Resource of the Week
By Shirl Kennedy, Deputy Editor
If your daily collection of spam is anything like mine, it probably contains more than one “offer” to refinance your mortgage at some unbelievably low rate. That is why computers have “delete” keys. In truth, though, the Web can be a valuable tool when you’re shopping for a mortgage, even if you eventually resort to the telephone or a bricks-and-mortar location when it’s time to “pull the trigger,” as most people seem to do, according to a study released in May by Forrester Research and Compete Inc. For example, Bankrate.com is a reliable tool for comparing mortage rates in your geographic area.
But let’s face it, even if it’s not your first home purchase, shopping and applying for a mortgage is an anxiety-generating activity; a bad decision could cost you thousands of dollars and, if you make a fatal mistake somewhere along the line, you could be turned down by multiple lenders. Maybe you’re lucky enough to have a knowledgeable friend or relative who will hold your hand throughout the mortgage process. For the rest of us, there is the Mortgage Professor — otherwise known as Jack M. Guttentag, Professor of Finance Emeritus at the Wharton School of the University of Pennsylvania.
You can’t shop for a mortgage at the Professor’s website; the site is strictly ad-free and non-commercial — although Guttentag himself is founder of GHR Systems, Inc., “one of the nation’s leading providers of lending technology and related support services.” What you can do is equip yourself with enough information to shop intelligently and not be intimidated by those who wish to sell you something and likely do not have your best interests in mind.
Residential finance virgins may want to start at the beginning, a basic tutorial on selecting mortgage features. Learn about FRMs, ARMs, and interest-only options. What are “points”? What is a “lock period”? How much documentation will you need?
“The home mortgage market is a minefield for consumers shopping for a mortgage,” says the Processor. So even those who have “been there, done that,” as far as financing a home is concerned, would do well to read over Shopping Hazards You Want to Avoid. Learn how to make sure you are getting all the information you need, and how to avoid unnecessary fees and nasty surprises at the closing table. Crave more information? Read the extensive list of mistakes to avoid.
Rather than shopping directly for lenders, you may want to consider shopping for an Upfront Mortgage Broker, who is in a better position to shop the market for you. Guttentag explains what’s involved and provides a link to the Upfront Mortgage Brokers Association, which offers a searchable directory.
There is help here not only for those who are purchasing a house, but also for those who are building a house and need to know about construction loans, building financing, etc. For those who already have a home and a mortgage, there’s information about such things about prepayment, refinancing, second mortages, debt consolidation and more.
What else can you do here?
+ Learn how to shop for a mortage online, including which sites are the best.
+ Use the glossary to look up those many confusing terms and acronyms. The definitions include links to relevant articles available on the website.
+ Find useful calculators and downloadable spreadsheets.
+ Educate yourself via tutorials, or by browsing the Professor’s recent columns.
+ Leave a comment or question for the Mortgage Professor.
The website’s Table of Contents is available — oddly — via a link in the middle of the navigation pane on the righthand side of the home page, but it may not be the best way to start browsing, since there is a lot of information here. The site could use a good search engine, but if you’re desperate, you can always use Google’s site search feature.
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on Thursday, August 31st, 2006 and is filed under Uncategorized.
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