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Jack M. Guttentag
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Jack M. Guttentag is Professor of Finance Emeritus at the Wharton School of the University of Pennsylvania. He served as chief of the Domestic Research Division of the Federal Reserve Bank of New York; was a member of the senior staff of the National Bureau of Economic Research; and was managing editor of both The Journal of Finance and The Housing Finance Review. Prof. Guttentag has been advising consumers and the media on mortgage-related issues since assuming emeritus status in 1997. Comments and questions can be left at

Entries by Jack M. Guttentag

Senior Homeowners Can Reduce the Risk of Outliving Their Money

(0) Comments | Posted May 27, 2015 | 2:06 PM

Seniors who, during their work years, accumulate a nest egg that they then use to maintain their lifestyle during retirement risk running out of money if they live too long. With life spans growing at an increasing rate, that quandary is increasingly being labelled a "retirement funds crisis." Seniors who...

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Why Small Home Mortgage Loans Are Hard to Find

(0) Comments | Posted May 18, 2015 | 8:07 PM

Providing small mortgage loans at non-subsidized prices affordable to the borrower has always been a challenge. The core problem is that the high cost of originating and servicing a mortgage loan is no smaller for a small loan than for a large one, but the dollar amounts of interest and...

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5 Questions to Ask Your Lender Before Locking a Rate

(0) Comments | Posted May 5, 2015 | 7:54 PM

You have identified the mortgage lender with whom you wish to work, based at least in part on a price quote. You probably know that the price quote doesn't mean anything until it is locked, but few borrowers know all the steps required to get to the lock, and the...

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Reverse Mortgage Prices and Closing Costs: A Look at the Options

(0) Comments | Posted April 25, 2015 | 1:21 PM

Senior homeowners looking to shop the HECM reverse mortgage market for the best price, meaning the lowest interest rate and origination fee, have a major problem. Unlike the standard mortgage market where price data are available from many sources (including third party multi-lender sites), in the reverse mortgage market prices...

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Mortgage Qualification Rules Are Not Always Black and White

(0) Comments | Posted April 23, 2015 | 12:19 PM

Some of the more interesting questions I receive from readers are about unusual situations that may affect their ability to qualify for a mortgage. The rules are not always crystal clear, which is why lenders continue to rely on underwriters whose stock in trade is good judgment. Here are a...

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Mortgage Referral Fees and the Public Interest: 40 Years of Bungles

(1) Comments | Posted April 8, 2015 | 4:07 PM

Markets don't work well when one party to transactions has much more information than the other party, especially when the party with better information also controls the process. The two best illustrations of this rule are the markets for medical services and home mortgages.

In principle, Government regulation can...

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Mortgage Points: A Powerful Option That Is Often Neglected

(0) Comments | Posted March 25, 2015 | 7:43 PM

What Are Points?

Mortgage points are an upfront payment to the lender, expressed as a percent of the loan amount. For example, one point on a $210,000 loan is $2100. Points are part of the price of a mortgage, along with the interest rate.

As I write this article...

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What Is Live Mortgage Pricing?

(0) Comments | Posted March 15, 2015 | 1:15 PM

"I have read statements by you regarding 'live mortgage pricing', but I am not sure what it means, or why it is important?"

A live mortgage price quote is a price that the lender is prepared to lock at the time of the quote. A lock is a binding commitment...

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Selecting the Type of Mortgage That Best Meets Your Needs

(0) Comments | Posted March 9, 2015 | 5:59 PM

Perhaps the most important decision a mortgage borrower makes is the type of mortgage: whether fixed-rate (FRM) or adjustable-rate (ARM), if it is fixed, they decide the term, if it is adjustable they decide the initial period until the rate adjusts. The available terms on FRMs today are 10, 15,...

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Buying a New House Before Selling the Old One

(0) Comments | Posted March 5, 2015 | 4:30 PM

Home owners buy their second or third homes for a variety of reasons. They may be trading up to get more space and amenities; they may be downsizing, because they don't need as much space and want to cut expenses; they may want to relocate to get closer to their...

