Help for Home Buyers From the Inside

"I've seen people attempt to commit loan fraud -- consumers and loan officers alike," he said. "I've watched the interest rate market shake, rattle and roll through various rate hikes and rate cuts."

Throughout the book Reed stresses the need to understand mortgage terms.

For example, if you're applying for an adjustable rate mortgage, you should know what a margin is.

"ARMs can get lost in a sea of vocabulary," Reed writes. "Start rates, LIBOR, annual caps, lifetime caps, fully indexed -- it can get confusing. It's the margin that you need to concentrate on."

The margin is the number, expressed as a percentage, that is part of what is used to determine the rate a borrower will pay, Reed writes. Let's say, for example, that your loan is based on a six-month CD at 4 percent and the margin is 2 percent. You may have been attracted to the loan by that 4 percent teaser, or starter, interest rate. But your fully indexed rate is that 4 percent teaser plus the 2 percent margin, for a combined rate of 6 percent.

"It's not uncommon for lenders who offer lower start rates to offset that with a higher margin," Reed said.

A common margin is 2.75 percent. "Anything above that is nothing more than a lender's attempt to get more interest from you faster," he writes.

Reed covers everything from where the money for mortgage loans really comes from to closing costs (I found the tips in this chapter particularly enlightening) to refinancing to the various loan choices available.

The greatest service Reed provides is acting as an interpreter.

"Mortgage Confidential" is like reading the Cliff's Notes for "Hamlet." You shouldn't substitute the notes for actually reading the play, but reading the notes beforehand can help you understand the language. You feel less intimidated.

Reed breaks down the lingo of the industry and provides good unbiased information that will help you ask the right questions and avoid getting snookered.

If you don't want to be like a third of homeowners who don't know what type of loans they have, get a copy of this book.