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Metro Atlanta Mortgage Tip: Use Caution With Home Equity

As Metro Atlanta mortgage borrowers continue to see home prices rise they have increasingly more equity to utilize. Industry experts say that nationwide home equity has risen by nearly $825 billion. That represents a 250% increase over home equity levels of just four years ago. However, tapping into that equity by using a home equity line of credit, or HELOC, is more challenging than ever.

Metro Atlanta mortgage borrowers are enjoying increases in home prices and higher home equity.

HELOCs: A Metro Atlanta Mortgage Dilemma

Mortgage analysts report that HELOCs currently being extended to Metro Atlanta mortgage borrowers are principally reserved for those with extremely good credit. HELOC originations during the first quarter of 2015 reflected the highest average credit scores since that data has been recorded.

While HELOC lending has increased by 40% from a year ago, origination levels are 85% less than those of the housing boom of 2007. Most notably, in addition to record high credit scores, are the reasons Metro Atlanta mortgage borrowers are utilizing the home equity.

Mortgage lenders say the trend these days is for home owners to tap into their home equity for necessities rather than luxuries. Simply put, it’s more about what they need versus what they want. Plus, industry insiders say that most of the HELOC activity is relegated to wealthier homeowners in the more expensive housing markets. During the housing boom, Metro Atlanta mortgage borrowers were using the equity in their homes — and then some. Because housing values were artificially inflated and lenders did a poor job of restricting loan-to-value ratios, many homeowners found themselves in trouble when the job market experienced a slowdown and the economy softened. This was a key contributor to the housing crash, and many HELOC borrowers were faced with foreclosure.

Those that were able to weather the housing crisis have HELOCs that were originated between 2005 and 2007 and are nearing the end of their principal draw periods. These borrowers will soon be required to repay the principal and interest, adding on average roughly $250 per month to their mortgage payment. What’s worse is a large number — estimates are as high as 30% — of homeowners have loan-to-value ratios that exceed 85%, meaning a refinance will be difficult.

In summary, the Metro Atlanta mortgage market, as well as others throughout the country, will be scrutinized closely in the coming months to see how homeowners react to the impact of the HELOCs.

For more articles pertaining to the Metro Atlanta mortgage market, check out other articles in the Atlanta Mortgage Info section of our site below our Atlanta Real Estate Categories in the column to your right. Remember, we also post tips daily on Twitter and Facebook. Check us out there too.

Posted in: Atlanta Mortgage Info Tagged: Metro Atlanta mortgage info

5 Ways to Lower Mortgage Closing Costs

Mortgage closing costs have risen 6% over the past year, according to a recent Bankrate.com report — averaging $2,539 on a $200,000 loan.

But mortgage closing costs aren't set in stone. Especially in today's market, you can definitely negotiate your origination and lender fees. It's like any other service. They have the power to give you a discount, if they want to. Don't just settle for whatever you're quoted for mortgage closing costs when buying a Metro Atlanta home.

Buying a Metro Atlanta home, ways to lower mortgage closing costs
Here are 5 Ways to Lower Your Mortgage Closing Costs

Get Multiple Quotes – Going with the first lender you call is like going with the first car insurance quote, or the first car you test drive — there might be a better deal or car out there. Get estimates from at least three lenders. You're looking for the total package for evaluation—interest rate plus closing costs. You'll generally be able to get those numbers by providing a few financial basics over the phone.

Compare Mortgage Closing Costs Carefully – This may be harder than it sounds, since lenders call similar fees by different names. They may lump certain things together that other lenders list separately, and include and exclude certain third-party costs, such as homeowners insurance. Your best bet is to ask for a GFE, or Good Faith Estimate, which lists each individual fee. It's the clearest way to see what each lender is charging you.

Ask About Fees – Make your lender walk through each charge with you and discuss what it includes. Some third party charges, such as appraisals and credit report fees, are pretty set in stone. Other costs, such as title insurance, legal fees, and rate lock fees vary more frequently than not. (Title insurance varies so much from state to state that some lenders don't even include it in their numbers. It's also something you can shop around for. You're not forced to take whatever quote you're given. Another charge to watch out for: Courier fees. In today's world of technology, unless the lender has been sending papers around for signature via delivery service, you can have this one nixed. Most use email and fax for signatures these days.

