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.

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.

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

1 – 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.