The new edition of “Mortgages for Dummies, Second Edition” by Ray Brown and Eric Tyson, based on their qualifications and real estate experience, should have been a “home run.” Instead, it was barely a disappointing two-base hit.
Starting with their modest attempt in the first edition, the authors should have improved their new edition to correct the prior deficiencies and make it the best home mortgage book in its field.
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Although the latest version is an improvement over the first edition several years ago, the authors make obtaining a home loan seem like a major challenge.
For home buyers and home owners who recently obtained home mortgages, they know the real test is to avoid being “ripped off” by the lender. The authors barely touch that topic, entirely neglecting lender mark-ups on legitimate loan charges and barely mentioning expensive junk and garbage fees.
For example, most mortgage borrowers have no clue what a “yield spread premium” borrower rip-off is. Unfortunately, this book doesn’t even mention this important rip-off term, which borrowers should know.
Unfortunately, yield spread premium is a perfectly legal “kickback” from the actual lender to a mortgage broker for convincing a home loan borrower to pay a higher than normal market interest rate. Worse, the mortgage broker can also charge the borrower a 1 percent or 2 percent loan fee on top of the lender’s kickback.
This very simplistic guidebook is an excellent introduction for naive home buyers and refinancing homeowners to the complicated world of home mortgages.
A good analogy that home loan borrowers easily understand is when a car buyer walks into an automobile dealer showroom. The car dealer is the expert. The car buyer is the amateur.
One way or another, the car dealer will profit at the expense of the buyer. This same principle applies to mortgage lenders profiting from innocent borrowers who often don’t even know how they were fleeced.
The book’s best chapter explains the very important basics of credit reports and FICO (Fair, Isaac and Co.) credit scores. Brown and Tyson do a superb job of explaining how to improve your FICO score, why this score is so important to mortgage lenders, and how a good score helps borrowers obtain the best interest rate.
But the book’s most disappointing chapter is about reverse mortgages for senior citizen homeowners. This chapter could have been very all-inclusive with the vital details seniors need to know to determine if they should get a tax-free reverse mortgage to provide for their retirement years.
Instead, the reverse mortgage chapter is a bland simplistic explanation of these mortgages. It only mentioned two of the three major nationwide reverse mortgage lenders.
Also not mentioned is the all-important government-required TALC (Total Annual Loan Cost) disclosure, which reverse mortgage lenders must provide to prospective borrowers; information how to find reputable reverse mortgage lenders (www.reversemortgage.org); and, worst of all, non-mention of Financial Freedom Plan, the nation’s third largest reverse mortgage lender, which originates these loans on homes valued above $333,700 (the current Fannie Mae loan limit).
Knowing how smart these authors are from reading their other real estate books, I was very disappointed by their latest edition of this mortgage book. They appear to have put minimal effort into improving the previous version. Lack of specific details make the book of limited value to serious prospective readers, such as home buyers, homeowners and real estate agents.
For example, the authors warn borrowers not to lie on their loan applications. Excellent advice. Then they mention the lender will probably require the borrower to sign an IRS form allowing the lender to verify income by obtaining their actual income tax returns. True.
But the authors fail to warn that many lenders insist their borrowers leave these IRS forms undated so the lender can check the borrower’s income tax returns many years in the future. Savvy mortgage lenders know this lender “dirty trick,” which the authors failed to disclose.
Perhaps I am too harsh. The book’s format is superb, with its tips, warnings, technical stuff and even the funny cartoons. But the generalized, incomplete content lacks vital details. If one of the co-authors was actually in the mortgage business, this book might have been much better.
Chapter topics include “Determining Your Borrowing Power”; “Qualifying for a Mortgage”; “Scoping Out Your Credit Score”; “Fathoming the Fundamentals”; “Selecting the Best Home Purchase Loan”; “Surveying Special Situation Loans”; “Finding Your Best Lender”; “Surfing the Internet’s Mortgage Sites”; “Choosing Your Preferred Mortgage”; “Refinancing Your Mortgage”; “Reverse Mortgages for Retirement Income”; and “Ten Mortgage No-Nos.”
The well-qualified authors could and should have written a great “how to get a home mortgage” book. Instead, they updated a second-rate mortgage book and showed insufficient attempt to be the best. There are far better home loan mortgage books in bookstores. On my scale of one to 10, this disappointing new book rates only an eight.
“Mortgages for Dummies,” by Ray Brown and Eric Tyson (Wiley Publishing Inc., Hoboken, N.J.), 2004, $16.99, 212 pages; Available in stock or by special order at local bookstores, public libraries and www.amazon.com.
(For more information on Bob Bruss publications, visit his
Real Estate Center).
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