FOR IMMEDIATE RELEASE: Cornerstone Mortgage is now ranked the 3rd fastest growing privately held company in the St. Louis Region.

St. Louis, Missouri (June 1, 2011)-Cornerstone Morgage, Inc.-a privately held St. Louis based mortgage banking firm-has been ranked the 3rd fastest growing privately held company in the St. Louis region by the St. Louis Business Journal.

In addition, for the second year in a row the St. Louis Business Journal named Cornerstone Mortgage the fastest growing mortgage banker in the area.

According to Jim Dean, President of Cornerstone Mortgage, this kind of phenomenal growth in a very unstable economic climate is due in part to "Hiring and retaining Loan Officers with an average of 15 years experience and are licensed at both the state and national level, unlike most bank lending officers.  These professionals come to closing with a check for our clients and have eliminated all the complications in the loan process."  Mr. Dean also stated, "As an independent mortgage banker, we're not reliant on any other company to originate, fund and service loans.  This means we can offer pricing advantages over the larger lenders."

Cornerstone Mortgage, Inc. is a locally owned an operated Mortgage Banking firm with a proven track record in retail mortgage originations.  Founded in 1995 by Jim Dean, President/CEO and Angi Stevenson, Senior Vice President, Cornerstone Mortgage has 42 Loan Officers (all state and nationally licensed) and 6 locations serving the St. Louis metropolitan area.  In 2010, the company originated in excess of $500 million in residential home loans and was ranked the #1 fastest growing mortgage banking firms by the St. Louis Business Journal.  Cornerstone Mortgage, Inc. has been accredited by the Better Business Bureau since 1996 and has an A+ rating. 

When Realtors or Builders Recommend a Lender

If your Realtor or builder make a suggestion for a lender, be sure to talk to that lender. There are several reasons they make recommendations.

One reason Realtors and builders make suggestions is because they want to recommend someone reliable. Reliability is important to you, so that you don't end up with a horror story to tell. Reliability is also important to the seller, the agents, and everyone involved in your transaction because is the deal doesn't close, everyone walks away with nothing.

When agents and builders recommend lenders, they often develop a certain amount of "clout" in dealing with those lenders. This can help in a situation where you need to cut through "red tape" and get something done quickly.

When buying a new home, dealing with a recommended lender is often very important. This is because there are a lot of intricacies involved in new homes that do not exist when buying resale. If you "shop" around to find your own lender, you may end up with someone who quotes a great rate and is great with refinances or resales, but has no experience with new homes. This can lead to problems or delays.

Over the last ten years, real estate companies and builders have built up their own mortgage brokerages. "Bundled services" like this make sense because it adds another profit center to the company. This is useful because it helps real estate companies to offset higher commission splits with their agents.

In the early days of "bundled services," the loan officers and staff were often sub-par and the quality of service may not have been so great. Things have improved since then. However, because this is "captured business," sometimes these lenders don't have as much incentive to offer you great deals or lower rates. All you have to do is let them know you are "shopping rates" and they will probably work toward accommodating you as much as possible.

Never automatically disqualify a recommended lender, but be sure to be ask questions about any relationships between the lending company and your builder or real estate agent's company. That will help you be more vigilant on getting the best interest rate and the lowest costs.

CONCLUSION

Make sure to do a little shopping for yourself. By knowing the interest rates of the market and making sure your loan officer knows you are looking at rates from other institutions, you can use that as leverage to make sure you are obtaining the best combination of service and lowest rates.

Advantages of Paying Your Mortgage Bi-Weekly

Start paying your mortgage bi-weekly instead of monthly and shave up to 5 years off of your payment period.

 

One easy way to pay down your mortgage faster is to write bi-weekly checks instead of monthly ones. Pay on this twice-a-month schedule and you’ll get in an extra mortgage payment per year.

 

Sounds weird, but here’s how it works: Of course, there are only 12 months in the year, so you would think that bi-weekly payments would only equal 24 total payments. Because all of the months are made up of a different number of days, when you break down the year into 14-day increments, you actually get 26 bi-weekly time periods.

 

That’s why when you pay your mortgage bi-weekly rather than monthly, you can fit in 2 extra payments or 1 extra month’s payments.

 

Seeing as you are probably already getting paid bi-weekly anyway, it makes sense to just go ahead and set up your mortgage payments according to your pay schedule. