Beginner's Information: June 2008 Archives
In the last couple of years a movement has arisen, led by certain well meaning academics, that says negotiating a loan broker's total revenue is sufficient to get consumers a better loan. As far as they go, they are even correct - it is a better alternative than you find with the vast majority of the loan providers out there, because it removes the ability to arbitrarily boost their own compensation by kickbacks, markups, and just delivering a more expensive loan. This arrangement, which I will call compensation pricing for the purposes of this article, encourages consumer to choose the loan provider who is willing to represent that they make less money than any other. Note that this is not the same thing as actually making less money than any other loan provider.
Most consumers don't understand loan accounting. In the past I have gone over loan accounting as many as three times at and after closing with a given client because they didn't understand what were and were not costs despite me having explained it at loan sign up. I've explained it in person, then again over the phone, then to the guy's accountant, who himself had difficulty understanding the accounting on the HUD-1. For instance Impounds are not a cost, and thankfully, California now has a law that lenders can't charge for not having them. Nonetheless, for those people who do want an impound account after I explain that they are not costs but do require seed money up front, they still often want to count that seed money as a cost. They're not. Impound accounts are that property owner's own money being held to pay that property owner's property tax and homeowner's insurance, bills that that property owner would have even if there was no loan at all on the property. When the loan is paid off, the money in the impound account is promptly returned to the homeowner.
Prepaid interest is another example of money that people do not understand. It is money they would owe in any case. If they choose not to write a check for the month that they refinance, that interest charge has to be paid somehow. It is possible to roll it into the loan balance in most cases, but that is NOT "skipping a payment". You will never EVER skip a monthly payment as long as you have a loan. If you choose not to write a check, you are simply adding it to your mortgage balance.
These two items (assuming the consumer does not pay them out of pocket with a check) can easily add seven or eight thousand dollars to a $400,000 balance, but they are not costs of the loan. They are money that has to be accounted for because they are active and ongoing parts of the loan environment. The new lender is usually perfectly willing to add loaning you this money to your loan balance because they will earn interest on it, but they are in the business of loaning money for interest - they're not going to loan it to you for free. Furthermore, there are immediate cash flows back in your favor in each case. Assuming you currently have an impound account, you'll be getting that money back in the form of a check within a few weeks from the former lender, roughly offsetting the money you borrowed today. Unless your loan has a prepayment penalty, take that check and use it to pay your loan down when you get it, and you'll be roughly even on the impound account money. The same applies to prepaid interest - if you don't want to write that check, but roll it into your loan balance instead, you will then have a month where you don't make a loan payment. You emerge essentially even - except for the fact that you're now owe more money, which you'll be paying paying interest on essentially forever. It's exactly the same as if you had taken "cash out" in a refinance.
But essentially everything else is a cost of the loan itself. Appraisal, title, escrow, notary, processing, underwriting, recording, etcetera. That loan provider should know what they will cost, but most consumers have no real idea. That loan provider also knows what loans are really available, but unless that consumer is a loan broker themselves, they really don't. Various sites publish weekly averages, but that's always what the rates were, not what they are, and are highly misleading in any case. The best loans available, so called "A paper" which a minimum of 75% of all borrowers should qualify for, have their rates change every day at a minimum, and sometimes several times per day, and as of a few months ago, now vary with credit score of the applicant and loan to value ratio as well. Furthermore, all of these services that I'm aware of are based upon a national average, and even for the national lenders there are variations in the rates between the states due to some states making it more expensive to do business than others.
I cannot hit too hard on this point: That loan provider should know what they can deliver, but the consumer does not, because the informational resources available to them are nowhere near real time, and not nearly so concrete as the loan provider's ongoing experience with their lenders and third party service providers.
Compensation pricing leaves the consumer assuming pricing risk on the loan. The first implication of this is that even though you have negotiated their company revenue, they can still lowball their quotes. You've mutually agreed that they're going to make $2500 for doing this loan - but they're still competing with Larry the Loan Low-baller, and they know it. The vast majority of competitive pricers offered what looks like a cheaper loan will switch, regardless of whether it really is better. The incentives for low-balling and pretending that costs they you are going to pay do not exist, but guess what? You're still going to pay them. Quoting a shorter rate lock period than necessary to deliver the loan means that they can pretend you're going to end up with a cheaper loan, but what happens if rates rise between quote and lock?
