Metro Atlanta mortgage holders often ask questions about the best way to prepay their home loans – and save money in the process. Follow these tips and you can save thousands of dollars in interest over the life of your mortgage. In addition, prepaying your loan will mean it will pay off earlier than the original term.

Metro Atlanta Mortgage Holders Can Save Thousands

Prepaying your mortgage by just one additional payment a year can reduce a 30-year loan down to roughly a 23-year term. When you pay bi-weekly (every other week) for example, you're really making 26 half-payments (52 weeks divided by 2 equals 26 weeks.) You could also make an additional payment at some point during the year to effectively make 13 monthly payments instead of 12. Still, some people like to add 1/12 of their mortgage payment to each monthly payment and accomplish the extra payment that way.

Some mortgage lenders charge a fee for prepayments. Hopefully, if you already have a mortgage, yours doesn't contain a prepayment clause. The majority of Metro Atlanta mortgage lenders allow prepayment without penalty. If you're shopping for a mortgage or are considering refinancing, avoid signing a mortgage with a prepayment penalty.

Prepaying your mortgage works best when you pay the same amount each month. Decide whether you're going to pay an extra $50, $100 or whatever amount you choose and stick with that amount for at least a year. When you change the prepayment amount, just make sure you keep a written record and check your statement closely to see that the extra amount has been subtracted.

Regardless of how you make any extra payment(s) – or if you decide to make a lump-sum payment – make sure your lender enters the payment properly. If you question how, or if, it was applied, contact your Metro Atlanta mortgage lender immediately so they can either explain it to you or correct it if it's in error.

You can find a lot more Metro Atlanta mortgage information in our Atlanta Mortgage Info section of articles to your right just below the Atlanta Real Estate Categories. We also update mortgage news constantly on Twitter and Facebook. We hope you'll check us out there as well.

Metro Atlanta mortgage lenders have “seen it all.” With banks paying low interest rates and the stock market in the midst of a mini-crash, it’s tempting to just keep your cash at home. However, if you’re planning to buy a home and need that cash for a down payment you’d better rethink that investment “strategy.” You won’t be able to use it unless it’s accounted for.

Metro Atlanta Mortgage Market: Cash Isn’t King

In a recent survey by American Express, 57% of consumers say they have cash in a bank account. Surprisingly though, 53% admitted to keeping additional cash stashed in their home.

If you’re preparing to go to a loan closing, cash isn’t king. You’ll need a cashier’s check from a bank or other financial institution. One mortgage lender says, “Cash on hand is unacceptable… No title company is going to accept (actual) cash… at the closing.” The lender will view the cash with a big red flag, and will assume it was gained illegally — despite your claims to the contrary.

Nowadays, real estate agents and mortgage professionals are keenly aware of the possibility of money laundering. Even bringing a modest amount of cash to a closing could prompt the filing of a Suspicious Activity Report with the Financial Crimes Enforcement Network (FinCEN) of the U.S. Treasury Department.

In a 10-year study from 1996-2006, FinCEN reported that 20% of residential real estate sales transactions earmarked as suspicious showed evidence consistent with money laundering.

If the financial institution can’t document a legitimate source of the cash, even a mortgage pre-approval letter from a Metro Atlanta mortgage lender is virtually useless. A pre-approval letter states there is sufficient income, assets and a qualifying credit score for financing. The pre-approval is still subject to final verification by a credit underwriter at the mortgage lending company.

As a result of the Secure and Fair Enforcement for Mortgage Licensing Act of SAFE Act of 2008, and increased safeguards on “stated income” loans in the Dodd-Frank law of 2010, lenders must account for every dollar in a mortgage lending transaction.

In addition, the Patriot Act in 2001 tacked on more restrictions to discourage terrorist groups from money laundering in mortgage transactions.

Cash savings must be on deposit in a financial institution account to be counted as part of the overall asset evaluation. Plus, it has to be in the account at least 60 days for mortgage lenders to term the cash “sourced and seasoned.” A cash gift from a relative must also be documented to make sure that money isn’t considered a loan which may hurt the borrower’s debt to income ratio.

Metro Atlanta mortgage lenders advise if you’re planning to buy a home with a mortgage loan, deposit the cash into a bank account as soon as possible. Don’t be surprised when your bank files a Currency Transaction Report (CTR) with the IRS. Even smaller cash deposits over short periods to “fly under the radar” of the legal reporting limits of deposits over $10,000 will be reported.

Despite the warnings, mortgage lending experts say around 5% of loans each year involve cash money issues. Most of them can be ironed out — as long as the borrower informs the lender early in the process.

