Harp continues to play a beautiful melody...

The HARP refinance program continues to aid to U.S. homeowners.
According to the Federal Housing Finance Agency (FHFA), nearly one hundred-thousand mortgages were closed under the Home Affordable Refinance Program (HARP) in May, raising the all-time tally to 2.65 million.
HARP is available to U.S. homeowners through December 2015.

HARP : Refinancing Underwater Homeowners Since 2009

The Home Affordable Refinance Program was first launched in February 2009. It was introduced as a way to help struggling U.S. homeowners lower their mortgage payments, and to help boost the national economy.
The recession was underway and home values were dropping. So were mortgage rates. Unfortunately, only specific groups of homeowners could capitalize.
FHA-backed homeowners, for example, had access to the FHA Streamline Refinance, an appraisal-less refinance program. Losing home equity didn't affect FHA-backed homeowners.
The same was true for military borrowers carrying a VA loan. Via the streamline IRRRL program, eligible VA homeowners could simply ask their bank for a refinance and, in most cases, it was awarded.
These two programs were models for HARP.
Via HARP, the government waived most home appraisal requirements, giving U.S. homeowners whose homes had lost equity access to the same mortgage rates as everyone else. There were just three criteria in order to be HARP-eligible.

1. The homeowner's loan must be securitized by Fannie Mae or Freddie Mac
2. The homeowner's loan must have a securitization date no later than May 31, 2009
3. The homeowner must show a recent history of on-time payments

For people who met these conditions, the HARP program proved valuable and nearly one million Home Affordable Refinance Program loans closed before the government elected to update and relaunch to its popular refinance program.
Dubbed "HARP 2.0", the revamped Home Affordable Refinance Program included simpler approval standards and relaxed loan-to-value requirements. The changes  made HARP instantly available to millions of additional U.S. households.
In the year-plus since HARP 2.0 launched, there have been 150% more closings than during all of HARP 1.0's tenure.

HARP 2.0 : Tops In California, Florida, Michigan

When HARP was first announced in early-2009, it was a program expected to help 7,000,000 U.S. households lower their respective monthly mortgage payments. Four years later, however, HARP is well short of its target.
Through April 2013, there have been just 2.57 million HARP closings nationwide -- an average of 52,450 per month. It would take until May 2020 for HARP closings to reach 7 million at this pace. Unfortunately, the HARP program has just 17 months until its expiration.
This is one reason why talk of HARP 3.0 gets louder in Washington. Like HARP 2.0, such a program would break down barriers to entry and make the "Obama Refi" available more easily.
For now, though, HARP usage has been concentrated by state, with the Pareto Principle in effect. More than 80% of HARP closings have occurred in just 20 percent of the states.

1. California (21% of program refinances nationwide)
2. Florida (13% of program refinances nationwide)
3. Michigan (10% of program refinances nationwide)
4. Illinois (10% of program refinances nationwide)
5. Arizona (7% of program refinances nationwide)
6. Georgia (7% of program refinances nationwide)
7. Washington (6% of program refinances nationwide)
8. Minnesota (5% of program refinances nationwide)
9. Ohio (5% of program refinances nationwide)
10. New Jersey (4% of program refinances nationwide)

By contrast, there have been relatively few Home Affordable Refinance Program closings in Wyoming, Vermont, Alaska, South Dakota and North Dakota. The activity in these 5 states accounts for less than one-half of one percent of HARP refinance activity nationwide.

To receive personalized rates please email me at eneal@athccorp.com with your available times to discuss your options. 

Condo values rising faster than housing...

As the U.S. housing market gains, it's taking the condominium market with it.
Home price growth in condos and co-ops is outpacing growth in single-family residences. This is a major shift for the housing market -- condos were among the most distressed sectors of last decade's housing market downturn.
Home sellers are getting higher prices for their condos.

Los Angeles Condos Jump 23%; Chicago Rises 12%

According to the most recent Case-Shiller Index, home values climbed 12.2 percent nationwide for the 12 months ending May 2013. This jump marks the biggest one-year increase in home valuation since the Case-Shiller Index launched 26 years ago.

Each of the Case-Shiller Index's 20 tracked cities posted annual gains, led by the San Francisco Bay Area; Las Vegas, Nevada; and Phoenix, Arizona. Home valuations in the Las Vegas are up 23% since from 12 months ago, which claws back against the heavy losses sustained last decade.

The "last place" finisher in the May 2013 Case-Shiller Index? New York City.

As compared to one year ago, home values in the city's five boroughs -- Manhattan, Brooklyn, Queens, the Bronx, and Staten Island -- rose just 3.3 percent, which is well below the U.S. national average.
However, the Case-Shiller headline figure tells just part of the story.

In New York City, the market is thick with condominiums and co-ops and it just so happens that the Case-Shiller Index ignores homes of these types. If we were to add back condos and co-ops to the Case-Shiller Index data, we'd actually see that New York City is performing quite well.

In New York, condo values are up nearly 10% since last year -- well above the broader index's reading of 3.3 percent.
The same is true in other Case-Shiller Index markets, too. Condos in the 4 other cities tracked by the Case-Shiller Condominium Index showed strong annual gains, and each outpaced its home city.
•    Los Angeles, California : Condos +23.1% annually (versus +19.2% for single-family homes)
•    San Francisco, California : Condos + 27.6% annually (versus +24.5% for single-family homes)
•    Chicago, Illinois : Condos + 11.9% annually (versus +8.5% for single-family homes)
•    Boston, Massachusetts : Condos +8.7% annually (versus +7.5% for single-family homes)
•    New York City, New York : Condos + 9.8% annually (versus +3.3% for single-family homes)

With tight supply and limited construction, buyers of condos and co-ops should expect higher home prices through the end of 2013 and into early-2014, at least.

Mortgages For Condominiums

Getting a mortgage for a condo can sometimes be a challenge. Last decade, lenders were burned on condos for a variety of reasons and so they've bounced back on condo loans a bit more cautious and a bit more wise.
Today's buyers of condos have fewer financing choices as compared to buyers of single-family detached homes.
As one example, buyers using conventional mortgage financing via Fannie Mae or Freddie Mac pay a premium for all loans with less than 25% equity. For this reason, buyers of condos and co-ops are encouraged to cap loans at 75% loan-to-value (LTV).

Condo loans above 75% LTV remain acceptable, however, the accompanying mortgage rate and/or closing costs will likely be higher.

VA loans for condos are available, too. VA loans allow 100% financing with no mortgage insurance required. Mortgage rates tend to be relatively low with a VA loan because all VA loans are guaranteed by the government.
In nearly all cases, though, buyers of condominiums will want to verify a building's warrant ability.
"Warrant-ability" is a mortgage term whether mortgages in a given condo building are eligible for purchase by Fannie Mae or Freddie Mac. Non-warrant-able condos are sometimes denied for funding, but not always.

A building's warrant ability is based on a host of traits, some of which include :
1.    No person owns more than 10% of the building units
2.    No more than 50% of the building's units are active rental units
3.    No more than 20% of the building is dedicated to commercial/retail space
To determine whether a building is warrant-able or non-warrant-able, mortgage lenders will often use a "condominium questionnaire", which addresses the lend-ability of a building.
Non-warrant able condos can still be financed, it should be mentioned. Product availability, however, is limited and mortgage rates are sometimes higher.

The Case-Shiller Index reports rising values for today's condos and co-ops. In many cases, condo prices have climbed more than for comparable single-family residences. Buyers of condos should expect rising prices.
If you're considering buying a condo or co-op, see how today's mortgage rates fit your budget and check the warrant-ability of your expected purchase property.

To receive personalized rates please email me at eneal@athccorp.com with your available times to discuss your options.

Closing Cost the breakdown behind the fees....

According to Bankrate.com's 2013 Mortgage Closing Cost Survey, today's typical mortgage applicant pays 6 percent more in origination and third-party fees as compared to 2012. Last year, costs had dropped seven percent.
For today's home buyers and refinancing households, rising closing costs change the math of getting a mortgage. It's helps to be prepared, and to know how zero-closing cost mortgages can improve your mortgage shopping.

What Is A Mortgage Closing Cost?

Mortgage "closing costs" are fees consumers pay to start a new mortgage, and can be grouped into two categories.

