Why The Common-Sense Mortgage Is Back

When are you going to re-do the mortgage book?cover photo

It’s a question I get with some frequency because the “mortgage book” was published by Harper & Row in a series of editions that spanned more than a decade. It popularized a revolutionary idea, the thought that mortgage borrowers could save enormous amounts of money if only someone explained how the lending system worked in plain language.

The Common-Sense Mortgage began as a series of weekly columns written originally for The Washington Post. The columns were directed toward readers of the paper, you didn’t need a degree in finance to understand them.

There were hardcover editions, paperback editions and unit sales for the book were well into six figures, results which were achieved without promising instant wealth or millionaire status. Instead, the guide was written to help borrowers determine their own best interests and find the loans which were best for them.

Today we have a new mortgage marketplace, one radically different from the period when the original book was in print. While there are far more protections for borrowers than in the past, that does not mean borrowers can easily or automatically get the best loans. To succeed now, to get the rates and terms which are best for you, you have to know how the new system works and why some deals are better than others.

The Common-Sense Mortgage & Good News

We now have a 2016 edition of The Common-Sense Mortgage. Why? Because compared with the old ways of getting a loan today’s mortgage marketplace requires different strategies for success.

First, we moving toward online mortgage applications but we’re not there yet. In many cases we still need paper documents to verify the information inserted into electronic forms.

Second, new rules mean new ways of doing business. For instance, no doc, stated-income, and NINJA  (no income, no job, no asset) loan applications are gone. Lenders must carefully verify the ability of borrowers to re-pay the debt. Such past staples as mortgages with negative amortization, balloon payments, and prepayment penalties are now rare and getting rarer.

Third, new government forms are designed to make competing loan offers easier to evaluate and prevent surprises at closing. The very same forms can also be misleading and unclear.

Interest rates so far in 2016 have been consistently below 4 percent. According to Standard & Poors, this compares with the 8.6 percent average during the past 40 years. It’s a great time to finance and refinance — if you know the tricks and traps.

So here’s an invitation. Spend less than $4. Get your copy of The Common-Sense Mortgage. Get empowered — and get saving.

Table of Contents

1 Introduction

2 How To Boost Your Credit Score
2.1 Can Weak Credit Doom A Mortgage Application?
2.2 How Can I Check My Credit Score For Free?
2.3 Special Credit Situations
2.4 Does Every Missed Payment Hurt My Credit?
2.5 What About Credit Report Errors?
2.6 Imposter Credit Sites
2.7 Minimum Credit Scores

3 New Rules
3.1 The Ability to Repay Rule
3.2 The Qualified Mortgage Rule (QM)
3.3 Small Mortgages
3.4 TRID

4 Start Your Paperwork Folder NOW

5 Do I Need A Pre-approval or Pre-qualification Letter?

6 Fixed Rate Mortgages

7 Adjustable-rate Mortgages (ARMs)
7.1 ARM Start Rates
7.2 ARM Indexes
7.3 ARM Margins
7.4 ARM Caps
7.5 ARM Strategies

8 Down Payments
8.1 The Loan-To-Value Ratio
8.2 The Case For 20 Percent Down
8.3 How To Buy With Little Or Nothing Down
8.4 Piggyback Loans
8.5 First & Second Mortgages
8.6 Gift Funds
8.7 Are You A First-time Buyer?
8.8 Down Payment Assistance
8.9 MCC Financing

9 Mortgage Insurance
9.1 Claim Advance Programs
9.2 How To Cancel FHA Mortgage Insurance
9.3 How To Get A VA Funding Fee Refund
9.4 How To Cancel Private Mortgage Insurance
9.5 Why Cancellation Policies May Not Matter
9.6 Curtailments
9.7 Mortgage Insurance & Taxes

10 Mortgage Rates
10.1 Rates & The APR
10.2 Points & Discounts
10.3 Refinancing: A Caution

11 Loan Limits: How Much Can I Borrow?
11.1 Jumbo Mortgages

12 The Debt-to-Income Ratio (DTI)
12.1 How To Become MORE Qualified
12.2 DTI — A Caution


14 Rate Locks — Lock-ins

15 Prepayment Penalties

16 Layering & Buffers

17 Appraisals
17.1 Free Appraisal Copies
17.2 Automated Valuations
17.3 Broker Price Opinions
17.4 Appraisal Reviews

18 The Loan Application
18.1 6 Rules For Success
18.2 Timing & Dates
18.3 Loan Estimate — Page 1
18.4 Page 1 Explained
18.5 Loan Estimate — Page 2
18.6 Page 2 Explained
18.7 Loan Estimate — Page 3
18.8 Page 3 Explained

19 Loan Processing
19.1 The Illusion of Approvals
19.2 The Quiet Period & Hidden Debt
19.3 Documents

20 Closing
20.1 The Role of the Settlement Provider
20.2 Choosing A Settlement Agent
20.3 The Place & Time of Settlement
20.4 Walk-Throughs 20.5 Good Funds
20.6 TRID Delays
20.7 Closing Disclosure — Page 1
20.8 Page 1 — Explained
20.9 Closing Disclosure — Page 2
20.10 Page 2 — Explained
20.11 Closing Disclosure — Page 3
20.12 Page 3 — Explained
20.13 Closing Disclosure – Page 4
20.14 Page 4 – Explained
20.15 Closing Disclosure — Page 5
20.16 Page 5 Explained

21 Why You Want Paper Copies

22 After The Deal Is Done

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