Get more Metro Atlanta mortgage tips and information by looking up our other articles in the Metro Atlanta Mortgage Info list of articles under Metro Atlanta Real Estate Categories. We also post mortgage related news and information on our Facebook page and on Twitter. Check us out there as well.

As predicted by some in the Metro Atlanta mortgage industry, sales of existing homes fell sharply in November. Insiders say the new consumer disclosure rule was to blame. The rule resulted in delays in many mortgage loan closings.

Metro Atlanta Mortgage Fears Realized

The sale of existing homes dropped 10.5% during November from the previous month, according to the National Association of Realtors. With a seasonally adjusted annual rate of slightly more than 4.75 million homes sold, it was the slowest month for existing home sales in more than eighteen months. The decline follows a 3.4% decrease in October, as well.

The chief economist for the National Association of Realtors, Lawrence Yun, said the decline in demand was due, in part, to the Consumer Financial Protection Bureau's recent new disclosure rules. The requirements, known as "Know Before You Owe" or TRID (Truth in Lending Act and Real Estate Settlement Procedures Act integrated disclosures,) went into effect in October. Confirming the fears of many in the Metro Atlanta mortgage industry, the disclosure forms have increased the time needed to close a loan. The delays pushed closings that should have taken place in November into December, sometimes January.

Lower home inventory and higher asking prices were also responsible for the drop in home demand. The combined impact meant that existing home sales dropped nearly 4% in November compared to November of 2014. That decline was the first year-to-year decrease since September of 2014.

As written in a previous article on this topic, mortgage lenders feared the new changes would create technological hurdles requiring additional software programs and thousands of man-hours.

The disclosure form given to the consumer after the loan application begins — known as the Loan Estimate — covers the rules as to what can and cannot be done by the lender. It includes cost estimates approved by the borrower in writing before the application process can continue. The Closing Disclosure must be given to the borrower within three business days of closing. It shows all the costs paid by the consumer. If the borrower wants to make any changes during the three-day window, the three days start over. As expected, this has caused delays and the "domino effect" creates additional delays in loan closings.

Find more articles about the Metro Atlanta mortgage market by checking out our Atlanta Mortgage Info to your right just below our Atlanta Real Estate Categories.

We also post on Facebook and Twitter. Follow us there for many other Metro Atlanta mortgage related tips, too.

Metro Atlanta mortgage loan experts say over 6 million people nationwide will buy homes next year. Statistics expect roughly 2 million will be first-time homebuyers. Both first-time buyers and others always wrestle with whether or not to pay “discount points” on their mortgage.

The Metro Atlanta Mortgage Loan: Points?

Just what the heck are discount points, anyway? Mortgage discount points are a one-time, upfront closing cost designed to discount the existing mortgage interest rate. One point is equal to 1% of your loan amount. Your interest rate is normally reduced by .25% for each discount point.

Since paying discount points lowers your interest rate, the process is often called “buying down” your rate. As an example, on a mortgage amount of $400,000 at 4% interest, you could elect to pay one discount point or $4,000 and lower your interest rate to 3.75%. For a borrower planning to be in that home for as long as a 30-year term, the interest savings over the life of the loan can be substantial.

Should you pay discount points? The answer is a resounding "that depends." Paying discount points can be expensive. Plus, it will mean you have to come up with more money at the loan closing. Still, it may make sense — especially if you can negotiate with the seller for him to pay part or all of the closing costs.

Paying points to lower your mortgage interest rate could be a good investment over time. However, if you plan to sell your home in a few years or refinance your mortgage you probably won’t recoup the amount you paid in discount points.

Because discount points are used to "buy down" your interest rate, they are usually tax-deductible.

Mortgage experts recommend you consider paying discount points as a luxury, not a necessity. If paying one or more points puts you in a bind by requiring you to pay additional money at the closing, it’s probably best not to do it.

Okay, what’s next? Consult your real estate agent about concessions the seller may make as part of your offer to purchase a home. You never know what you may get until you ask. Discuss discount points with your Metro Atlanta mortgage loan professional to find out your best course of action.

Get more up to date news and tips on Metro Atlanta mortgage loans by checking out our other articles under the Atlanta Mortgage Info section just below Atlanta GA Real Estate Categories to your right.

A loan closing attorney who, when reviewing the documents with a new Metro Atlanta mortgage borrower, used to jokingly say, “You’re welcome to read all these forms, and if you find anything in your favor the lender will be happy to correct that mistake!” Of course, he was only joking and he used that line as an ice-breaker. However, it’s very important that you review your closing documents to make sure they are correct.

Closing Your Metro Atlanta Mortgage Loan Accurately

Remember, you’re going to be asked to sign almost every document you'll see in the loan closing paperwork. You will be responsible for everything in those agreements. With mortgage terms up to 30 years, that’s a long-term commitment.