A subsidiary weakness of compensation pricing is "What does it include?" When negotiating compensation pricing, I have to include processing because sometimes I do my own when I want something handled just so, and even when I don't, I use an in-house processor. Since I'm negotiating total company revenue, I have to include that in my negotiations. Somebody who uses strictly contract processing can exclude processor cost from negotiations in compensation pricing, because that money is going to a third party they can show a receipt for. Were any direct lenders to negotiate compensation pricing, it would have to include all their lender imposed fees such as underwriting and document generation, as well as secondary loan market premium they expect to receive from the loan (a number which would vary with developments in the financial markets as the loan progresses, by the way). Brokers usually are significantly cheaper than direct lenders, but these numbers would appear to amplify that difference far more than warranted, and is a reason you'll fly to the moon by flapping your arms before direct lenders honestly negotiate their total compensation in this manner.
This leads into another weakness of compensation pricing. The FTC did some research a while back which directly highlighted this fact, that choosing the lowest loan provider compensation does not translate into the best loan. Focusing on loan provider compensation takes your eye off the ball of the best bottom line to you, the consumer. If that loan broker is going to make $2500 for your loan, no matter what, do you think the broker is motivated to aggressively price your loan with every possible lender and find you the best possible price on that loan, or are they motivated to go with the loan they can get through underwriting most easily? It really does make a huge difference, if they take the time time to understand the niches a given lender is aiming at. More than once, by shopping the right lender I've come in with quotes that would enable me to tack on two points of compensation to my company revenue and still deliver a better loan than my competition. Not to mention I was willing to assume the pricing risk, and they weren't.
Compensation pricing also assumes that the broker or lender is honest about their revenue. Given the facts in the second through fifth paragraphs of this article, that one is worth more laughs than Robin Williams and Bill Cosby combined have gotten over the course of their entire careers.
What is the alternative to the consumer retaining pricing risk? The lender (or broker) assuming it, of course. It really doesn't take much more information. The lender indicates in writing the loan type or characteristics, the interest rate, the total cost, and whether or not there is a prepayment penalty attached, then guarantees in writing that they will pay anything above that level. Note that all of this information is necessary, and four things really isn't a lot to remember. rate and cost are always a tradeoff for any given loan type, so ignoring one to concentrate upon the other makes your shopping for a loan a complete waste of time. Making certain you're talking about the loan type you want is a real good idea unless you're willing to risk getting stuck with something else, and the presence or absence of a prepayment penalty (and for how long!) can make a huge difference. Two percent on the rate is not at all unusual, so failing to nail them down as to whether there's a prepayment penalty is a real problem. Here's a list of Questions you should ask every provider you shop before you sign up for their loan.
Furthermore, focusing on guaranteed pricing means that you're focusing on what's really important to know: How much money this loan is going to cost you over time. You're zeroing in on the bottom line to you, not extraneous and distracting information about how much someone is going to make providing it. Wal-Mart makes more per item than most of their competition, but people shop there in droves. Why? Because the bottom line is better for them, the customers. If I offer to sell you the exact same television $100 cheaper than my competition, which set are you going to buy? Do you even care if I'm going to make $50 more than the other salesperson? The situation is the same with loans.
Quote guarantees are not a panacea. It can be exceedingly difficult to enforce them right when you need the loan, so I still recommend a back up loan if you are at all unsure of that loan provider's intent to deliver the loan they promise. There are limitations upon the best of quote guarantees, as loan officers are not loan underwriters and cannot write loan commitments. The loan officer cannot promise you the loan; they can promise you the rate and cost provided the underwriter approves it, and they can go over the main guidelines with you to make certain there isn't a known reason for the loan to be rejected.
But by forcing the lender to assume pricing risk, you are far more likely to end up with a better loan out of the process, because they have to tell you about the real costs and the real rate that they have reason to believe you will qualify for. If they don't, the difference comes out of their pocket, not yours, whereas in any other pricing scheme, who do you think is going to get stuck for the difference? For this reason, I'll recommend any guarantee that forces the lender to assume pricing risk over any loan quote that does not. Even if the other quote is lower, without that pricing guarantee what evidence do you have that they intend to deliver that lower quote? There is no sufficient answer to that question. If they intend to deliver, they should be willing and able to guarantee pricing.
