Mortgage expert David Reed invites Walletpop readers to ask him questions about real estate financing. leave your questions in the comment section of this post.

Rates over the past few months have been volatile, to say the least. I recall one day where mortgage rates on a 30-year fixed rate loan went up nearly 1/2% in one day. That's a rare occurrence, but not unheard of. Rates can move throughout the day based upon a variety of economic or political factors but the fact that they do move requires a portion of prudence when it comes to qualifying.

Realtors, lenders, even your beer buddies acknowledge the importance of getting pre-approved by a lender before you go shopping for a home. When you do so you can shop in confidence. That is unless you were pushing debt ratios to begin with while mortgage rates hovered near 5 1/2%, like they did last March. Now, rates are closer to 6% and if you got pre-approved for a home loan a couple of months ago and are still shopping you might want to contact your lender and make sure you can still qualify.

This is especially true for those who might have been pre-approved for a mortgage to buy a brand new house but the builder isn't finished with your new abode. A lot can happen over several weeks, shoot, a lot can happen in the course of a business day. If you're pre-approved, it pays to contact your lender to find out how high rates can go and still keep your pre-approval. If you make an offer on a house and rates have gone up, you might be in for a sad surprise.

Real estate finance expert David Reed is president of CD REED Mortgage Bankers in Austin, TX and author of Mortgage Confidential: What You Need to Know That Your Lender Won't Tell You and Mortgages 101: Quick Answers to over 250 Critical Questions About Your Home Loan.

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Mortgage expert David Reed invites Walletpop readers to ask him questions about real estate financing. leave your questions in the comment section of this post.

Credit reporting involves a massive database. A credit repository is a library full of information about the payment histories of consumers nationwide. Each time someone makes a charge on a credit card or makes a payment each month, that individual act is recorded and sent to the database for other businesses to research credit histories of potential customers to determine their creditworthiness, or lack thereof. There are three main repositories that store such consumer information; Equifax, Experian and Trans Union. It's the job of these three organizations to store credit data sent to them by merchants who in turn use those same three to research credit histories of other potential credit customers. As you might imagine, keeping this database current and accurate is a challenge. And there are plenty of mistakes going around.

Is your name Joe Smith? Then you might imagine you're not the only Joe Smith who lives in Detroit. It's possible that at some point another "Joe Smith's" credit data could be accidentally "dumped" into your credit profile without your knowing about it. When you applied for credit, did you apply as "Joseph" instead of "Joe?" Or later in life did you drop the "Joseph" altogether and just went straight for the "Joe" moniker? "Smitty" maybe? Or perhaps your name was misspelled at some point by someone else and your name appears incorrectly at the credit bureau.

Did you pay that collection account but the credit report says you didn't? That bankruptcy is not yours? Who is that other Joe Smith, anyway?!?

When applying for a mortgage and your lender pulls your credit report you might be surprised that someone else is appearing on your report by mistake. Or that an account you paid off is incorrectly showing as outstanding and in collection. Consumers are advised to regularly check their credit reports for errors...but what do you do when you find one? Or two?

The hard way is the obvious way, contact the three credit repositories, go through a series of "If you are a consumer, Press 1" or "If you want to report an error, Press 3" or the popular, "Para Espanol, marque le dos." After about five minutes of pressing numbers and getting to the right person you're asked to fill out some forms and forward your documentation disputing the credit error. After a few weeks you might have everything fixed. Or not. But the easiest way to have credit errors fixed is to have your loan officer do it for you instead. How can they do that?

Lenders have business relationships with credit reporting agencies. These agencies also hire customer account representatives who literally make sales calls on mortgage companies soliciting their credit report business. One of the services these agencies offer lenders is the ability to correct mistakes found on their borrowers' credit reports. Is there a collection account showing outstanding that has been paid? Then all you need to do is fax to your loan officer the documentation showing payment and your loan officer sends it to the credit agency. The credit agency looks at the documentation, removes the offending entry and provides a brand new credit report without the credit mistake. Something that might take you weeks to do along with the frustration of going through voice mail hell can be fixed in a matter of moments. This really works, I've done it for my clients several times over the years.

Yes, check your credit before you apply for a mortgage. But if you find a mistake, don't worry, take the easy road: Let your lender do the work.

