Mortgages For Dummies, 2nd Edition (Paperback)

by Eric Tyson (Author), Ray Brown (Author) "Do you feel less than fully informed about mortgages and related housing decisions?..." (more)
Key Phrases: loan lingo, homeownership expenses, ongoing interest rate, Fannie Mae, Freddie Mac, Determining Your Borrowing Power (more...)

Editorial Reviews

Amazon.com Review
For many of us, the single biggest financial transaction is buying a house. Even more significant than the hefty down payment we fork over is the 15- to 30-year mortgage that needs feeding every month. If you have this much at stake, a little knowledge can go a long way, which is where Eric Tyson and Ray Brown come in. In Mortgages for Dummies, Tyson and Brown (who also wrote Home Buying for Dummies and House Selling for Dummies) provide a comprehensive introduction for anyone who is contemplating a mortgage. The book 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. The authors also devote a section to refinancing and discuss what you should consider when prepaying a loan. They include amortization and remaining-balance tables, and a useful glossary. Whether you're a first-time home buyer or are just looking to refinance, you'll find this a valuable, easy-to-use guide. --Harry C. Edwards --This text refers to an out of print or unavailable edition of this title.

Review
"Fun-to-read.... Deciphers mortgage mumbo-jumbo." —San Jose Mercury News

"A favorite.... Fun reading and informative." —Minneapolis Star Tribune

"Objective, down-to-earth.... A book I wish I'd read before purchasing my first lemon-of-a-home." —Wilmington News Journal

"Invaluable information, especially for the first time home buyer." —Fort Worth Star-Telegram --This text refers to an out of print or unavailable edition of this title.

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Product Details

• Paperback: 312 pages
• Publisher: For Dummies; 2 edition (August 27, 2004)
• Language: English
• ISBN-10: 0764571923
• ISBN-13: 978-0764571923
• Product Dimensions: 9.1 x 7.3 x 0.7 inches
• Shipping Weight: 1 pounds
• Average Customer Review: 4.3 out of 5 stars See all reviews (20 customer reviews)
• Amazon.com Sales Rank: #283,083 in Books (See Bestsellers in Books)

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Customer Reviews

Most Helpful Customer Reviews

80 of 84 people found the following review helpful:

5.0 out of 5 stars Great Book For home buyers or refinancers, September 17, 2002

By	Peter Hupalo (MN United States) - See all my reviews (REAL NAME)

This review is from: Mortgages for Dummies (Paperback)

Buying a home is the biggest financial deal many people will ever make. If you're about to buy your first home it pays to learn the ins-and-outs of mortgages. Structuring your mortgage properly can save you thousands or even tens of thousands of dollars over the life of the mortgage. "Mortgages For Dummies" explains how mortgages work and how to get a great deal on your mortgage.

"Mortgages For Dummies" begins by asking the reader to evaluate how large of a mortgage he/she can afford. Tyson and Brown discuss budgeting, which is something many people will already know. The authors point out that in addition to covering your basic expenses, such as food and water, you must also allow for your other financial goals, such as retirement planning. Only through budgeting will you get a handle on how large of a mortgage you really can afford. Obviously, you don't want to wind up with mortgage payments you can't pay!

Lenders have separate evaluations of how much you can afford. Tyson and Brown suggest that lenders will expect your monthly housing expenses and repayment of non-housing debt to total no more than about 36% of your monthly income. And, your total housing expense probably shouldn't exceed 28% of your monthly, pretax income.

Tyson and Brown suggest not making an overly large down payment, "if it depletes your emergency financial cushion." And, don't accept a bigger mortgage than you think you can afford just because the banks say you can afford it!

If possible, you probably want at least a 20% down payment on your home. Lenders borrowing to people with less than 20% equity have found that there is an increased risk of default. Because of this, Tyson and Brown explain new homeowners with less than 20% equity in their homes will need to pay Private Mortgage Insurance (PMI). PMI can cost hundreds of dollars a year. PMI benefits the borrower, not the homeowner. Tyson and Brown suggest that as soon as you have 20% or more equity in your home, you should eliminate PMI.