While most mortgage lenders are careful to make sure documents are accurate, mistakes do occur. One real estate expert says she has yet to see a loan closing where there wasn’t at least one typo, numerical error or other mistake. Her advice is to hope for the best and prepare for the worst.

The recent TRID (Truth in Lending/Real Estate Settlement Procedures Act Integrated Disclosure) rules require lenders to give borrowers Closing Disclosures at least three days before the loan closing. Mortgage insiders say borrowers should double-check three key areas: the loan amount, the personal and property information and the interest rate.

If you find an error, call your lender as soon as possible. It will either be corrected or new documents will be drawn up. If the mistake is serious, the lender may be required to restart the three-day disclosure period and delaying the loan closing. Such a delay could create a "domino effect" if the sellers need the proceeds from the closing to purchase their new house.

The Metro Atlanta mortgage industry now has new regulations in effect designed for lenders to be more transparent in their dealings with borrowers. The areas of reform are aimed at simplifying and streamlining some of the consumer disclosure documents in order to make it easier for borrowers to understand various lending programs.

Metro Atlanta Mortgage Rules Change: Know Before You Owe

As a result of the last housing and mortgage crisis and the passage of the Dodd-Frank legislation, the Consumer Financial Protection Bureau (CFPB) was established to design simplified forms to address two key areas: post application disclosures and pre-closing information. The CFPB reportedly spent nearly four years researching and testing the new disclosures and are now ready to require Metro Atlanta mortgage lenders to implement them.

For their part, mortgage lenders nationwide say the reform has created a huge technological challenge involving additional software programs and thousands on man hours in training and ramping up for the new disclosure procedures.

The disclosure form that is given to the consumer after the loan application begins — known as the Loan Estimate — covers the rules regarding what can and cannot be done by the lender, including cost estimates that must be approved by the borrower in writing before the loan application process can continue. The Closing Disclosure must be given to the borrower within three business days of closing. It captures all the costs paid by the consumer. If the borrower wants to make any changes during the three-day window, the three-day period resets. This, inevitably, will cause delays and potential "domino effects" that could create additional delays in closing.

Metro Atlanta mortgage lenders are keeping their collective fingers crossed that the new disclosure requirements will be seamless. However, there are numerous “moving parts,” as the disclosures now impact the real estate industry. While real estate professionals have no direct responsibilities under the new regulations they still have a role in the process. They need to educate their clients about the changes and help them understand that the loan closing transaction may take longer. Additionally, real estate clients will need to understand that there is an increased risk of delays in the loan closing — especially if borrowers try to make “eleventh hour” negotiations or changes within the three-day waiting period.

Once upon a time in the Metro Atlanta mortgage market, "adjustable rate mortgages" (ARMs) was a phrase that was shunned. During the Great Recession of just a few short years ago, many consumers experienced their mortgage payments spike to levels of unaffordability. Sadly, some of those homeowners fell victim to foreclosure. But what about now?

The Metro Atlanta Mortgage Arena: Are ARMs Making a Comeback?

Some mortgage industry experts say that adjustable rate mortgages are returning to popularity among some borrowers who consider them as a potential way to save money and more easily qualify for a mortgage loan. The Wall Street Journal recently reported that in 2013 roughly 22% of all mortgage amounts between $417,000 and $1 million were ARMs. In 2014 the percentage increased to 31% and appears to be climbing.

In the Metro Atlanta mortgage landscape it appears that most borrowers interested in adjustable rate mortgages plan to be in their home for a relatively short time period. And, if their employers transfer employees every few years, for example, an ARM may be a better fit than a traditional fixed rate mortgage. Consider this: a 30-year fixed rate mortgage may be higher than a five year ARM at a lower rate, saving the homeowner a considerable amount of money during those five years.

In addition, Metro Atlanta mortgage lenders have improved their ARM products through "hybrid" loans that can offer important features to some borrowers. Not only can borrowers save money during the first five years until their first rate adjustment, if there is one, but the adjustments are limited to how much the rate can increase.

For borrowers that have the financial wherewithal to take necessary action if their rate rises, ARMs may be a preference. However, some Metro Atlanta mortgage lenders caution average homeowners and recommend against getting "backed into a corner" with an ARM in which they have no control over a rise in interest rates. They also warn that the simple answer of refinancing if the rate increases is somewhat risky. Conventional rates may have also risen by that time and, of course, there are always closing costs associated with refinances.

So, ARMs may be worth a second look depending on your particular employment situation and risk tolerance. As usual, there's not a "one size fits all" Metro Atlanta mortgage.