Real estate finance expert David Reed is president of CD REED Mortgage Bankers in Austin, TX and author of Mortgage Confidential: What You Need to Know That Your Lender Won't Tell You and Mortgages 101: Quick Answers to over 250 Critical Questions About Your Home Loan.

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Mortgage expert David Reed invites Walletpop readers to ask him questions about real estate financing. leave your questions in the comment section of this post.

Okay, I admit. There are those who will vehemently disagree with the premise of not paying down debt, I'm among them, but there are times when not paying down debt makes perfect sense when considering buying real estate and obtaining a mortgage. On the other side of that very same coin, it also makes sense to pay down debt for the very same reason: to help qualify for a home loan. What's up with that?

When debt-to-income ratios are too high for a particular loan program, then getting rid of some of that debt to help qualify is in order. But which debt? Revolving balances on credit cards do very little unless you substantially pay down a credit card balance, from say $10,000 to $5,000, but simply paying $1,000 or so will do very little to reduce the minimum monthly payment on that revolving account. That means the debt to income ratio will barely be affected.

Not the case with installment loans, and in particular an automobile loan. An interesting underwriting guideline asks that if an automobile loan has less than 10 months remaining then the lender won't count the car loan against the borrower's debt even if the borrower is still making payments on the car. For instance, if a borrower's monthly car payment is $450 and has 12 months left, the borrower need only pay the note down to nine payments. That's $1,350 to pay down the auto loan instead of paying off the auto loan completely, somewhere around $5,500. (this trick doesn't work on a leased vehicle, the underwriter will assume that when the lease is over the borrower will have to buy/lease another automobile, keeping a similar debt load.)

A quirk regarding not paying off debt addresses credit scores. One of the biggest factors when calculating credit scores is the loan balance compared to available credit. The magic percentage seems to be somewhere around 33%, meaning a better credit score will be calculated with $3,333 in loan balances with a $10,000 credit limit compared to a $10,000 credit limit with zero balances. I know it sounds counter-intuitive, but having a zero balance on a credit card can actually lower a credit score compared to a loan balance of about a third of the credit line.

Real estate finance expert David Reed is president of CD REED Mortgage Bankers in Austin, TX and author of Mortgage Confidential: What You Need to Know That Your Lender Won't Tell You and Mortgages 101: Quick Answers to over 250 Critical Questions About Your Home Loan.

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Mortgage expert David Reed invites Walletpop readers to ask him questions about real estate financing. leave your questions in the comment section of this post.

Q: David- I have a 3-1 arm. Every 6 months the payment goes up. I need to refi and lock in lower payment but I now live in a "decreasing" neighborhood. My credit is excellent but nobody wants to refi me. I have no money to bring to closing!!! H-E-L-P!!!!!! -Groovner

A: Groovner: It's not a situation of a lender wanting to refi you, they certainly do, but only under underwriting guidelines that include a consideration of living in a "declining market." When an appraiser appraises a property, she must check a box that states if the market is stable or declining. Other lenders and mortgage insurers have identified various counties throughout the United States as "declining." When a property is in a declining market, lenders will require a lower loan amount compared to the current appraised value, typically 5% lower than normally required.

Perhaps you can save some money by taking a higher fixed rate in exchange for a lender paying some of your closing costs, but other than that all I can suggest would be to wait it out. One good point is that adjustable rates have been on a downward trend as of late and it's likely your next adjustment will be down, not up. -- David

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Mortgage expert David Reed invites Walletpop readers to ask him questions about real estate financing. leave your questions in the comment section of this post.

Q: David -- I've been asked by Freepoint to refinance with them. This company claims that I would build up wealth by investing the difference in my equity with them, getting an interest only loan. They state that having equity in your home is not good because someone can sue you and have a claim on your equity. After several years, one would have enough money to pay off their mortgage if they desired. I would like to get advice on this. They said the higher interest would be a tax write off and I would be investing the equity and getting a higher return. Please advise. Thank you. - Helen

A: Helen -- Don't return their phone calls. I don't know who that company is, and while I'm sure they're a fine organization, I'm not comfortable. I see three big problems with this "pitch" which used to be very popular among mortgage loan officers yet seems to be falling by the wayside.

