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With a hot housing market, budget-tightening inflation and ongoing pandemic concerns, the role of an experienced residential mortgage lender has never been more important to Hudson Valley home
buyers. We recently sat down with our own residential lending expert, Vince Aurigemma, Vice President of Residential Lending, an industry veteran of over 20 years, to get his thoughts on some of today’s pressing mortgage lending questions.
Q: What are your thoughts about online mortgage lenders versus community banks like Rhinebeck Bank?
A: We have something an online lender can’t offer – the personal touch that comes from a community bank. The mortgage process, especially for first-time homebuyers, can be intimidating. We’re able to truly serve as a resource to our borrowers throughout the mortgage process. That starts from when they apply, through the pre-approval process, discussions of the best mortgage fit (fixed rate, adjustable rate (ARM), SONYMA, FHA, etc.), estimated closing costs and continues through to their closing. Your local lender is going to understand the nuance of the territory. Someone who is taking a loan application in the Midwest can look at a map and see towns like Woodstock and Rhinebeck, but they have no idea how these areas attract a second home buyer and how that could affect appraised value and other aspects of a loan.
We appreciate the importance of borrowers, especially younger ones, to interact with their lender via online channels throughout the mortgage application process. We’ve taken steps to similarly expedite our application and other processes here, as well as offer more online channels for borrower/lender interactions. That is something we’ll continue to do as we strive to meet borrowers’ evolving needs and expectations.
Q: How has the traditional lender/realtor relationship changed in light of the proliferation of online home search platforms available to prospective homebuyers? How does that relationship benefit customers?
A: The relationship between a lender and realtor takes years to build, but is still important, even with all the online home search options available to buyers today. To me, the most important aspect of a lender/realtor relationship is communication. Realtors must be able to trust that lenders are working to ensure their clients are completing all necessary documentation in an efficient manner. There is no room for ambiguity in the lending industry, so staying in constant communication with the realtor and borrower is an absolute must. In addition, it is vital for lenders to stay on top of mortgage industry trends and regulations on the local, state and national level and keep realtors informed of these trends/regulations. That goes both ways – we rely on realtors making sure we’re aware of local housing market trends, customer requests and concerns, etc. When we communicate effectively with each other, we are both better equipped to serve the needs of our customers.
Q: How has the pandemic affected the day-to-day activities of your Residential Mortgage Lenders and underwriting/processing teams?
A: We were changing our mortgage origination systems (software systems used to input and process new applications) in the middle of the pandemic, so it was extremely challenging. The majority of our team had experience working in a “paperless” processing system, so we transitioned to a remote work environment fairly quickly. Our biggest concern is always how we can maintain effective inter-department communication, so our lenders, underwriting and processing teams continue to work hard to ensure accurate and thorough communication via loan notes inside of our software systems and regular in-person and/or online meetings.
Q: Do you see any comparisons between the housing market bubble in 2008 and the housing market we’re experiencing today? How would you advise people looking to buy a home right now?
A: I see the comparison in the consistent increase in average and median home prices. What I believe is very important to keep in mind is that much of what led to the issues we had in 2008 were the lending decisions and loan programs that were helping drive the market. There were interest-only loans, pay option ARM (adjustable-rate mortgage) loans, no income/no asset, and stated income/stated asset loans. Investors (i.e., Fannie Mae, Freddie Mac, FHA) were craving loans to repackage and sell on Wall Street. Back then, your credit score drove most of the process. Those times are, thankfully, gone. Now, credit decisions are driven mainly by documented ability to repay. With most home purchasers opting for longer mortgage loan terms (i.e., 30-year terms), if they have a documented history of repayment, today’s increased home values and the possibility of future home value fluctuations are not as big a problem. In the past, the deep decline in value hurt so many people who had short-term loans and needed to refinance, but couldn’t due to the decrease in property value.
Q: What differences have you seen between new homebuyers coming from outside of the Hudson Valley versus those from current HV residents and how do you handle them?
A: This is an interesting question. One thing I’ve noticed is that borrowers coming to the Hudson Valley from New York City are accustomed to a higher cost of living and, in some cases, are still able to work remotely and retain their higher income levels. Both factors have contributed to the increase in home purchase prices in the Hudson Valley in the past few years.
We also see many more self-employed borrowers, from within the Hudson Valley and outside of it, now than in the past – lots of people who are working the “gig economy.” This is challenging at times because the pandemic has caused changes in investor lending guidelines for self-employed borrowers. The documentation required has increased and there is much more scrutiny for people who are self-employed. They should expect to provide the following documentation when applying for a residential mortgage loan:
Minimum of two (2) years of full business and personal federal tax returns
Current Profit & Loss Statement (P&L) for the business*
Most recent three (3) months of business banking statements*
*These document requirements are new as a result of the COVID-19 pandemic.
Whether you’re a first-time homebuyer or looking to purchase a new/second home, our team of Residential Mortgage Lenders can help guide you through the mortgage process and answer any questions along the way. Click here to contact a lender near you!