Publication Date: Friday, April 18, 2008
Guiding the home-loan bewildered
Local brokers write mortgage primer in these subprime times
The mortgage market, with its LTVs, APRs, ARMs, FRMs and other inexplicable acronyms, is enough to send anyone running scared -- sometimes right into the comforting arms of a dishonest broker or an Internet scam artist. People need help making sense of it all, and knowing whom to trust.
That's why Rick Stern and his associates at Stern Mortgage in Palo Alto, Todd Flesner and Julie Fukuhara, set out to write "Mortgages Made Easy," a roadmap to the mortgage market designed for navigating the nasty landscape and leading readers to easy street.
Stern said the book was born "when the subprime debacle was festering, and the three of us went to Dallas for a seminar to learn how to market better. What it ended up being was a seminar on how to gouge our clients.
"Well, we were frustrated. It was all about the best interest of the broker, not the borrower, and later, while we were riding around town, we decided we want to do it right, to enable people to ask the right questions to protect themselves."
This set the authors on the yearlong collaborative writing process, Flesner said, until they had produced a book "that speaks to people the way you would face to face. Most people don't need intimate details, they just have to ask the right questions. If you take a car into a garage and don't know anything about how it works, it's real easy to get hammered by a mechanic. The same principle applies."
The book, published last fall, aims to lead readers through all the different types of lenders, loans, applications processes and associated costs without getting bogged down by jargon. Stern hopes the book will not only enable people to ask the right questions of lenders, but also ask the right questions of themselves.
"Most of us grew up in a home our parents owned, and think we need exactly the same, and often that's just not true," Stern said. "What are your financial goals and obligations over the next five to 10 years? A mortgage is a tool, and you need to pick the right tool at the right time for the right purposes."
"And about more than just shopping for the lowest rate," added Fukuhara, who is also Stern's daughter. "Things are more complex than that. Somebody with bad credit is not going to get the same rate as someone else. If you call a broker and they give you a rate without asking any questions, well, it's probably not a good broker."
"You need to seek out referrals," agreed Flesner. "And find someone who is accountable."
"Yes," Stern said. "If I sell you your mortgage, and then I run into you at the grocery store, well, I better be able to look you in the eye. ... Have you heard of premarital counseling? Well, you need pre-buyer counseling, too." The book is a start.
"Mortgages Made Easy" is available from Amazon.com or on the Stern Mortgage Web site at www.sternmortgage.com.