1. Build wealth by investing the different in equity with them
2. Having equity in your home isn't good because someone can sue you
3. The higher interest would be a tax write off

Sheesh. And I thought loan officers like that were out of business or selling cars or something.

The fact is that people like these folks really don't care about you or your situation, they want to do two things: Strip the equity out of your home via a refinance so they can make money on your mortgage (with a higher loan amount, by the way, so they can make even more money off of you) and make commissions on investments they make on your behalf. I know this is only my opinion, but such pitches -- and they are pitches -- (and I'll just bet their "loan officers" are trained to read a script), make me sick to my stomach. -- David

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Mortgage expert David Reed invites Walletpop readers to ask him questions about real estate financing. leave your questions in the comment section of this post.

Q: What are your thoughts on the feds likelihood of dropping the interests rates again. I'd like to buy a home during this period of lower home prices, and relatively low interest rates. Trying to judge the housing market and interest rates to get them at there best levels is tricky. When do you think it will be the best time to jump in to get the most for my money. Thanks in advance, Steve

A: Steve- Fixed mortgage rates anticipate Fed moves and don't react to them. When the Fed makes a cut, mortgage rates view that move as an indicator of the future of the economy. When the Fed slashed the Fed Funds rate over a series of cuts, mortgage lenders saw that the Fed interpreted our economy as in dire, dire straits. Rates moved downward as a result. Wall Street is in general agreement that the next Fed cut will be a less draconian 1/4%.

But there are rumblings of an economy that's recovering. As well, inflationary fears are still being stoked. This is a double whammy for mortgage rates and in a bad way. First, mortgage lenders as well as the rest of Wall Street have already factored in a 1/4 point cut at their next meeting. Combine that with next week's barrage of sensitive economic data, most importantly payroll numbers, wage inflation, and the core price index and it's dicey at best. Finally, if you look back at all the Fed moves, mortgage rates are always higher after the last Fed cut. The trick is figuring out when that last Fed cut might be.

I agree with you, home prices are at relative lows as are interest rates, but the crystal ball simply isn't that clear to accurately predict the future. But a best guess is always in order. And my best guess would be to buy now. If rates go down even further sometime in the future, you can always refinance. But if they start to rise, you made a mistake you'll be paying for every month each time you write the mortgage check. -David

Real estate finance expert David Reed is president of CD REED Mortgage Bankers in Austin, TX and author of Mortgage Confidential: What You Need to Know That Your Lender Won't Tell You and Mortgages 101: Quick Answers to over 250 Critical Questions About Your Home Loan.

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Mortgage expert David Reed invites Walletpop readers to ask him questions about real estate financing. leave your questions in the comment section of this post.

Q: The Fed has reduced rates by three full percentage points since last September. I have been following long term mortgage rates for quite some time. 15 and 30 year fixed rate mortgages are only .25% lower than they were last September. No one I ask seems to know why mortgage rates are still so high and happen to be rising as I write this. The current yield on the 10 year bond is 3.83, up from 3.47 early last week. My question is this. Do you think we will see lower mortgage rates in the future? - Carl

A: Carl -- good question. No, I really don't see lower rates in the future, certainly not anything like three percentage points. If 30-year and 15-year fixed rates do fall they might go down another 1/4 to 1/2% but nothing near to what the Fed has done with the Fed Funds Rate.

The fact is that the Fed has very little to do with fixed mortgage rates. Surprised?

Fixed mortgage rates are directly to to their respective mortgage bond, which are traded all day long. They're then securities backed by mortgages (mortgage-backed securities). The Fed reduces the Federal Funds rate, which is a very, very short term rate...as in overnight. This rate is what banks pay for short term loans, typically in order to meet their reserve requirements. The Fed can raise or lower this critical rate to make money more or less expensive. The lower the rate, the increased likelihood banks will lend money to businesses which theoretically would stimulate the economy.

During economic downturns, like we're experiencing now, the Fed will act to make money less expensive by lowering the Fed Funds rate. 30 year fixed rates are not tied to overnight lending rates but to their associated mortgage bond, or specifically a Fannie Mae 5.50% 30 year bond or a Ginnie Mae 6.00% bond. Since bond values are susceptible to inflation, any indicator of inflation will eat away at the future value of a mortgage bond. Prices for those bonds would then fall which would raise the rate.

