Guardian Bank: The New Mortgages Rules and How They Impact You
Monday, February 29th, 2016
At some point most people will buy or consider buying a home, or know someone who is. Becoming a home owner is an exciting change, and life is full of events – like getting married, having children, changing jobs, or retiring – that can impact the type of home that is needed. While this exciting process will almost certainly appear in our life journey, the rules and processes for doing so have changed significantly.
In October 2015 a new set of mortgage guidelines for lenders went into effect. Championed and enforced by the Consumer Financial Protection Bureau as a reaction to the 2010 Dodd-Frank Act, these adjustments are two-fold. First, they aim to share more information with the borrower before they execute closing documents. Second, they intend to ensure lenders take the necessary steps to verify that the borrower is able to repay the loan.
The intent of the reform is to prevent another housing bubble burst, but the overhaul of changes has left many lenders and borrowers puzzled and frustrated.
That isn’t the case at Guardian Bank, a local Valdosta-Lowndes County community bank with an established reputation for stability and excellent customer service. Chief Executive Officer Parrish Clark explains why the Guardian Bank lending team is ready. “We’ve done our homework,” explains Clark. “We trained extensively, and now we are using that expertise to help our community.” Clark continues, “When customers come to Guardian Bank, they will get first-class customer service and the very best efforts of a knowledgeable lending team that is committed to their well-being.”
Although some borrowers may not notice a difference when applying for a mortgage, a number of borrowers will experience a more stringent process especially, the self-employed and those seeking larger loan amounts. The new regulations focus closely at what and when information is given to the borrower, and even the slightest adjustment can cause a major impact to timing. Since many home transactions take place nearly simultaneously (a family sells one home and buys another), this potential ripple effect is very real and could impacts multiple parties.
“The new regulations on personal loans have the potential to be frustrating and time consuming. More information is required than ever before, and one delay can make it stressful,” says Clark. “Working with experts can help alleviate that frustration, and our lenders work continuously to refine and improve our processes to make them as efficient as possible. Communication between the borrower and the lender is critical.”
Understanding the changes and how they impact you are the keys to making your journey to home ownership less stressful. Here are three suggestions from the team at Guardian Bank:
Know Your Banker
While it may seem obvious, it is a critical component of ensuring that you understand and are comfortable with the loan process. You want to know, trust, and have confidence in the banker with whom is navigating the process for you.
“The new regulations are intended to ensure that we do not end up in another housing crisis,” says Joey Stith, Lending Officer at Guardian Bank. “There are several pieces of information that must be verified when you apply for a loan, and that information includes sensitive personal data. Having a trusting relationship with your banker will put you at ease.” Stith continues, “You need to be able to communicate with him openly and honestly so you get the mortgage product you want and need.”
In addition to trust there needs to be an established record of expertise, a piece of the puzzle the lending team at Guardian Bank stresses. The team at Guardian Bank strives to set the example for professional, personal service in the financial industry. The local bank participates in ongoing educational opportunities and encourages its team to continuously learn more especially regarding these new regulations.
“We continuously read, train, and test so we can be the absolute best financial resource for the community,” says Andy Bolton, Lending Officer at Guardian Bank. “We commit to our customers to give them first-class service with expert financial advice.”
In addition to knowing your lender and being confident in his or her expertise, there are also several pieces of information that are necessary to begin the loan process.
“Part of the new regulation puts timelines on when and how lenders give information to the customer,” Stith clarifies. “The more customer information we have on day 1, the easier and faster the process will be.”
Stith goes on to explain that while every loan has a unique set of requirements, there are five pieces of information in addition to the application that buyers are recommended to have at their fingertips. He uses the five vowels (A, E, I, O, and U) as an easy reminder:
- Amount: How much money are you looking to borrow?
- Employment: A verification of your work, preferably in the form of a W2 or 1099, for the past two years.
- Income: Confirmation of your income for the last 2 years, ideally with your tax returns and recent pay stubs.
- Obligation of Debt: On what do you currently owe money? Items like car payments, alimony, or child support fall into this category.
- Uncertain Value: What is the estimated value and/or sale price of the home/property? An appraisal will be done later, but a rough idea of the value (if available) is helpful.
Other items that may be necessary at some point in the loan process include an estimate of insurance expenses, a copy of the purchase contract (if there is one), and verification of the assets listed on the borrower’s application.
“We know there is a good bit of information necessary to proceed with a loan,” says Stith. “That is one reason knowing and trusting your banker is so important. We are honored when a person or family chooses to do business with us, and we take that privilege seriously. Whether we’re answering questions or providing guidance, we are with you every step of the way. That is one way we commit to service.”
The third and final piece of the puzzle in making the journey to home ownership simple and smooth is communication. As the real estate market picks up, more people will start to see the impact of the new rules in their daily lives.
Bolton encourages potential buyers to speak frequently and candidly with their lender, “Regulations can be confusing, and I’m not sure we’ve fully experienced the impact of these changes just yet. There is huge emphasis on information disclosure, and it is driven by a very strict timeline. If you’re a borrower, don’t be timid. Ask questions or make an appointment to discuss your file and the process. Also, share everything you think we need to know about your situation. We are better able to serve you when we have all of the information we need. And, the better you understand the process and the timeline, the happier you will be.”
The road to home ownership is rumored to be littered with tales of unpleasant experiences, but the Guardian Bank team is confident that these three steps can make it simpler and less stressful.
“Buying a home or land should be exciting,” explains Stith. “We are privileged to be a part of that for many Valdosta and Lowndes County families.”
For more information about Guardian Bank, please visit GuardianBankOnline.com or call the Main Office at (229) 241-9444, or visit one of the branch offices located in Valdosta at 701 Wildwood Plantation Drive, 246 Norman Drive, and 1914 North Ashley Street.