Purchase Money: This is a loan that enables you, in combination with your down payment, to actually purchase the property. If you spend cash to buy the property and get a loan the next day, that is not a purchase money loan. This has tax consequences.
Rate/Term Refinance: This is a refinance that does not put money in your pocket for other purposes. As it is more usually defined, this is a refinance that does not put significant numbers of dollars in your pocket. These loans typically have the best rates of the three purposes. For A paper, you are allowed to pay off existing loans, you are allowed to borrow enough money to "seed" a new impound account, you are allowed enough money to pay up to one month of prepaid interest, and you are allowed up to 1% of the new loan amount, or $2000, whichever is less, to be put into your pocket for other purposes. In order to qualify as rate/term, A paper cannot do anything with an existing second (or third) mortgage, unless every last cent of that second (or third) mortgage was spent in acquiring the property, a fact which can force you to either do a cash out refinance or to subordinate your existing second mortgage to a new first trust deed. Sub-prime may have more forgiving definitions regarding other debts, but choosing sub-prime loan because it allows your new loan to be defined as a rate/term refinance is like voting Cthulu for President because you're tired of voting for the lesser of two evils. Sub-prime loans have pre-payment penalties by default, and generally carry higher rates.
The difference in tradeoffs between rate and cost can be small to non-existent between rate/term and cash out refinances, particularly at lower loan to value ratios. The difference also varies depending upon credit score, size of loan, and individual lender policy, but it can be quite steep. The point is to get an honest discussion of your options beforehand, not simply to sign up with some lender who pretends that the difference doesn't exist.
Cash Out Refinance is any refinance that does not meet the definition of rate/term. It puts cash in your pocket, it pays off other debts, it includes or combines or refinances a home equity loan or home equity line of credit that you took out for improvements or to pay other debts. Cash out refinances will usually have the least favorable set of rate and cost trade offs, what the uneducated think of as "highest rates" of these three purposes, at least at higher loan to value ratios. Depending upon the lender, loan to value ratios under seventy to sixty percent may have the same rate structure as rate term refinances. Cash out refinances also usually have slightly tougher underwriting guidelines than either of the other two categories.
You've probably heard the horror stories, and I've mentioned the possibility more than once. Some unsuspecting person is looking at properties beyond their price range, and it therefore has all kinds of attractive features that properties which are in their price range do not have. They are just about to regretfully but firmly put the notion of buying this particular property out of their heads when the Real Estate agent whispers seductively, "I can see that you want it, so let me show you how you can afford it!"
There are all kinds of reasons why this happens. Bigger commission check for the bigger sale certainly is one, but a far bigger concern to most of the predators who do this is that it's an easy immediate sale. Instead of having to take those folks around to dozens more properties that are in their price range (and perhaps lose them to some other agent taking advantage of an opportunity in the meantime), while the clients agonize about the trade-offs of linoleum versus carpet in the bathroom and kitchen, and maybe if they'll keep looking just a little while longer they'll find one that is perfect despite the market, so they're not going to make an offer today, thank you very much, this predator has shown them the equivalent of the holy grail, provided the clients do not understand the downsides of the loan that is necessary to procure that property.
There is a reason why I advise people shopping for a property to make a budget based upon what they can afford based upon current rates on 30 year fixed rate loans, or at the very most an amortized 5/1 ARM, and stick to it. That the maximum price you will offer - end of discussion. Even if you, the client, end up applying for another type of loan that has lower payments, if you could make the payment on a thirty year fixed rate loan, you are pretty certain you are not getting in over your head. But shop by sales price, not payment. "Creative financing" has become so pervasive that shopping by the payment the real estate agent has posted, or tells you about, is severely hazardous to your financial health. This number should be the most important thing buyer's discuss with their agents, and the budget must be quoted in terms of purchase price, not monthly payment. There are too many games that can be played with monthly payment.
Indeed, the very head of the list of reasons why buyers should fire an agent is that the agent showed them a property which can not reasonably be gotten for the sales price limit they told the agent about. You tell me that your limit is $320,000, it might be okay to show you a property listing for $340,000 or even $350,000. In the current buyer's market, that's a comparatively small amount of bargaining power. In a seller's market, of course, it would likely rule out anything where the ask is over $325,000. But if the agent shows you a property listing for $450,000, simply ask to be taken home or back to your vehicle immediately, and then inform them that their services are no longer required and that you desire them to make no further efforts to contact you. Were I shopping for a property, I would demand to know the asking prices before I went, and not only fire the agent but also refuse to go if they cannot show me why they think this property can be obtained for the total cost limits we have agreed upon. Not monthly payment limits, sales price.
