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Buying a home this holiday season? Here are a few holiday homebuying tips and hints you should know!

Eric & Ray's Top 10 Tips for Borrowers


Eric & Ray's Top 10 Tips
for Borrowers.

adapted from Mortgages for Dummies
by Eric Tyson and Ray Brown

Eric Tyson and Ray Brown, who also wrote Home Buying for Dummies, have followed up with Mortgages for Dummies. The book is a comprehensive introduction for anyone who is contemplating a mortgage, and tells you how to evaluate your creditworthiness, determine your borrowing power, and shop for a lender, as well as covering the various types of loans.
Buy It

  1. Before you get a mortgage, be sure you understand your personal financial situation. The amount of money a banker is willing to lend you is not necessarily the amount you can "afford" to borrow given your financial goals and current situation.

  2. Understanding how lenders evaluate your creditworthiness will maximize your chances for getting the mortgage you want the first time you apply and keep you from wasting time and money on loans which end up rejected. Most obstacles to mortgage qualification can and should be overcome prior to submitting a loan application.

  3. The ocean of mortgage programs is bordered with reefs of jargon. Learn loan lingo before you begin the mortgage shopping voyage to ensure that you hook the best loan and to minimize your chances of being taken by loan sharks.

  4. To select the best type of fixed-rate or adjustable-rate mortgage for your situation, clarify two important issues. How long do you expect to keep the loan? How much financial risk are you able to accept?

  5. Special situation loans - such as a home equity loan or 80-10-10 financing could be just what you need. However, some "special" loans such as 125 percent loans and balloon loans, can be toxic.

  6. Whether you do it yourself or hire a mortgage broker to shop for you, canvas a variety of lenders when seeking the best mortgage. Be sure to shop not only for a low cost loan but also for lenders that provide a high level of service.

  7. To compare various lenders' mortgage programs, you must understand the myriad costs and features associated with each loan. To help you keep score and do a fair comparison, we provide helpful worksheets in the book.

  8. Just as preparing a compelling resume is the first step to securing a job you want, crafting a positive, truthful mortgage application is key to getting the loan you want.

  9. Refinancing - that is obtaining a new mortgage to replace an existing one can save you big money. After you get a purchase mortgage, stay informed about interest rates sincea drop in rates could provide a money saving opportunity. Assess how long it will take you to recoup your out-of-pocket refinance costs.

  10. Prepaying your mortgage - that is, making larger than required monthly loan payments to payoff your mortgage faster - may or may not make sense depending upon your personal and financial circumstances.

Eric Tyson, MBA, is a financial counselor, syndicated columnist and author of five best-selling books including Home Buying for Dummies (co-author), Investing for Dummies and Personal Finance for Dummies. His work has been praised and featured in hundreds of publications including Newsweek, the Los Angeles Times, the Wall Street Journal, Kiplingers, and on PBS, ABC, the NBC Today Show, CNN, CNBC, CBS and National Public Radio.

Ray Brown is a 25-plus year veteran of the residential real estate profession. He wrote a syndicated column and currently hosts a weekly radio program, "Ray Brown on Real Estate." He has appeared on CNN, NBC, CBS, and in the Wall Street Journal and Time magazine.

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