Origination/Lender Charges

Origination/Lender fees are fees paid in conjunction with your loan's origination. They include line-items from your settlement statement which may include an application fee, a rate lock fee and/or origination points, for example.
Listing all such fees is difficult because fees masquerade under different titles from bank-to-bank, and from product-to-product. One bank's "underwriting fee" is another bank's "processing fee", for example, and VA loans and FHA loans have specific costs which don't exist for conventional ones.
This is why rate shoppers who attempt to shop banks "fee-for-fee" tend to strike out. It's an impossible comparison.
A better plan for today's home buyers and refinancing households is to just ignore the individual line items which make up lender's origination fees completely. Instead, savvy shopper should focus on the sum of origination charges -- it's inclusive of all fees and makes for simpler comparisons.
Look for Section 800 on your Good Faith Estimate (GFE). It's the section in which origination fees and lender charges are listed and summarized.

Third-Party Charges

The second type of closing costs are "third-party" costs.
Third-party costs are fees paid to parties other than your mortgage lender. Third-party fees can include the costs of your appraisal(s), the cost of your credit report, and title company settlement costs.
In general, when comparing Good Faith Estimates against each other, you should ignore whatever third-party fees are listed. This is because third-party fees are often fixed-cost items which cost the same no matter which bank you ultimately work with.
Your appraisal costs what it costs; your credit report costs what it costs; and your choice of lenders won't affect that. That said, one of the rare times that third-party costs come into play is with respect to HARP refinancing; or via the FHA Streamline Refinance and VA Streamline Refinance. These three programs often waive the need for a home appraisal. Some lenders, however, may insist on performing one, which can affect costs.
Be sure to ask your lender whether an appraisal will be required.

Convert Your Mortgage Into A Zero-Closing Cost Mortgage

Closing costs are 6% higher as compared to last year and paying for costs can be costly -- especially if you live in high closing cost states such as Hawaii, California or New Jersey.
There are three ways to pay your mortgage closing costs :

1. You can pay your costs with cash at closing
2. You can add your closing costs to your loan balance (for refinances)
3. You can waive your closing costs via a zero-closing cost mortgage

Each method has its advantages.
When you pay your costs with cash at closing, you often get access to the lowest combination of mortgage rate and loan size. In the long-term, this reduces the amount of mortgage interest paid to your lender, and can result in a quicker principal balance reduction.
When you add your closing cost to your loan balance, you save your savings which can help with financial planning. It's important for all homeowners to have an emergency cash reserve and using your reserve to pay for closing costs could be foolish.
Or, you can waive your closing costs altogether via a zero-closing cost mortgage.
Zero-closing cost mortgages are exactly what they sound like -- they are mortgages for which the homeowner pays absolutely zero closing costs -- nothing is added to the loan balance, nothing is "hidden" in the figures.
With a zero-closing cost mortgage, all fees down to the last penny are paid by the lender instead of by you. In exchange for this payment, the homeowner agrees to accept a slightly higher mortgage rate than the day's "market rate" -- typically an increase of 0.25 percentage points.
As an example of how this works, let's say a homeowner in Loudoun County, Virginia wants to borrow at the local jumbo conforming loan limit of $625,500 and doesn't want to pay Virginia's closing costs with cash. In most cases, the homeowner could add the costs to his loan. Here, however, it's not an option. This is because the loan balance would exceed conforming loan limits if the closing costs were added.
The homeowner would have to use a zero-closing cost mortgage, then.
If today's mortgage rates are 4.50%, the mortgage applicant would get a rate near 4.75% from his bank. In return for taking the higher rate, all of the applicants closing costs would be waived.
Zero-closing cost mortgages are available with purchases and refinance.

Get Today's Zero-Closing Cost Mortgage Rates

In many refinance scenarios, zero-closing cost mortgages are an economically-sound decision. When you pay no costs, you get a refinance with infinite ROI -- there are measurable monthly savings and no closing costs to recoup. You break-even on the mortgage before it ever even starts.
On purchases, they can work out, too. Paying fewer closing costs means that you can increase the size of your home downpayment, or reserve some money for repairs.
Closing costs are rising, Bankrate.com tells us, and they're expected to rise through 2014, too. Make sure to have a plan. Know what today's zero-closing mortgage rates look like and see where you can save on fees.

