Review: The New Rules for Mortgages

The New Rules for Mortgages
by Dale Robyn Siegel

In the wake of the subprime mortgage meltdown and ensuing economic crisis, it’s no secret that the rules for buying a home and getting a mortgage have changed. But it might be hard to get a straight answer from someone on just how those rules have changed. Unless that someone is Dale Robyn Siegel, attorney and licensed mortgage broker! Ms. Siegel has been in the real estate industry for 20 years, and has decided to lend her knowledge to the public in her book, The New Rules for Mortgages.

Chapters 1-3: What You’ll Need

The first three chapters focus on the three major things that you’ll need before you can get a mortgage:

• A good credit score
• Income
• A down payment

These three chapters are especially useful if you’re a college student or 20-something interested in buying a home a few years down the line. The sooner you act on establishing and improving your credit score, the better off you’ll be. The book covers everything you could possibly need to know about credit scores and how yours will affect your ability to take out a mortgage, and the interest rate you’ll receive.

The income and down payment chapters, like the rest of the book, are incredibly detailed. Unlike some mortgage books, which assume you have a 9-5 steady job, this one covers every income scenario under the sun. As someone who makes her income from self-employment and freelancing, I found this chapter immensely refreshing and helpful!

I never knew there were so many sources you could have for your down payment, or all of the rules associated with them, until I read the third chapter. This book is really designed to cover a wide range of scenarios, and not leave anyone in the dark about their mortgage process.

Chapters 4-6: Prepping For A Loan

Chapter 4 covers the part that most people actually like about home buying, and spend the most time on: shopping for the property you want to buy! Since what you need will be specific to your situation, this chapter mainly focuses on pitfalls to avoid (like illegal apartments) and what needs to be done for appraisals. It’s one of the shorter chapters in the book (although no chapter is exceedingly long).

Over the last few decades, mortgages have become a lot more complicated mostly due to the range of loans available. Gone are the days when all mortgages were fixed-rate, and you just picked the length! Of course, fixed-rate loans are still available, and are the preferred type in many situations. (Old Faithful, Slow and Steady Wins the Race… clichéd wins out when it comes to mortgages!) But because this book is so comprehensive and covers so many different situations, Siegel takes the time to explain the other types of loans available, and the situations they would be appropriate for.

Once you’re ready to start shopping for a loan, Siegel guides you through the different places to start that process. As a mortgage broker herself, she clearly favors mortgage brokers. She backs that up with sound reasoning (mortgage brokers can help you not get locked into just one loan with one bank), it’s important to keep in mind that this particular piece of advice is naturally biased.

Chapters 7 and 8: Getting Your Loan

These two chapters walk you through the actual process of filling out the paperwork and, finally, closing on a mortgage. They’re pretty straight forward step-by-step chapters that point out the pitfalls, as well. As you might expect, there are a lot of pitfalls to avoid throughout the whole process! There are a few helpful hints thrown into these chapters as well, such as what to do if you buy a house in the winter and can’t check on the air conditioning or swimming pool.

Chapters 9-11: Standalone

Each of the three chapters at the end of the book are sort of miscellenous topics. Though important, it’s hard to categorize them as any one thing. Chapter 9 covers the huge range of property types. Again, this book refuses to make the assumption that you’re a 9-5 worker buying a standard house. Although it’s helpful if you are, there’s plenty in here for everyone else. There’s even a bit on “log homes,” which hit me right in the heart, because I grew up in a log home!  There’s also quite a bit in this chapter about co-ops and condos.

Though not cheery, the topics of Chapter 10, Protecting Your Home Ownership: Divorce, Dispute, and Death must be handled. Failure to heed the advice in this chapter can lead to disaster down the road. Losing one’s home occurs with terrifying regularity in this country, so this chapter is especially important. Those of us who are still young sometimes believe these types of things will never happen to us — but we would be wrong about that!

The final chapter offers a few hints and tips for life as a homeowner: insuring the house, building equity, maintaining the property, and possibly refinancing. It’s a bit of an abrupt ending, but if you’ve made it this far, do you really want to just keep reading about mortgages?

Criticisms

Although I liked the book overall, I have just a few reservations about it. It’s rather short, which is fine if it’s just the first book you read about home ownership and mortgages. It’s a great starter book for young people who hope to be homeowners at some point. But it probably shouldn’t be the only book you ever read before buying a home.

Additionally, I found a few factual inaccuracies in the book. On page 27 in Chapter 1 the different ways to obtain a free credit report are listed, but http://www.annualcreditreport.com isn’t really covered. It’s mentioned, but the book inaccurately states that you can only get your Experian report from there, and that you’ll have to enter credit card information and cancel a service. Actually, you can get all three credit reports from that site, for free, without ever entering any credit card information or signing up for any services.

The other inaccuracy I found was on page 55 in Chapter 3, which stated that Roth IRAs are “pre-tax” retirement accounts, and there will be taxes and penalties for taking money out before age 59[1/2]. That would be accurate if it said “Traditional IRAs,” but is not true for Roths. Roth IRAs are “post-tax,” and you can take out any of your contributions without tax or penalty.

I should note that I received a “uncorrected proof” for review purposes, so these inaccuracies may actually be corrected in the final print of the book. Additionally, I feel these are just small errors in an otherwise good book.

Recommendations by Age Group

College Students: The book may be a little much if you’re just starting out with personal finance. But if you’re dedicated to the idea of owning property in the future, it’s a good read. The first three chapters will be of the most help to you. Recommended for some.

20-Somethings: As soon as the idea of home ownership starts rattling around in your head, it’s a good idea to start reading books like this one! Recommended.

30-Somethings and Beyond: If you aren’t yet a homeowner, this book will be very helpful in getting you there. But it’s going to be a lot of repeat information if you have already been through the mortgage process before. Although the book is called The New Rules…, you’d find yourself skimming a lot to find those “new rules” for mortgages. Recommended for new home buyers.

The New Rules for Mortgages can be yours for about $11 on Amazon.com.