Contents

Preface to the Second Edition

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

Affordability Depends on You—Not a Lender 1

SECRET #1 SECRET #2

SECRET #3 SECRET #4 SECRET #5

Affordability depends on you. 1

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

Separate the emotional from the financial. 7

Align self-talk with your priorities. 9

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

Increase Your Borrowing Power

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 #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

SECRET

#31

SECRET

#32

SECRET

#33

SECRET

#34

SECRET

#35

SECRET

#36

SECRET

#37

SECRET

#38

SECRET

#39

For the short term, ARMs usually cost less. 78 ARMs for the long run: How to lower costs and alleviate risk. 80

You can (sort of) forecast interest rates. 81

Low teaser rates: Bait or bargain? 84

Your start (teaser) rate isn't your contract rate. 86

There's no one best index. 88

Don't ignore the margin. 91

All caps aren't created equal. 92

That flashy convertible could prove a clunker. 93 APRs tell you nothing about ARMs—and very little about fixed rates. 94

Perfect Your Credit Profile

SECRET #40 SECRET #41

SECRET #42

SECRET #43 SECRET #44 SECRET #45 SECRET #46

SECRET #47 SECRET #48

SECRET #49 SECRET #50

Emphasize all eight Cs of loan approval.

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

Your credit score doesn't necessarily represent your credit strength.

Discover your credit scores.

Improve your credit scores.

Garbage in, garbage out (GIGO).

Most credit repair firms (or deceptive tactics)

can't fix your credit or boost your credit scores.

Bogus credit counselors can scam you, too. Credit counselors and debt management firms do not improve your credit record or boost your credit scores.

Bankruptcy (Chapter Z) doesn't necessarily ruin your credit.

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

105 10Z 109

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

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 PM—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

Index

0 0

Post a comment