Watch For "Junk" Fees – Junk fees are fees a lender will charge that are negotiable, that they can take out or leave in. These might include things like application fees, underwriting fees, and loan processing fees, among others. If they seem vague, they probably are. Sometimes when you question the more ambiguous charges, they can be lowered or eliminated.

Ask for Discounts the Competitor is Offering – Go ahead, pit lenders against each other when getting quotes on your mortgage closing costs. If one lender is offering a deal, ask other lenders if they can match it. You may be surprised when a competitive market results in a smaller bottom line.

So there you have it. Our list of 5 Ways to Lower Mortgage Closing Costs when buying a Metro Atlanta home.

Stay abreast of all the tips and tricks affecting your ability to obtain a mortgage and lower your mortgage closing costs here at our website. More articles regarding Metro Atlanta mortgages can be found by clicking on the Atlanta Mortgage Info link to your right under Atlanta Real Estate Categories.

Posted in: Atlanta Mortgage Info Tagged: Metro Atlanta mortgage info, closing costs

5 Mortgage Tips for Metro Atlanta Home Buyers

Metro Atlanta home buyers need to be sure they'll qualify for a mortgage before they sign on the dotted line to buy that home of their dreams.

Qualifying for a mortgage alone is not enough these days. Metro Atlanta home buyers also need to know they are getting the best possible rate they can, as well as shop around for closing costs, because these can vary from lender to lender.

5 Mortgage Tips for All Metro Atlanta Home Buyers

Metro Atlanta home buyers need to be prepared to document their finances when applying for a mortgage1 – Document Your Finances. Metro Atlanta home buyers should be prepared for extra scrutiny by lenders when qualifying for a mortgage due to new mortgage regulations that went into effect in January, especially the new rules that prove borrowers' ability to repay their loans. You should be prepared to show bank statements, tax returns, W-2s, investment accounts, and documentation of any other assets you own. You should also be prepared to explain any sizable deposits to your bank account—even a $500 check from a family member for Christmas. If you can't prove where the money came from, it can delay your closing.

2 – Lock In Your Rate As Soon As Possible. Mortgage rates are expected to rise in 2014 as the Federal Reserve continues to phase out its $85 billion per month bond-buying stimulus program. A rate lock is usually good for 30, 45, or 60 days, although that time period can vary among lenders.

3 – Know Your Credit Score. The best mortgage rates go to Metro Atlanta home buyers with credit scores of 720 or higher. While those with a credit score of 680 can still likely qualify for a loan, you may end up paying a higher rate or more closing costs.

4 – Shop Lenders. Metro Atlanta home buyers may have the upper hand in 2014. Lenders have lost a huge amount of their refinance business as rising rates discourage home owners from refinancing. Metro Atlanta home buyers are the beneficiaries of the refinancing cutbacks, as lenders become more willing to compete for your business. Metro Atlanta home buyers need to shop around for more than just the best interest rate on the loan, looking at points and closing costs as well.

5 – Watch What You Spend. Metro Atlanta home buyers need to refrain from going out and outfitting their new home with all new furniture—on credit—before closing on the home loan. Lenders will be carefully scrutinizing your debt obligations, such as credit cards and student loans. Borrowers are advised to keep their monthly debt obligations, including mortgage and property taxes, to below 43 percent of their income. And just because you have been approved for a loan doesn't mean the loan is guaranteed. It's customary for lenders to pull your credit report a second time, just before closing, to see if you have done anything to change the credit line they approved you on to begin with.

We post periodic updates about Metro Atlanta mortgage rates and the news that affects those rates at our Atlanta Mortgage Info link to your right under Atlanta Real Estate Categories.

Posted in: Atlanta Mortgage Info Tagged: Metro Atlanta mortgage info

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