So what loans should not be used to purchase a property? Well keep in mind that this list assumes that your loan providers are telling the truth about the kind of loan they are working on for you, an assumption that, judging by a dozen or so different e-mails I've gotten from people who were scammed, is increasingly iffy. Furthermore, if you are a real financial and loan expert, there are reasons why these warnings may not apply, particularly if the property in question is investment property, but those sorts of experts should know the exceptions, should not be looking to this website for advice, and are always able to accept the financial consequences of not following these guidelines (in other words, they have the ability to absorb the losses).
The absolute head of the list, the loan that should never be used for purchase of a primary residence is the negative amortization loan. Known by many other friendly sounding names such as "pick a pay", "Option ARM", "COFI loan," "MTA loan," and "1% loan" (which it is not), this loan is a truly horrible choice for the vast majority of the population (99%+). It was only approved by regulators to service a very small niche market, and if you are a member of that niche market, chances are that your Option ARM will not be approved by the lender! This loan is usually sold strictly on the basis of the fact that the minimum payment is lower than any other type of loan, making it look like clients can afford a loan that they cannot, in fact, afford. This low payment is based upon a low nominal, or "in name only" rate that is not the real rate the money is accumulating interest at. In fact, the real rate that you are being charged is currently at least 1.5 percent above equivalent rates for thirty year fixed rate loans, as well as being month to month variable. How often do you think people who are being fully informed of the loan would agree to accept a rate a full 1.5 percent higher on a fully variable loan than what they would have gotten on a thirty year fixed rate mortgage, and with a prepayment penalty also? The lenders pay very high yield spreads for doing these loans, and the bond market pays even higher premiums, so many lenders push them hard, and many wholesalers push them even harder. Despite being warned that I was not interested in any loans that feature negative amortization, three new potential wholesalers have gotten themselves thrown out of my office in the last month. I guess they weren't interested - or able - to compete with other lenders on real loans.
The Interest only 2/28 does have one redeeming factor, as compared to the negative amortization loan. At least your balance isn't getting higher every month. With the average loan around here being about $400,000, a rate of 5.5% would have the payment being $1833. But if that's all you can afford, what happens in two years when the rate adjusts and it starts amortizing, and if the market stays right where it is today, the payment goes to $2771, an increase of 51%? You haven't paid the principal down. There's a pre-payment penalty stopping you from selling or refinancing until it does adjust. If prices have appreciated enough to pay the costs of selling you might not come out so bad, but what if they haven't, or if prices have actually gone down? This is not the sort of bet that someone with a fiduciary relationship should make, as real estate prices increasing is not something you can make a risk free bet on. Millions of people are finding that out right now.
The next loan on the list is the 3/27 Interest Only. This does offer you one more year to get your act together and start making more money to make the payments with than the 2/28. The downside is that it actually adjust higher due to the increased interest only period. In the example above, the payment would adjust to $2804, an increase of just under 53%. This also means you have another year for the value of the property to do the historically normal thing and appreciate a little. Still doesn't mean it's a bet somebody with a fiduciary responsibility should be making with your finances.
The next type of loan to be wary of is anything stated income or even lesser levels of documentation (NINA or "no ratio" loans). These loans are great and wonderful if you really are making that money and really can make those payments, but don't let the temptation to buy a more expensive property lead you to exaggerate what you really make, or allow a loan officer to exaggerate what you really make, in order to qualify for the loan. Remember, you are still going to have to make those payments, and if you can't, the bad things that will happen more than counterbalance the nicest thing that might happen. Again, millions of people are discovering this right now.
Somewhat less dangerous are interest only loans with a longer term or extended amortization loans. A five, seven, or ten year interest only period, while much more endurable than a two or three, is still not a certain bet of making a profit. Same thing with a forty or fifty year amortization loan. Given the way the rate structure is applied by most lenders, these loans are given out by lenders wishing to cover questionable lending practices to people who do not qualify for interest only loans according to bond market guidelines. Still, if it's got a good long fixed period of at least five years, you are paying the balance down and it's a reasonable bet that you will be able to sell for a profit before the adjustment hits. Not a certain bet, but a reasonable one, as in "the odds of making a profit or being able to refinance on more favorable terms before the payment becomes something you cannot afford are definitely on your side."