Inflation can occur when economies are running at full speed and demand for products and services rise. Inflation can also occur when the cost of money is so cheap the currency is devalued, like we're experiencing now. Fixed mortgages rates anticipate the likelihood of inflation.

So while the Fed indeed has dropped the Funds rate by 3%, fixed rates have remained relatively stable. You can find more information in my book, Mortgage Confidential.

Real estate finance expert David Reed is president of CD REED Mortgage Bankers in Austin, TX and author of Mortgage Confidential: What You Need to Know That Your Lender Won't Tell You and Mortgages 101: Quick Answers to over 250 Critical Questions About Your Home Loan.

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Mortgage expert David Reed invites Walletpop readers to ask him questions about real estate financing. leave your questions in the comment section of this post.

Let's do a flip on a previous post where we talked about how to lower your mortgage rate by 1/4% by paying one discount point. Lenders can lower your mortgage rate for you if you decide you want to pay them for the privilege. On a $250,000 note, two points would lower your rate by about 1/2% but it would cost you $5,000 to do so. What if you didn't have $5,000 for points? Well, then you'd get the mortgage rate offered at zero points. But what if you were also short on closing costs and didn't have the money for things such as an appraisal, title insurance or attorney fees? Again, look to your rate.

Just as lenders may reduce your rate by 1/4% by paying a point, they can also increase your rate by that same 1/4% and give you a point that you can use at closing to help offset closing costs. Does that make sense? Of course it does.

Using that same example with a 30 year fixed rate of 6.00% on a $250,000 mortgage, the monthly payment is $1,499 per month. Now increase that rate by 1/4% to 6 1/4% and the new monthly payment is $1,539 per month, or a difference of $40. Yeah, it's higher, but you also saved $2,500 in closing costs because your lender gave you one point at closing in exchange for a higher rate!

If you're short on cash or otherwise don't want to completely empty your piggy bank in order to buy a house, look at the option of exchanging a slightly higher rate for a cash rebate. The number just might work!

Real estate finance expert David Reed is president of CD REED Mortgage Bankers in Austin, TX and author of Mortgage Confidential: What You Need to Know That Your Lender Won't Tell You and Mortgages 101: Quick Answers to over 250 Critical Questions About Your Home Loan.

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Mortgage expert David Reed invites Walletpop readers to ask him questions about real estate financing. leave your questions in the comment section of this post.

Discount Points, or simply "points," is another of the slough of terms rarely heard outside the home loan process. Do you think lenders just make up all those foreign terms to try and confuse us? Possibly. Even so, this particular term deserves some attention because it affects what your monthly payments will be on your new mortgage.

A point represents 1% of your loan amount. For a loan amount of $250,000 one point would equal $2,500. A point is sometimes called a discount point because the point is used to discount your interest rate that you use to calculate your mortgage payment. How much does it discount your rate?

One point will typically reduce your mortgage rate by 1/4%. If your rate today is 6.00% then your lender would also offer 5.75% if you paid one point. Two points would reduce your rate by 1/2%. And you have choices as to whether or not to pay a point, more than one point or no points at all. It's up to you. So how do you decide whether or not to pay points? Simply take the difference in monthly payment the lower rate provides and divide that into how much your point(s) cost you. The answer is the number of months it would take to "recover" the cost of the point you paid to get the lower rate.

For example, a 30 year fixed rate at 6.00% on $250,000 gives you a $1,499 monthly payment. Paying one point, or $2,500, drops the rate to 5.75% and a $1,459 payment, or a difference of $40 per month. Divide $40 into the $2,500 point you paid and the answer is 62.5. As long as you will keep the mortgage for 62.5 months it would make sense to pay a point to reduce the rate. Over the life of the loan savings? By paying one point you would save $14,400 in interest. Not a bad trade-off.

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Mortgage expert David Reed invites Walletpop readers to ask him questions about real estate financing. Leave your questions in the comment section of this post.

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Mortgage expert David Reed invites Walletpop readers to ask him questions about real estate financing. leave your questions in the comment section of this post.