To receive personalized rates please email me at eneal@athccorp.com with your available times to discuss your options.

"President Calls for Ending Freddie and Fannie, Hints at HARP Expansion"

President Barack Obama, speaking to an audience in Phoenix yesterday, tied his proposal reforming the U.S. housing system to both his on-going theme of shoring up the middle class and to immigration reform. Among his specific proposals were the gradual elimination of Fannie Mae and Freddie Mac and the need to insure the availability of decent and affordable rental housing.

Calling owning a home "the ultimate evidence that here in America, hard work pays off, that responsibility is rewarded," he pointed to the difference between when his grandfather was able to buy his first home with an FHA loan and the events leading up to the recent crisis. "In that earlier generation, houses weren't for flipping around, they weren't for speculation -- houses were to live in, and to build a life with." But unfortunately, he said, responsibility gave way to recklessness - and triggered a recession.

The President enumerated some of the steps that the government has already taken to reverse the decline in housing and some of the recent signs of recovery, emphasizing that housing isn't just important for the person who owns the house - it impacts the entire economy "Construction workers, contractors, suppliers, carpet makers, all these folks are impacted by the housing industry."
We've made progress, he said, but we've got to build on this progress and "turn the page on this kind of bubble-and-bust mentality that helped to create this mess in the first place. We've got to build a housing system that is durable and fair and rewards responsibility for generations to come".

There are, he said, five immediate steps that must be taken:

·        

 Congress should pass a bill giving every homeowner the chance to save thousands of dollars a year by refinancing their mortgage at today's rates.

·        

 We've made it harder for reckless buyers to buy homes that they can't afford now we must make it easier for qualified buyers to buy ones they can afford by simplifying overlapping regulations, cutting red tape, and giving persons who have worked hard to repair their credit a second chance.

·      

   We must fix our broken immigration system because when more people can buy homes and play by the rules, home values go up for everybody. One recent study showed the average homeowner has already seen the value of their home boosted by thousands of dollars because of immigration.

·       

  Rebuild the communities hardest hit by the housing crash; putting construction workers back to work repairing rundown homes, tearing down vacant properties so that the value of homes in those surrounding areas start picking up.

·        

 Make sure families that can't or don't want to buy a home still have a decent place to rent. Instead of making everyone feel like they must own a home, even if they weren't ready let's invest in affordable rental housing. Let's bring together cities and states to address local barriers that drive up rents for working families. 

As home prices rise, we don't want another bubble, he said, we want something stable and steady. 'And that's why I want to lay a rock-solid foundation to make sure the kind of crisis we went through never happens again." To that end, he said, we must wind down Fannie Mae and Freddie Mac, the two companies that are not really government but not really private sector. "For too long, these companies were allowed to make huge profits buying mortgages, knowing that if their bets went bad, taxpayers would be left holding the bag. It was "heads we win, tails you lose." "It helped to inflate this bubble in a way that ultimately killed Main Street."


He said a bipartisan group of senators is working to end these two companies (referring to the Corker-Warner bill), "And they're following four core principles for what I believe this reform should look like. "

First, private capital should take a bigger role in the mortgage market. There should be a limited government role and private lending should be the backbone of the housing market including community-based lenders "who view their borrowers not as a number, but as a neighbor."

Second, we can't leave taxpayers on the hook for irresponsibility or bad decisions by some of these lenders or Fannie Mae or Freddie Mac. "We've got to encourage the pursuit of profit, but the era of expecting a bailout after you pursue your profit and you don't manage your risk well -- well, that puts the whole country at risk. We're not going to do that anymore."

The third principle is to preserve access to safe and simple mortgage products like the 30-year, fixed-rate mortgage. 

Fourth, we've got to keep housing affordable for first-time home buyers. And that means we've got to strengthen the FHA so it gives today's families a chance to buy a home, and it preserves those rungs on the ladder of opportunity. 

And we've got to support affordable rental housing and we've also got to keep up our fight against homelessness. 

The president also called on Congress to immediately allow an up-or-down vote on the confirmation of James Watt, his nominee to head the Federal Housing Finance Agency (FHFA) and gave a strong endorsement to the work being done to protect homeowners by the Consumer Financial Protection Bureau.