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Mortgage Borrowers Thinking About Paying Down Their Loan Balance Should Know How Mortgage Amortization Works

(10) Comments | Posted February 26, 2015 | 8:06 PM

Recently, I have been getting a lot of mail from mortgage borrowers asking about amortization. Most are considering whether to pay down their loan balance more rapidly, and have suddenly realized that they don't know how best to do that, or even whether it is a good idea because they...

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Does the New CFPB Rate Tool Help Consumers Shop for a Mortgage?

(0) Comments | Posted February 16, 2015 | 12:44 PM

The Consumer Financial Protection Bureau (CFPB) deplores the fact that almost half of the home buyers it recently surveyed did not shop for a mortgage but dealt with a single loan provider. To encourage shopping, the agency has developed a "Check Interest Rate" tool. It advises borrowers: "As you start...

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Why Do Some Borrowers Pay Higher Mortgage Interest Rates Than Others?

(0) Comments | Posted February 7, 2015 | 4:51 PM

The Consumer Financial Protection Bureau (CFPB) recently unveiled an internet-based tool designed to help consumers shop effectively for the lowest possible mortgage interest rate. For this tool to work, it must help mortgage shoppers distinguish between rate differences that are justified, which borrowers would have to pay in a perfect...

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Some Recent Letters on Downsizing and Mortgage Lender Mistakes

(0) Comments | Posted February 6, 2015 | 9:56 PM

Downsizing But Retaining Current Home
I am downsizing by purchasing a smaller home that will be my primary residence. Because I do not have my existing house on the market, the lender I approached to finance the purchase has asked me for a letter describing my reasons for...
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After March 2, Reverse Mortgage Borrowers Will Have to Prove They Are Not Deadbeats

(0) Comments | Posted January 25, 2015 | 10:36 AM

One of the attractive features of the HECM reverse mortgage has been that there are no income or credit requirements. All homeowners 62 and older who live in their homes without a mortgage have been eligible, and those with mortgages may also be eligible if the balance is not too...

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How Can You Be Sure That Refinancing Will Save You Money? Introducing the Integrated Refinance Calculator

(0) Comments | Posted January 20, 2015 | 4:21 PM

Despite the recent increase in the growth rate of the economy, interest rates remain stubbornly low. Many mortgage borrowers who to this point have procrastinated in making a refinance decision are wondering whether the market fates are giving them another shot. And some who did refinance earlier are wondering whether...

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The Fixed-Rate/Adjustable-Rate Decision: Standard vs. HECM Reverse Mortgages

(0) Comments | Posted January 12, 2015 | 9:51 PM

The other day a reader caught me off guard by saying that she had counted 28 articles on adjustable-rate mortgages on my website, but that all of them pertained to standard mortgages. Not one applied to reverse mortgages, she said, and she wondered whether that was because the issues were...

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Transitioning From a Standard Mortgage to a Reverse Mortgage

(0) Comments | Posted December 30, 2014 | 10:28 AM

In my father's generation, very few people still had a mortgage to pay when they reached retirement age. Now it is common. But retired homeowners may now have an option my father did not have: If they have enough equity in their home, they can pay off the balance of...

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A New Approach Toward Selecting a Mortgage Loan Originator

(0) Comments | Posted December 22, 2014 | 1:39 PM

One important reason the home loan market works so poorly is that borrowers have no reliable way to select the loan originator (LO) -- the individual who takes the borrower through the loan process. LOs are loan officer employee of a lender or broker, or a broker herself. The problem...

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Forget the Homeownership Rate, It Is the Process That Matters

(0) Comments | Posted December 16, 2014 | 9:34 PM

Because of the widespread belief that homeownership is valuable, the recent decline in the homeownership rate has generated some dismay. The rate, which had peaked at 69.1 percent in 2005, shortly before the financial crisis, has since fallen to 64.8 percent. This is the lowest it has been since 1995.

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