Q: David: What is "VA?" I'm hoping to be buying a house this time next year and I am trying to find out as much info as I can. - Josh

A: Josh: "VA" is short for "Veterans' Administration" or the Department of Veterans' Affairs. VA - backed mortgage loans were part of the original GI bill passed in 1944 as a benefit to those who served in the Armed Forces. VA loans require zero money down, highly competitive rates and relaxed credit guidelines when compared to conventional mortgages that follow Fannie Mae and Freddie Mac standards.

Generally speaking, those that qualify for a VA mortgage are those honorably discharged from the Armed Forces Active Duty, having served 180 days, National Guard and Selected Reserves, and spouses of service men or women who died in service or from a service-related injury.

If you qualify for a VA loan and want a no-money-down mortgage, there is no better mortgage alternative, period. For more information on VA mortgages, you can find my book, "Your Guide to VA Loans" in bookstores everywhere and online at amazon.com. -David

Real estate finance expert David Reed is president of CD REED Mortgage Bankers in Austin, TX and author of Mortgage Confidential: What You Need to Know That Your Lender Won't Tell You and Mortgages 101: Quick Answers to over 250 Critical Questions About Your Home Loan.

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Mortgage expert David Reed invites Walletpop readers to ask him questions about real estate financing. leave your questions in the comment section of this post.

Q: I have only one question to you to ask: I am kind of confused about ARM and FRM. Could you please tell which one more safer? -- Adam

A: Adam: ARM stands for Adjustable Rate Mortgage and FRM stands for Fixed Rate Mortgage. An ARM can fluctuate in rate throughout the course of a loan term while a fixed rate never changes. That said, a FRM is the safer bet. -- David

Real estate finance expert David Reed is president of CD REED Mortgage Bankers in Austin, TX and author of Mortgage Confidential: What You Need to Know That Your Lender Won't Tell You and Mortgages 101: Quick Answers to over 250 Critical Questions About Your Home Loan.

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Mortgage expert David Reed invites Walletpop readers to ask him questions about real estate financing. leave your questions in the comment section of this post.

This is bugging me. I hear it over and over again from talking heads on t.v., "You've got to have 20% down and perfect credit in order to get a mortgage," or a host asking "But you know, who's lending money these days anyway?" and other such drivel. I'm not going to name names but this was a show on Fox with a famous show host asking their famous business analyst and both talking stupid and keeping potential home buyers on the sidelines.

"Well, hon, I guess we can't buy a house after all. Our credit scores are only 700 and we just have 10% down."

Let me repeat this here: You DO NOT have to have an 800 credit score and 20% down to get a mortgage! To save ink, please re-read the previous sentence for emphasis. And lenders ARE making mortgage loans...every single day. It's just that they're not making the goofy loans they used to make the put so many lenders out of business.

Conventional loans via Fannie Mae do require a minimum credit score of 680 if you have less than 5% to put down. FHA doesn't have a minimum credit score although most lenders won't issue an FHA loan with a credit score below 500 regardless of any automated approval. And hey, last time I looked VA still has the best deal on the block with zero down, relaxed credit and loan limits up to $417,000.

Real estate finance expert David Reed is president of CD REED Mortgage Bankers in Austin, TX and author of Mortgage Confidential: What You Need to Know That Your Lender Won't Tell You and Mortgages 101: Quick Answers to over 250 Critical Questions About Your Home Loan.

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Mortgage expert David Reed invites Walletpop readers to ask him questions about real estate financing. leave your questions in the comment section of this post.

Q: David: I have two mortgages (both 30 years...about three years in on each...5.75% and 5.825%)...($165,000 and $270,000). I also have a $150,00 balance due on a HELOC -- prime minus one -- the HELOC is paid about $1000 a month but the interest is only about $600/month...I pay the extra...Question:...is this a good move or could the extra cash be better invested elsewhere/some other way....other suggestions?

A: You've got some really great rates right now, especially the HELOC which will continue to move lower alongside future Fed cuts. I get asked this question on occasion, should you pay down your mortgage or should you invest instead? I'm not a financial adviser but your question has other variables, specifically how old you are, how long you plan to keep the property (will you retire in it?) and how much current equity you now have.

