Help for Home Buyers From the Inside

By Michelle Singletary
Sunday, September 30, 2007

The news in the housing sector just keeps getting worse.

Most recently, the National Association of Realtors reported that in August -- for the sixth consecutive month -- sales of existing single-family homes declined. The association expects similar results when the numbers come in for September.

But there is good news in the sales slump.

"Mortgage interest rates have been declining and loan availability is improving," said NAR President Pat V. Combs. "The abundant choice of homes is permitting buyers to better negotiate price and terms."

For the savvy buyer, this market can yield a good deal. On the other hand, what about those buyers who don't know how to negotiate with lenders or loan officers?

Part of the reason the mortgage industry is in such a mess is that borrowers were steered into bad loans by greedy and, in some cases, unethical lenders, loan officers and mortgage brokers.

It's more likely that people need an outside coach with inside information.

And that's the role author David Reed plays in "Mortgage Confidential: What You Need to Know That Your Lender Won't Tell You" (American Management Association, $16.95). It's why I've chosen the book as my October selection for the Color of Money Book Club.

In a survey by earlier this year, homeowners with mortgages were asked what type of loans they had. It doesn't surprise Reed that 34 percent of the respondents had no clue.

"The average loan officer might close 80 loans per year," he writes in his book. "But you might buy only two or three houses in your lifetime. That means that your loan officer does on a routine basis what you do on very, very rare occasions."

Clearly that disparity puts borrowers at a disadvantage.

As a former mortgage banker and senior loan officer, Reed has closed more than 1,000 home loans. He said he's seen it all.

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