The President concluded, "Put all these principles together, that's going to protect our entire economy and it will improve the housing market not just here in Phoenix, but throughout the state and throughout the country. We'll make owning a home a symbol of responsibility, not speculation -- a source of security for generations to come, just like it was for my grandparents."

To receive personalized rates please email me at eneal@athccorp.com with your available times to discuss your options.

Harp 2.0, Harp 3.0?

U.S. homeowners have lost trillions of dollars in home equity since April 2006. Yet, the U.S. Refinance Boom continues.
Triggered by lifetime-low mortgage rates and generous refinance programs for underwater homeowners including HARP 2.0, the VA-to-VA refinance, and the FHA Streamline Refinance, refinance closings from this year's first quarter blew past Wall Street estimates.
Today, through various program, literally millions of U.S. homeowners could refinance to save money. The next 12 months may be heavy on mortgage refinancing -- especially should HARP 3.0 pass Congress.

HARP : Mortgages For Underwater Homeowners

Since 2009, millions of U.S. households have refinanced despite falling home equity.
Through the first three months of this year, for example, data from Freddie Mac shows that the median appreciation of a refinanced home was -8%, marking the 15th straight quarter during which lenders refinanced an "underwater mortgage" more often than a home with existing home equity.
Not surprisingly, this multi-year streak began near the month the government launched its Home Affordable Refinance Program (HARP), which is a component of the Making Home Affordable program.
Sometimes called the "Obama Refi", HARP is the refinance product for homeowners with lost equity. Via the program, homeowners with negative equity can refinance with nearly zero underwriting verifications to make beyond proving a one-year perfect mortgage payment history.
HARP got its start in 2009. The economy was sinking and mortgage rates were dropping. Unfortunately, however, because home values were dropping, too, few homeowners could take advantage of the day's low rates.
To refinance would have meant to pay private mortgage insurance (PMI) and PMI rendered refinancing impractical.
In response, the government designed HARP.
HARP's main draw was that it allowed homeowners whose loan-to-value exceeded 80% to refinance without having to increase their current mortgage insurance coverage. This meant that homeowners who had originally made a 20% downpayment -- but now had little or no equity -- were eligible to refinance without having to take on PMI.
Prior to HARP, homeowners with lost equity could only refinance via a "cash-in" refinance. Now, though, with HARP in the mix, nearly anyone with a Fannie Mae- or Freddie Mac-backed mortgage was refinance-eligible without incurring new PMI.
More than 2.6 million U.S. households have used HARP since 2009.

HARP 2.0 : More Options For "Underwater Mortgages"

HARP had early success in its first two years. To build on that success, then, the government made updates to help the HARP program reach more U.S. households.
Relaunched in late-2011 as HARP 2.0, the Obama Refi was changed to allow unlimited loan-to-value, among other updates. No matter how far underwater you were with your home, with HARP 2.0, refinancing was a possibility.
Your home's LTV could be 200% or higher and you'd still be HARP-eligible.
The move toward unlimited LTV was a boon to the HARP program in places such as Phoenix, Arizona; Orange County, California; and Las Vegas, Nevada -- three areas in which homes values had plunged between 2007-2009. Homeowners in these areas were often severely underwater and, today, HARP refinances still account for more than half of all the nation's HARP closings.
"The President waives refi requirements", said headlines. Two years later, HARP 2.0 accounts for 20 percent of refinance transactions nationwide.
Furthermore, underwater homeowners are taking advantage. Look at the median home appreciation of all Freddie Mac refinanced mortgages since 2011. HARP 2.0 is working.

• HARP 1.0 : Median refinanced home appreciation of -3%
• HARP 2.0 : Median refinanced home appreciation of -9%

If not for sharply rising home values over the last 12 months, the difference would be even more stark.
Underwater homeowners exploit the Home Affordable Refinance Program for all of its benefits, and the program is scheduled to terminate December 31, 2015. HARP refinance volume remains strong.