The ordinary 2/28 and 3/27 are dangerous enough for most fully informed adults. Using the interest only examples above, the 5.5% rate actually becomes 5.25% fully amortized, as it's a less risky loan. The initial payment becomes $2208, which does pay the loan down some, but then the payment becomes $2691 (in the case of the 2/28) or $2678 (3/27) holding the market constant as it sits and keeping other background assumptions constant. If you cannot afford these smaller jumps when they happen, at least you've got several thousand dollars that you have paid the principal down to use for closing costs on the new loan or towards the costs of selling, but be aware that the market is never reliable in its fluctuations over a short period of time, and using these loans for a purchase can and many times has meant that when the fixed period ran out, those people who choose these loans are in the unenviable position of being unable to afford their current payments, being unable to refinance, and being unable to sell for enough to break even when you consider the costs of selling.
There is nothing really wrong if you can afford the thirty year fixed rate loan but deliberately choose some other loan. I do this myself to save money on interest charges, which is the real major cost of the loan, but as narrow as the gap in rates is right now, even I might choose a thirty year fixed rate loan if I needed to refinance. It's not being able to afford the sustainable loan that will kill you. If not a thirty year fixed rate loan, at least a fully amortizing ARM with a fixed period of at least five years.
The most important things about any loan is the interest you are being charged for the money you are borrowing, how long it lasts, and the cost in dollars of getting that loan done, not a lower minimum payment that, certain as gravity, has a gotcha! engraved on it that will cause you to regret getting that loan. Unfortunately, we cannot go back to the past with information we learn in the future, and real estate loans are especially unforgiving of borrowers who do not understand the future implications of their current loan decisions.
As a final note, I have structured this essay around the loan to purchase a property, but the arguments work just as strongly and just as universally for so-called "cash out" refinances as they do for purchase money loans.
First off, neither the California Mortgage Loan Disclosure Statement nor the Federal Good Faith Estimate are promises, commitments, or anything more than your loan provider wants them to be. Quite often, they're nothing more than a fictional story told to get you to sign up for their loan. It's amazing and disgusting how much it's legal for lenders to lowball their quotes.
That said, there are three explanations as to why your rate is higher. They're not mutually exclusive by any means, but it has to be at least one of the three.
The one that reflects on you is that you somehow misrepresented your situation when you were getting that loan quote. In that case, you are no one's victim except your own. It is pointless to lie to a loan officer, and if you don't know the answer, you should say "I don't know" instead of making one up. This does happen, but it's probably the rarest of the three answers, and you should know if you did it. If you didn't do this, what's left is one or both of two common loan officer sins.
The less abusive of these is that the loan officer failed to lock the loan. This is either rank stupidity or frustrated avarice. Shorter rate locks are cheaper, and there's always the hope that rates will go down, so they can make more money on the same loan they quoted you. Of course, rates can go up, also, and they do so about fifty percent of the time. When that happens, they can either make less money, often to the point where delivering the original loan would cost them thousands of dollars, or they can deliver a loan with a higher rate. Since we're living in the real world here, which of these alternatives do you think is going to happen?
The more abusive alternative is that you were deliberately lowballed. There is always a tradeoff between rate and cost for real estate loans, and the person who gave you that quote told you about a loan that didn't exist. Either it always carried a rate much higher than you were told, or the loan officer ignored potentially many thousands of dollars it was going to cost all along. I see this happening literally every time I check a loan quote forum. I do business with eighty lenders, among which are the lenders who are most keen to compete based upon price. I know what's deliverable and what is not, every other loan officer I respect knows what is and is not deliverable, and I can't imagine anyone in their right mind wanting to do business with anyone who doesn't know whether what they quote is deliverable. It's not exactly confidence inspiring to be told essentially, "I can get you this loan, but I don't know if it really exists." I'm sure you'd line up for that loan like it was free beer, right?
Not really. But loan officers do this because none of the paperwork you get at the beginning of the loan process is in any way binding. Not for price, not for a loan at all. In fact, the only form that's required to give an accurate accounting of the costs is the HUD 1, which you don't get even in preliminary form until you are signing final loan documents. Loan officers do this because once you have signed up for their loan, you are likely to sign the final loan documents no matter how bad they are. Why is that? Because thirty days or so have gone by, you've got a deposit at risk that you're going to lose if you don't sign, and you're not going to get that house that you wanted badly enough to put yourself in debt for thirty years. I assure you that loan officers know that they will have you over a barrel when you go to sign final documents. Many of them are counting upon that from the day you sign up, and they'll tell you anything at loan sign up in order to get you to choose their loan, because it's not like any of this is binding on them.
