Need a Mortgage

Attractive Loans Available to Savvy Buyers

By Pamela A. Keene

Contrary to public perception, the mortgage business is still open and it's a buyers' market for new homes and resales in the metro Atlanta area. That's good news for people moving to one of the most popular cities in the Southeast.

"A lot of the current condition of the mortgage industry has been sensationalized," says Sandie Tate, president of Guaranty Mortgage Services. "In fact, the U.S. Department of Housing and Urban Development has actually made it easier to finance an FHA loan by increasing the lending limits."

There's been a return to more traditional borrowing with FHA and conventional loans.

"The positive news is that lenders are still making loans with core products," says Donna Curran, senior vice president/regional mortgage manager for North Atlanta with BB&T Home Mortgage. "FHA home loans, both 15- and 30-year with competitive rates are still fairly easy to qualify for, and conventional loans are available as well. What's changed is the availability of many of the interest-only products or non-traditional mortgages that require little or no down payment or no verification of income."

Curran says that "no documentation" loans that are processed based on stated income are still being done, but lenders are requiring more money down and at least six months of total mortgage payments in the bank.

In the current market, adjustable mortgages are not particularly advantageous.

"With the interest rate environment now, there's not a lot of spread between adjustable and fixed rates," Tate says. "Unless you're going to stay in a home for a very short time, fixed-rate mortgages make much more sense."

Pre-Qualify To Find Out What You Can Borrow
Experts advise getting pre-qualified before house hunting to find out what amount of payments you can comfortably afford.

"The worse thing is to find a house, fall in love with it and then find out you can't afford the payments," says Mechele Glass, direction of education for Consumer Credit Counseling Service of Greater Atlanta. "It's a simple process to pre-qualify so that you know what you can afford."

Banks offer the ability to pre-qualify online as do many mortgage brokers. "Remember that being pre-qualified only gives you guidelines for the size of the mortgage you can afford," she says. "To be sure that you are in the ballpark, consider your fixed monthly expenses, variable expenses and additional funds to build a reserve for unexpected maintenance. Also, include the costs of not only the principle and interest, but the taxes and insurance on the mortgage as well."

Factors to Consider
As you plan a move, one of the first things to do is check your credit reports and scores. "You want to closely examine your credit reports from all three agencies-Equifax, Experian and TransUnion-to make sure that they are accurate," Glass says. "If you can, do this about four to six months in advance of applying for a loan because it may take some time to resolve inaccuracies."

Credit reports are available at no charge on the Internet at annualcreditreport.com. Other sites may attempt to sell products like credit protection, but annualcreditreport.com offers free access to all three bureaus' reports at least once per year, depending on the state in which you live.

"Once you've reviewed your credit report, pull your FICO score at myFICO.com," Glass says. "There is a fee involved, but it's usually only $20 to $40." The site myFICO is the consumer division of Fair Isaac, the company that invented the FICO credit risk score system that lenders use.

"Credit scores factor heavily into the mortgage loan approval process," Curran says. "Lenders are much more stringent now than they were 12 months ago, so it's important to make sure you have the best possible credit score." The site also contains current information about credit scores, typical interest rates and worksheets.

Homework First
From proximity to work to selecting a school system, the importance of doing your homework is crucial.

"Each county has different tax rates and different school systems," Glass says. "Do some research to narrow your geographic choices." Comparable homes with similar features and square footage can vary by thousands of dollars, depending on the location.

"It's much more practical to live at a comfortable level and buy a home that will allow you some reserve than to purchase a home that will max out your family finances," Glass says. "If you do your homework, keep up your credit score and have money in the bank, getting the right mortgage can be fairly simple."

Lenders agree that the market is still positive in Atlanta. "Overall, home prices have held up and lenders are still very aggressive in this market," Tate says. "Savvy buyers are taking advantage, and Atlanta's strongest lenders are here to help."