"A Better Bargain" : Readying For HARP 3.0

Today, the Home Affordable Refinance Program is meant for mortgages backed by Fannie Mae and Freddie Mac only. Soon, that may change. HARP may be extended to non-government loans including Alt-A loans, subprime loans, and portfolio loans, too.
The purported "HARP 3.0" program is sometimes called #MyRefi and has also been referred to as "A Better Bargain" by the White House. The program has been slowly working its way through Congress, and may pass as law later this year.
There have even been some HARP 3.0-like bills including the Merkley Mortgage which is already in effect; and The Responsible Homeowner Refinancing Act of 2013, a bill sponsored by Senators Barbara Boxer and Robert Menendez. Both programs -- if widely adopted -- could open HARP-like opportunities to millions of additional U.S. homeowners.
Other potential features of a HARP 3.0-like program include changing the program eligibility date from May 31, 2009 to some date in 2011; offering more lenient terms on loans of 15 years or fewer; and making softer requirements for HARP investor loans.

Check Your HARP Mortgage Eligibility

For today's underwater homeowners, the Home Affordable Refinance Program offers low mortgage rates and simpler underwriting regulation. If your mortgage is HARP-eligible, you stand to lower your mortgage payment by as much as 25%.

To receive personalized rates please email me at eneal@athccorp.com with your available times to discuss your options.  

Banks starting to loan again?

For "prime" borrowers, it's getting easier to get a mortgage.
According to a Federal Reserve survey of more than 65 banks, very few lenders are tightening mortgage guidelines anymore as the U.S. economy improves, and as home values climb nationwide.
It's a good time to be a home buyer.

Mortgage Standards : Simpler And Easier In 2013

Once per quarter, the Federal Reserve conducts a survey in which it asks its member banks about the current lending environment. The survey covers a wide-range of loan types, both commercial and residential.
The questions are meant to uncover current consumer and business demand for bank loans, and the banks' willingness to make loans to its customers.
One such question deals with the prime residential mortgage, where "prime residential mortgage" is defined as a mortgage for a borrower whose credit scores are 740 or higher; whose debt-to-income ratios are lower than average; and, whose mortgage is either a "standard" loan type such as a fixed-rate mortgage or an adjustable one.
Prime borrowers had a easier time getting mortgage-approved between April-June 2013. Just two surveyed banks said that prime mortgage guidelines tightened.
As a percentage of all responding banks :

• 3.0% reported mortgage guidelines tightening
• 86.6% reported no change in mortgage guidelines
• 10.4% reported mortgage guidelines loosening

Loans are getting "easier" even as demand for loans grows. More than 58% of banks say that demand for purchase loans has climbed since last quarter. Demand for FHA loans and VA loans may have seen a similar spike.
Only 9 percent of banks say demand for purchase loans has dropped, a data point which is consistent with this year's housing market rebound. Builders report that foot traffic has reached its highest level in 7 years, and U.S. home inventory is barely keeping pace with today's active home buyers.
Furthermore, because some banks are loosening credit requirements for home equity lines of credit (HELOC), "piggyback mortgages" are becoming more common.

Demand For HARP Loans Remains Strong

Separately, the Federal Housing Finance Agency (FHFA) released data showing strong demand for the Home Affordable Refinance Program (HARP). U.S. lenders closed more than 86,000 HARP 2.0 loans in May 2013, raising the program total to 2.65 million closings since inception.
At the current pace of closings, more than 1.1 million HARP loans will close in 2013, which would mark the second straight million-plus transaction year. However, should HARP 3.0 pass Congress this September, the number of HARP closings could top even two million.
There are scores of U.S. homeowners who remain HARP-eligible. The passage of HARP 3.0 may entice them to finally refinance.
HARP 3.0 is rumored to include a change in program start date from May 31, 2009; an allowance for non-Fannie Mae and non-Freddie Mac mortgages; a reduction in loan closing costs; and, fewer lender restrictions.

Mortgage Rates Near Record-Lows

As a home buyer or refinancing household, if may not feel like mortgage standards are loosening, but they are. There are fewer documentation requirements as compared to 24 months ago, and mortgage approval rates are climbing.
Plus, mortgage rates are low. See how today's mortgage market can help your household budget.

To receive personalized rates please email me at eneal@athccorp.com with your available times to discuss your options. 

