look out for the lender’s
Qualification Ratios changing and/or the Appraisal
coming in too low to give you the Loan Amount you
need. This is another time when you need to have at least a Double
App, so you can try to make the loan elsewhere.
Unfortunately, our experience has been that all lenders are
reluctant to Fund when the market is moving up.
If you’re fairly certain the Rate market’s
bottomed, and there’s any way you can meet the revised
lender Ratios or Appraisal, we recommend going
for it. That’s how we got a 5.75% Fixed in the 90’s.
Of course, coming up with an additional $20,000 to Close
Reverse Mortgages, etc.
Myth: These loans will save you money.
Despite the friendly tone and the informal language of the
offers that clog your mailbox, both real and virtual, most
are as nefarious as the credit card “checks”that offer
such wonderful ease of use...and humongous cash advance
charges plus the highest rate the company issues.
are a few good, alternative Loan Programs out there,
however. Finding and evaluating them is one of the important
missions of this book.
Insider Information YOU should know:
Financial pundits often intone that your home will be the
largest single purchase in your lifetime. This is not true.
Hidden behind all the discussions about the complexities of
buying a home is a little known fact:
mortgage interest paid over the next 30 years will cost you,
at a 7.5% interest Rate, one-and-a-half times the
purchase price of your home. If Rates bounce up to
12% or worse, as they did for extended periods in the 80’s,
the interest you’re paying will run you nearly three
times the purchase price of your home!
there! This mortgage hunt stuff means serious money!
Although readers may quickly point out that we haven’t
taken into account the influence of inflation and the future
value of money, we haven’t taken into account the way an Amortization
Schedule weighs time in favor of the lender,
12%, a $100,000 loan wracks up $62,000 in payments over the
first five years. The lender
receives $59,000+ of that as interest. And that’s
before we add in the upfront Closing Fees.
only is this serious money for you as an individual,
mortgage lending is big business. Home mortgage debt in the
U.S. currently stands at slightly more than a trillion
dollars. Essentially, you’re girding yourself up to go
hunting in one of the biggest public money markets in the
may be axiomatic, but it’s wise to remember as you embark—lenders
are in the money business because they like selling money.
They spend their time and energy figuring out Loan
Programs the way Detroit works away on aerodynamics.
They delight in bringing out new models every year with
fancy trim and a blinding selection of new colors and new
names, to entice new homebuyers and seduce the Refi-inclined.
Adjustable were introduced two decades ago, your
monthly payment has been only one of several variables that
can make a the difference between your best deal and your
worst nightmare. It’s no fluke that the fancier the Loan
Program, in terms of Teaser Rates and high Loan
to Value, the more it’s going to cost you later.
the complex array of Loan Program choices, there are
numerous myths that obscure the most effective ways to hunt:
Steiners How To Talk Mortgage Talk
is the insider's book you need before---
Buying a home
Planning to refinance your high interest loan
Evaluating home equity line of credit offers
Being tempted by a reverse mortgage
Worrying if your current mortgage payments have been
Wanting your lender to stop assessing PMI and real estate
tax impound charges
AND if you're
Not thrilled about the prospect of sitting around
with a Loan Advisor whose financial knowhow
can tie you and your pocketbook in knots
for more than a quarter of a century.
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