iOS app Android app

Jack M. Guttentag
GET UPDATES FROM Jack M. Guttentag
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

How Do You Shop For a HELOC?

(0) Comments | Posted October 8, 2015 | 1:26 AM

"Do I shop for a HELOC in the same way as I would shop for another mortgage?"

No, shopping for a HELOC is very different from shopping for a standard mortgage. If you know the information you need, shopping is easier, but if you don't know what you need and...

Read Post

Don't Expect to Be Made Wealthy by Someone Who Doesn't Know Your Name

(0) Comments | Posted September 30, 2015 | 9:24 AM

Some time ago, I discovered that I was not getting all the emails sent to me by readers, which induced me to examine my spam file. Dismayed to find that it contained many letters from friends and readers that I should have received, I disabled the spam filter, and reconciled...

Read Post

Tough Questions: Negotiating a Mortgage Balance Reduction, and Can a Disabled 9/11 First Responder Become a Homeowner?

(0) Comments | Posted September 22, 2015 | 5:14 PM

Some of the questions I get from readers make me wince. One reason is that I know the questioner is not going to be pleased with my answer. The letter immediately below could have been written by millions of other borrowers who took out second mortgages before the financial crisis....

Read Post

Frequently Asked Questions About Down Payment

(0) Comments | Posted September 15, 2015 | 2:28 PM

Most consumers need to borrow some of the money needed to purchase a home, but lenders will seldom provide it all; usually, they require that borrowers provide some of the money out of their own resources. This is called the "down payment requirement." The questions about down payments shown below...

Read Post

Introducing the Kosher HECM Reverse Mortgage

(0) Comments | Posted September 6, 2015 | 7:46 PM

The kosher stamp on a food means that it has been certified as fit for human consumption. We have long needed a comparable certification process applicable to financial instruments sold to consumers, with the need most pronounced for the more complex instruments. HECM reverse mortgages are at the top of...

Read Post

Choosing the Best Type of Mortgage

(1) Comments | Posted September 1, 2015 | 9:08 AM

Mortgage borrowers having to choose between the different types of mortgages face a puzzle, which may be particularly perplexing today. Interest rates remain low by historical standards, the spread between fixed and adjustable rates remains large, but expectations are widespread that all rates will soon increase - unless the current...

Read Post

Are HECM Reverse Mortgages Overpriced?

(0) Comments | Posted August 30, 2015 | 1:09 PM

HECM reverse mortgages are reputed to carry high upfront fees, which raises two questions addressed here. First, are seniors getting real value in exchange for the high fees? The answer in most cases is "no". Second, can a senior who knows the ropes avoid paying excessive fees? The answer in...

Read Post

Is This a Good Time for a New HELOC?

(0) Comments | Posted August 20, 2015 | 9:07 PM

"Recently you pointed out a slew of problems now faced by borrowers who took out HELOCs before the financial crisis. Their timing was terrible, but that's water over the dam. Are conditions more favorable to borrowers taking out HELOCs now?"

In some respects, conditions are more favorable now for HELOC...

Read Post

Mortgage Closing Date: Does It Matter?

(0) Comments | Posted August 18, 2015 | 6:27 PM

On a purchase transaction, there is no financial advantage in closing on any day of the month, as compared to any other day. On a refinance, however, it is a good idea not to close on a Friday.

Closing Date and Per Diem Interest

The interest clock on a...

Read Post

Is Paying Down Your Mortgage Balance a Good Investment?

(0) Comments | Posted August 17, 2015 | 8:31 PM

"We are allocating $600 a month to savings... should we pay down our 4% mortgage or put the savings into our retirement account?"

In principle, you place it where it will earn the highest after-tax and risk-adjusted return. If you itemize your tax deductions and are in the 25%...

Read Post

The Tontine: A 17th Century Solution to a 21st Century Problem

(1) Comments | Posted July 25, 2015 | 11:15 AM

The tontine is an investment scheme where each of a group of participants pays a specified sum into a fund and receives a pro rata share of the income generated by the fund, but when a participant dies their share is divided among those remaining. As the number of participants...

Read Post

A New Approach to Protecting Consumers In Financial Markets

(0) Comments | Posted July 20, 2015 | 1:10 PM

Markets don't work well when one party in a transaction knows much more than the other, and nowhere is the knowledge gap wider than in HECM reverse mortgages. Borrowers typically know very little because reverse mortgages work differently and are much more complicated than the mortgages with which they purchased...

Read Post

What Happens When the Lender Miscalculates the Payment?

(1) Comments | Posted July 13, 2015 | 8:49 PM

With millions of mortgage loans originated every year, it is not surprising that now and then lenders make a mistake in calculating the monthly mortgage payment. On a fixed-rate mortgage, the payment is calculated only once, when the loan is originated, so any such mistake occurs then. On an adjustable...

Read Post

Website Features Home Buyers Should Look For

(0) Comments | Posted July 8, 2015 | 11:01 PM

Home buyers who need a purchase mortgage are less likely to use the internet to find one than are existing owners looking to refinance, yet the benefits of online shopping are just as large if not larger for home buyers. The problem may be that home buyers expend so much...

Read Post

How to Pay Off Your Mortgage Balance Faster Without Being Scammed

(0) Comments | Posted July 6, 2015 | 10:29 AM

The 30-year fixed-rate mortgage is a great instrument that has made homeownership possible for millions of consumers, but none of them like the idea of being in debt for 30 years. Those who like it the least and have the poorest understanding of how mortgage amortization works are vulnerable to...

Read Post

Protecting Borrowers in Dysfunctional Markets: A Major Challenge to CFPB

(2) Comments | Posted June 25, 2015 | 10:58 AM

Dodd/Frank established the Consumer Financial Protection Bureau (CFPB) after the financial crisis to protect consumers in financial markets, but it does not tell the agency how to do it. The need for such protection varies from market to market, depending on the extent to which consumers can obtain the information...

Read Post

The Pre-Crisis HELOC Chickens Are Coming Home to Roost

(0) Comments | Posted June 19, 2015 | 8:11 PM

"Ten years ago we purchased a house for $310,000 which we financed with a first mortgage for $255,000 at 3.75 percent, and a HELOC for $65,000 at 3.5 percent. The HELOC amount was at the maximum right from the start, which has ruined our credit, and very soon our payment...

Read Post

Reflections on Mandatory Counseling

(0) Comments | Posted June 13, 2015 | 1:55 PM

Economists who extoll the virtues of free markets concede that markets don't work well under conditions of "information asymmetry" -- when one party to transactions, who knows a lot more than the other party, specifies the contractual terms of the transaction. Unfortunately, information asymmetry characterizes some very important markets, including...

Read Post

Is Another Housing Price Bubble Looming?

(1) Comments | Posted June 8, 2015 | 9:20 PM

The question is being asked with increasing frequency, and also with great anxiety. The last housing bubble led to a financial crisis followed by a recession.

Many of those commenting on the question, however, don't understand what a price bubble is. It is NOT a marked rise in prices. Sharp...

Read Post

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...

Read Post