Understanding the mortgage process

The U.S. housing market is in recovery. Home sales are rising and home prices are, too.
If you're among the many people planning to buy a home this year, be sure to understand the actual process of it all -- especially with respect to your mortgage.
Understanding the mortgage process can help you save money on your home purchase, and on your monthly payments.

First, Select Your Mortgage Amount

For today's home buyers, there are multiple types of home loans available. A mortgage lender can offer you guidance, but it will be your responsibility to choose the most suitable mortgage program for your long- and short-term needs.
The first area in which to focus is "loan size"; how much money you'll want to borrow.
Mortgage lenders use formulas to calculate how large of a mortgage you can afford to give. The formulas take into account your monthly expenses, your gross income, and your asset base, and other inputs.
It should be noted, though, that a lender's "maximum loan size formula" won't tell you how much you should borrow from the bank -- rather, it will just tell you how much you can borrow from the bank.
Know your financial situation, so you can choose a mortgage loan size that works best for you. Banks may opt to lend you more money than you deem sensible.

Next, Consider All Mortgage "Types"

The most common mortgage type is the conventional 30-year fixed rate mortgage. A "conventional mortgage" is one which is backed by Fannie Mae or Freddie Mac, and which is typically within the local jumbo loan limit for your area.
Conventional mortgage loan limits begin at $417,000 and range up to $625,500, depending on where the subject property is located. You can lookup your area's jumbo loan limits here.
However, conventional mortgages aren't one-size-fits-all and other mortgage types exist to meet home buyer needs. Among the most popular of the non-conventional mortgages is the FHA loan.
FHA loans are loans insured by the Federal Housing Administration, but offered by traditional mortgage lenders. FHA mortgages provide comparable mortgage rates and terms versus conventional financing, and have become popular as a result of lenient approval standards and low down payment requirements.
For example, the FHA requires just a 3.5% down payment on most purchases; and its pricing can be more aggressive for home buyers whose FICO scores are below 740.
Another non-conventional loan type is the VA loan, offered by the Department of Veterans Affairs. VA loans are available to military borrowers and require no down payment whatsoever.
There is also the Conventional 97 program -- a 3% down payment program available via Fannie Mae, and which allows for the use of gift funds from family or related persons.
Overall, there are more than half-dozen loan "types" from which a home buyer can choose. Understand your options and you'll make a better choice.

Then, Consider All Mortgage Loan Products

Mortgage products come in many varieties, and there is usually a "best fit" given your financial needs.
For example, adjustable-rate mortgages (ARM) typically offer lower rates for an initial set period, and then fluctuate to meet current market conditions. If you plan to live in your new home for a finite number of years, therefore, the designated low-introductory rate period offered by an ARM may be worthwhile.
ARM’s are offered with initial teaser rates lasting three, five, and seven years, typically. There are 10-year ARM’s, too.
By contrast, fixed-rate mortgages maintain the same interest rate for the life of the loan, which allows a homeowner to budget and plan payments along a very long time frame. Fixed-rate mortgages are offered in 10, 15, 20, 25 and 30 year terms, with the 15-year and 30-year terms most common among buyers.
This is because the 15-year fixed rate mortgage and 30-year fixed rate mortgage tend to offer the lowest rates relative to other fixed-rate products.
When choosing between an adjustable-rate mortgage and fixed-rate one, consider current market conditions, plus the length of time you plan to live in the home.

Lastly, Mind Your Credit Score

Your credit score will play a large role in determining which mortgage product best suits you, and the mortgage rate for which you'll ultimately qualify.
If you don't have perfect credit, you can work on improving your credit score prior to applying for a home loan. High credit scores will help you get access to additional mortgage options as compared to a person with low credit scores; and will often grant you more aggressive mortgage rates.
Two quick ways to improve your credit score? One, spend responsibly; and, two, pay bills on time. These two factors account for 65% of your credit score.
In addition, be sure to receive a free copy of your credit report in order to check for errors or inaccuracies. If you find any, have them fixed immediately.

Know How Much Home You Can Afford

When you're planning out your mortgage, there's a lot of good research online. Mortgage calculators, expert insight and plug-and-play formulas can help you do your legwork.
Then, when you're ready to get real interest rates, you can do that for free online, too -- just ask for one. 

To receive personalized rates please email me at eneal@athccorp.com with your available times to discuss your options.