Get more Metro Atlanta mortgage tips and informatiion by checking our other articles in the Atlanta Mortgage Info section to your right under Atlanta Real Estate Categores.

In a move to assist Metro Atlanta mortgage borrowers, the Federal National Mortgage Association (Fannie Mae) announced it will make substantial changes in a lending program for low-to-moderate-income households. The program, dubbed HomeReady, is scheduled to begin in December. It promises to feature new lending guidelines recognizing that many of Metro Atlanta mortgage customers share homes and the accompanying financial responsibilities with their extended family. This is especially true in Hispanic and African American households.

New Rules in the Metro Atlanta Mortgage Game

Under the new guidelines, Metro Atlanta mortgage lenders will be required to include income from non-borrowers living in the same household as the primary borrower. Fannie Mae officials say this income has been proven to the stable over time and contributes greatly to the household and, therefore, the monthly mortgage payments.

Metro Atlanta mortgage borrowers may also be allowed to count income from co-borrowers that are not occupants, such as parents or in-laws. As is the case with a number of other mortgage products, the down payment can be as low as 3%. And, closing fees and PMI will also be less than on other loans.

Fannie Mae expects the new program to assist homeowners who suffered losses when home values dropped during the most recent housing crisis. In addition, the new guidelines are designed to assist first-time buyers entering the home market. The new program carries no set income requirements for Metro Atlanta mortgage borrowers buying in federally identified low-income census tracts. To qualify, homebuyers in those census tracts cannot earn more than the area’s median income. Income for homebuyers in other census areas cannot exceed 80% of that area’s median income.

The program requires borrowers to enroll and finish an online educational course on homeownership. In addition, borrowers will receive information on counselors in their area specializing in housing advice in the event they have financial trouble in the future.

It remains to be seen how many Metro Atlanta mortgage lenders will offer the HomeReady program. Industry experts say the new program could spur some renters into becoming homeowners. Recent statistics released from zillow.com show that on average a renter spends slightly more than 30% of monthly income on rent. The average homeowner spends half that number, 15.1% on a mortgage payment.

While it’s not clear how many lenders will offer the program, HomeReady could offer an opportunity for some households burdened by high rents to get into homeownership. A recent report from Zillow found that the average renter now spends 30.2 percent of his or her monthly income on rent, compared with an average of 15.1 percent for homeowners with a mortgage. In high-cost metro areas, the rental burden rises to as high as 40 percent.

Find more articles about the Metro Atlanta mortgage market by checking out our Atlanta Mortgage Info to your right just below our Atlanta Real Estate Categories.

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In addition to other favorable signs, the Metro Atlanta mortgage market is expected to be one of the positive features in the recovery of the housing market. Experts say Home Mortgage Disclosure Act (HMDA) information indicates the housing improvement continues.

Continued Improvement in Metro Atlanta Mortgage Market Expected

Because of the data trends, lending projections are expected to rise. And that could be even better for the real estate economy as it may stem any expected interest rate hikes by the Federal Reserve for awhile.

Mortgage lending dropped 27% last year to slightly over $1.25 trillion, but many economists had projected decreases of 40% compared to the previous year. The improvement was fueled in part by a larger percentage of purchases versus refinances at 51% compared to 49%. The trend has continued into this year, as well.

Refinances have increased to higher than expected levels as lower interest rates have held steady. Metro Atlanta mortgage market insiders say the refinancing spike is also due to the Federal Reserve’s recent hints at what was originally expected to be a slight increase in the federal funds rate.

The Mortgage Bankers Association has also improved its earlier forecast regarding loan originations, expecting them to rise 23%, citing a 25% spike in home purchases totaling more than $800 billion.

The resulting economy has given mortgage lenders a renewed optimism. A combination of lower down payment requirements that appeal to first-time homebuyers, and low interest rates for those seeking to refinance are reasons for the improvement in the Metro Atlanta mortgage market.

The HMDA information is compiled from reports from more than 7,000 lending institutions throughout the country. The data is utilized by state and federal compliance officials and bank regulators to — among other things — ensure that lenders make mortgages available to people living in minority neighborhoods.

Because the mortgage market can be volatile, economists and industry experts have historically projected conservative numbers. This is due in no small measure to interest rate fluctuations and the lag time inherent in obtaining disseminating public records data. Some lenders say that lag time can often be as long as nine months.

The improvement that’s been on the Metro Atlanta mortgage market horizon, however, isn't universally expected to continue. Some industry experts say stagnant wage growth and higher home prices causing the current seller's market will dissuade some buyers in premium-priced markets.

As one real estate economist put it, perhaps the real value of the HMDA data will be to reinforce the feeling that the market is sustainable and the "Chicken Little" concept of "the sky is falling" is not the current market condition.

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.