'The Mortgage Professor' Is A Treasure ChestOf Counsel For Home Buyers And Loan Shoppers

Oweboat published a blurb last week about a web site that is an absolute MUST for anyone shopping mortgage financing. The Mortgage Professor's Web Site went to my personal Favorites list when I read the section titled Tricks by Loan Providers. The site is published by Jack M. Guttentag, Professor of Finance Emeritus at the Wharton School of the University of Pennsylvania, and chairman of GHR Systems, Inc., a mortgage technology company. Remember that the best way to beat predatory lenders is by educating oneself about the process and proceeding accordingly.

Here is a small sample of a long list of Mistakes to Avoid in the home buying/loan shopping process.

BUYING A HOUSE

Look for a house without knowing how much you can afford to pay.

Assume that stretching your house-purchasing ability to the limit will maximize your wealth over the long term.

Buy a manufactured house through a dealer with a package that includes house, installation, site and financing.

SHOPPING FOR A MORTGAGE

Assume that rate quotes from loan providers are always given in good faith.

Assume that a "discount mortgage broker" will cost you less.

Assume that the Government requires lenders to disclose everything that is really important to borrowers.

QUALIFYING FOR A MORTGAGE

Assume that shopping multiple loan sources will adversely affect your credit rating.

Confuse "qualification" with "approval".

Accepting that you need an adjustable rate mortgage to qualify because the loan officer said so.

SELECTING THE MORTGAGE

Assume that a "no-closing cost loan" is a good deal.

Neglect to ask whether your loan has a prepayment penalty, and verify the answer on the Truth in Lending (TIL) disclosure statement.

Assume that because you are a veteran, your VA loan will be fairly priced.

LOCKING THE PRICE

Allow the price to float on a home purchase transaction.

Accept a mortgage broker’s verbal assurance that the loan has been locked with the lender.

Believe that fixed-dollar lender fees, and rate adjustment caps on ARMs, are covered by locks.

Comments

[Ann Rihn]

Hi- I have searched the web and read almost every page of Jack M. Guttentag's advice about mortgages. Although I have some experience in the industry, I do not know much about land only loans. I have a property in Florida, no house, that I do not currently have financed, but would like to find a vehicle, like a HELOC, that will let me draw on the equity from that land. I am not finding many options, can you help?