If you invest $600, or more, each month in lieu of paying down principal are you guaranteed a rate of return? If not and you don't feel comfortable with the risk, consider paying down your mortgage instead. But often this isn't an "either/or" scenario, you can always do a little of both, but my advice here is to understand that you do have options but these questions need to be asked of your Certified Financial Planner...but whatever you do, make sure you've got some equity in your property at all times. If something should happen in your life that you'd need to sell quickly you want to make sure there's room to do so.

Real estate finance expert David Reed is president of CD REED Mortgage Bankers in Austin, TX and author of Mortgage Confidential: What You Need to Know That Your Lender Won't Tell You and Mortgages 101: Quick Answers to over 250 Critical Questions About Your Home Loan.

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In a story released today by the Associated Press, RealtyTrac, an online foreclosure reporting firm, reported that year over year foreclosure rates jumped 57% when compared to March 2007. It seems foreclosures just won't stop and it's the fault of all those subprime and alternative mortgages that are resetting to higher rates and people simply can't afford them. Oh really? In another slant on the very same data, CNBC reported that yes, foreclosures are still up nationally, but they actually are FALLING in other states such as Texas, New Mexico, New Jersey, Hawaii and Delaware. This little tidbit, oddly enough, was stuck in the very last paragraph of the article. But wait a minute...if all these loans that are adjusting at higher rates are causing more and more people to be foreclosed upon then why are these other states immune from the very same problem? Hmmmmm?

Could it be that it's not the loan type that's been the problem? After all, subprime loans have been around for twenty years and so have their hybrid brethren so why has this foreclosure "crisis" being blamed upon subprime loans and the brokers that pushed them?

I've suggested this for quite some time, that if it were the type of loan that were the problem then we would have seen similar foreclosure rates for the past twenty years, and we haven't. And now we see that other states, including Texas, are showing just as dramatic decreases in foreclosure filings, all with the very same loan types as depressed states like California, Nevada and Florida.

The foreclosure "crisis" was caused by buyers who wanted in on the real estate boom, all the while thinking that if they ever couldn't afford the payments they could always sell and turn a profit. After all, home prices were going up so quickly they just couldn't lose. Could they?

Oh, and I almost forgot. Both the House and Senate are getting ready to throw hundreds of billions of dollars at the problem ignoring this recent data. Hundreds of billions of dollars of our money, may I remind you.

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Mortgage expert David Reed invites Walletpop readers to ask him questions about real estate financing. leave your questions in the comment section of this post.

In the olden days, say before electricity maybe, mortgage applications required all sorts of documentation before the loan request was even looked at by a human being: the underwriter.

Nowadays most underwriters won't review a loan request until the loan application has been electronically submitted through either Fannie Mae's Desktop Underwriter or Freddie Mac's Loan Prospector. While this may not mean a whole lot at first glance, this method can actually save you some money for closing costs: particularly for your appraisal. That's about $400, and if you're scraping up money for a down payment that $400 can mean a lot. How can electronic approvals save on appraisal money?

When your loan officer first submits your loan request through either Fannie or Freddie's automated underwriting system, your loan decision will be returned in mere moments. This decision will list all of the documentation you'll need to provide your lender: nothing more and nothing less.

Among all the required documents is a section that addresses the value of your current or proposed property and whether or not an appraisal is even warranted. The automated decision can ask for a full appraisal, a simple "drive by" appraisal costing maybe $200, or even extend an "appraisal waiver," meaning you don't have to shell out for a new property appraisal at all.

This means that if your loan officer asks for appraisal money up front, make sure you're getting what you pay for. If an appraisal waiver is issued, your loan officer must refund your appraisal fees.

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Mortgage expert David Reed invites Walletpop readers to ask him questions about real estate financing. leave your questions in the comment section of this post.

When comparing mortgage companies to try and find out who has the best deal, one is encouraged to ask for a "Good Faith Estimate of Settlement Charges," or simply, a "Good Faith," from each competing lender.

One lender may have a lower interest rate but tacks on a whole host of fees to make up for the lower rate. While yet another lender might offer fewer fees in lieu of a lower rate. There are several problems associated with reading a Good Faith, but the biggest problem is trying to understand all those fees, who charges them and what they're for.