Let me get one other thing out of the way to clear the air: You didn't get a higher rate because you somehow didn't qualify for the lower rate. The way people qualify for loans is based upon debt to income ratio and loan to value ratio, and of those two ratios, debt to income ratio is much more important. The lower the debt to income ratio, the more qualified you are. Debt to income ratio is a measure of the ratio of how your housing and expenses compare to your overall income. Lower interest rate means lower payments. Lower payments mean lower debt to income ratio, and hence, you become better qualified the lower the interest rate that is available. Counter-intuitive though it may be, it's easier to qualify you for a lower interest rate than a higher one. Any loan officer who offers you an excuse that you didn't qualify for the lower rate has just flat out told you that they are a liar.
What really happens is that while this loan officer was spinning you a tale of how great the rate you were supposedly going to get was (a loan officer's version of, "Yes I'll respect you in the morning"), in amongst all that creative storytelling, they neglected to account for the money you really are going to be paying, or even the money they admitted you were going to be paying.
However, we're dealing in the real world here. That money still needs to be paid.
There are three ways to pay it: Borrower cash, rolling it into your mortgage balance, or by giving you a higher rate. They have to tell you if they want more cash, and you may not have it. There's only so much equity in the property, particularly on a purchase where there is no playing of valuation games via a compliant appraiser. But since there is always a tradeoff between rate and costs, they can always create some more cash by sticking you with a higher rate, resulting in more cash available to pay for the things you were going to be paying from the very first. Often it means they'll make more money as well, for providing this "service", because "you were such a hard loan." Sticking you with a higher rate is often the only way they can pay for all the things that need to get paid. Yes, this means that you end up paying more for the low-ball deceiver's loan than for a loan where you were quoted something honest.
All of this is nothing more than practical effects of the common phenomenon of lenders low-balling their quotes to get you to sign up with them, knowing that when the time comes to actually deliver that loan, they will have all of the power and you will have none, which is a 180 degree reversal from the situation at sign up. They have this loan that you need right now, where anyone else will take time you probably don't have. If rates have gone up (once again, this happens about fifty percent of the time), even the lowest cost, most ethical provider in the world might not be able to deliver what this scumbag is offering you by signing his loan right now. If he's got the originals of your documents, you can't take your loan elsewhere. Finally, most people are tired of the whole loan thing by the time it comes to sign documents. Many folks won't examine the final documents carefully - figures I've seen say that over fifty percent of all borrowers literally never figure out that they were hosed by their lender, and on the ones who do figure it out, about eighty five percent will sign anyway because signing means they're done.
The games that lenders play are legion. They can lure you in with talk of low rate that exists, but costs you more than you'll ever recover. Whether they deliver that rate and soak you on the cost end, or switch it off for a higher one to pay the costs and make more money, is up to them. I see lenders quoting full documentation conforming loans for people who are known to be stated income, temporary conforming ("Jumbo conforming") or even non-conforming loans. Even for people who are full documentation and would have qualified if that loan existed at the costs they told you about, this need to raise the rate can move you to over to being a stated income loan because you no longer qualify full documentation at the higher rate. With stated income loans under the constraints they've encountered in the last few months, this not only means higher rates, but quite often means that no loan can be done, something completely alien to the thinking of many agents and loan officers who became accustomed to the Era of Make Believe Loans, and they haven't yet gotten their heads out of that mindset.
How can you avoid this? Ask all these questions of every loan provider, know what the red flags are if you encounter them, and take steps to protect yourself from being lowballed. A written loan quote guarantee is good, but can be hard to enforce immediately. Better yet is to apply for a back-up loan, so you have two loans ready to go. This is leverage to force one or the other of them to actually deliver something better than they are trying to.
You don't need to get victimized by any of the things that go on in the world of mortgage loans. But you have to understand that they do happen, and you have to take specific steps to prevent it from happening to you. Otherwise, you're just trusting to luck, and judging by what people have brought me from other providers, you'd need less luck to win the lottery so you can pay cash for the property.
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