Another option is to have the government insure or guarantee your loan. Mortgages For DummiesTM mentions FHA, VA, and FmHA government-guaranteed loans.

Chapter 3, Fathoming the Fundamentals, was one of my favorite chapters. The chapter does a good job explaining the secondary loan market and the purpose of the Federal National Mortgage Association (FNMA, or Fannie Mae) and the Federal Home Loan Mortgage Corporation (FHLMC, or Freddie Mac).

"Mortgages For Dummies" discusses the difference between conforming and non-conforming mortages. Tyson and Brown write: "This delicious tidbit of information can save you big bucks. Conventional mortgages that fall within Fannie Mae's and Freddie Mac's loan limits are referred to as conforming mortgages. Mortgages that exceed the maximum permissible loan amounts are either called jumbo loans or nonconforming loans. ... You pay dearly for nonconformity."

"Mortgages For Dummies" goes on to give the money-saving tip: "If you find yourself slightly over Fannie Mae's and Freddie Mac's limit, don't despair. You can either buy a slightly less expensive home or increase your cash down payment juuuuuuuust enough to bring your mortgage amount under the conforming loan limit." The "juuuuuuust enough" isn't my typo, although I probably got the number of u's wrong. It's Dummies' humor.

Today, "Mortgages For Dummies" Chapter 9, Refinancing Your Mortgage, will be popular. Tyson and Brown provide an example showing how quickly your refinancing will breakeven. They give us "Refinancing's Magic Formula" to calculate if you should refinance.

"Mortgages For Dummies" doesn't formally introduce the annual percentage rate or APR, and I believe this is a critical oversight. (The book does mention APR in its glossary). So, you might be quoted 7.2% and not realize this rate doesn't take into consideration points and fees you will pay, i.e. it's not the APR. Suppose your current mortgage rate is 8% (APR), you might quickly calculate that you save (neglecting tax effects) 8 - 7.2 = 0.8% on the principal loan amount. This would be incorrect, because your actual APR would likely be higher than 7.2% due to the added fees. You really need to distinguish between the fee-inclusive rate and the fee-exclusive rate you might be quoted.

Overall, I think reading "Mortgages For Dummies" is useful for people who are buying their first home or considering refinancing an existing home. Enough dollars at stake that you should pursue all information on the topic and become an informed consumer, even if you need to tolerate some siiiiily jokes.

Peter Hupalo, Author of "Becoming An Investor"

39 of 40 people found the following review helpful:

5.0 out of 5 stars Just what the doctor ordered, May 10, 1999

By A Customer

This review is from: Mortgages for Dummies (Paperback)

Excellent, plain English explanation of the various mortgages and how to choose one that best fits your situation. Also details how to shop and negotiate the best deal...with all the hype about shopping on the internet, that excellent chapter alone is worth the price of the book. I learned a lot about "creative financing" techniques like 80-10-10 loans that I knew nothing about before picking up a book. I've tried other mortgage books and found them to be dull and not to the point. This book was a joy to read and left me thinking clearly!

30 of 31 people found the following review helpful:

4.0 out of 5 stars very helpful, if not extremely polished, September 22, 2000

By	M. H. Bayliss "book queen" - See all my reviews (TOP 500 REVIEWER)    (REAL NAME)

This review is from: Mortgages for Dummies (Paperback)

You will definitely find out just about anything you wanted to know about mortgages: fixed and ARM (all the others are variations on these themes). My only small complaint is the same as the reviewer's below: several times the authors refer to appendices that are not there! There are also some typos ("suprised") some in prominent places -- it just gave me the feeling that the book was rushed. One piece of information I felt they could have spent more time on was the mechanical side of paying down a 30 mortgage faster. For example, how many years does it take off your loan to put in one extra payment a year, or $100 per month, etc.... Home buyers often pick a 30 year mortgage because of the low monthly payment, but can strive to put in an extra payment a year to save tens of thousands of dollars of interest. This information would have given more details to the types of mortgages most people get. The authors spent a bit too much time by comparison on some relatively rare loans (reverse mortgages) although no one will put a gun to your head and make you read those parts. Overall, it was easy to follow and the best of the books on understanding how mortgages work and how to compare them.