Sneaky loan officers can write up a competitive Good Faith, with low rates and low fees, not by low-balling their own mortgage company fees, but by underestimating charges associated with third parties such as attorney or title charges. Unwittingly, consumers can compare three different Good Faith estimates and look at the bottom line...how much is this going to cost me? Loan officers have no control over third party fees; they are what they are. But loan officers do control what's entered onto the actual Good Faith.

If all the consumer does is look at the bottom line and see one lender quoting lower closing costs than all the others, it's important to compare the non-lender fees being quoted as well. If one loan officer is quoting you $50 for an attorney charge while the other loan officers are quoting $500 for an attorney charge, then it's possible you're being intentionally low-balled. When you go to your closing you'll find out the attorney does in fact charge $500 and not $50 and your loan officer will say something like, "Hey, I have no control over what they charge" and you're forced into a closing you didn't expect.

When comparing Good Faith estimates, only compare lender fees such as processing or appraisal charges. If all you do is look at the bottom line, you could be misled.

Real estate finance expert David Reed is president of CD REED Mortgage Bankers in Austin, TX and author of Mortgage Confidential: What You Need to Know That Your Lender Won't Tell You and Mortgages 101: Quick Answers to over 250 Critical Questions About Your Home Loan.

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With all the housing mess making the news it seems that most anything that can be said has already been said. The problem is that the Federal Government keeps making the news with their take on how Big Brother can fix things so more in fact keeps getting written.

But here's my take. I say it took the Government too long to step in: they shoulda stopped all this nonsense years ago. How's that? They let home prices get too high. That's right: too high.

Both the Senate and the House have versions whereby you and me pitch in to buy foreclosed houses that aren't selling, paint them or whatever and then magically sell them to the public. I guess Big Brother has a better Listing Agent. What our elected officials are attempting to do is stop home prices from falling further by buying them from troubled lenders who want some of their money back. Let's swoop in with $400 billion and buy all these homes to prop up the prices. Artificially, of course, but propped up nonetheless. But the cows left the barn a few years ago. Big Brother shoulda stopped housing prices from going up so high in the first place, that way they wouldn't have fallen so far. Doesn't that make sense?

In California for instance where home prices routinely increased by 20% every year, or more, then why didn't the government put a stop to that nonsense and limit price increases to 2% per year? Hmmm? I mean, if it's okay for the government to attempt to manipulate the market by keeping prices from going too low then the reverse has to be true if indeed government price-fixing is an acceptable practice, is it not?

You know what else? The government ought to make gasoline, the unleaded premium kind, a buck a gallon. And my milk is too high, too. Don't get me started on my Corn Pops. I also think it should be against the law the tip the waiter 20% so have the government step in and max out tips at 15%. And to be fair to the waiter it would be a required 15% regardless of the service the waiter provided. Screw open markets.

Hey, it sort of works in other countries.

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Mortgage expert David Reed invites Walletpop readers to ask him questions about real estate financing. Leave your questions in the comment section of this post.

But, suddenly, I'm hearing from another loan officer at the company where we had attempted our refinance. According to the message he left me, he's been reviewing our file and doesn't understand why the previous loan officer didn't offer us some kind of deal that could have been approved. He says he can help us.

I'm smelling set-up, but I could just be reacting to all the negative press about sub-prime mortgages, etc. Is it common for loan officers at a finance company to compete in this fashion?

I've not returned the call, yet. What should I do? -James

A: I smell more than a set-up, I smell a rat. Understand that loan officers don't make any money unless they close a loan. When they don't have any new business coming through the door they have to go find some. This loan officer is doing just that, trying to get your deal in the door and then try and figure something out later. (I doubt that the other loan officer is still employed with the company.) If the lender 3 months ago couldn't find the value they can't find the value now.

If you'd like some extra money out of your home to pay some things off with, leave your current mortgage alone and explore a home equity line of credit (HELOC) . The loan officer doesn't make any money on HELOCs so that's why he's not pushing it. He's wanting to refinance the whole banana. I think you did the right thing by doing nothing and paying down your debt the old fashioned way.

Real estate finance expert David Reed is president of CD REED Mortgage Bankers in Austin, TX and author of Mortgage Confidential: What You Need to Know That Your Lender Won't Tell You and Mortgages 101: Quick Answers to over 250 Critical Questions About Your Home Loan.

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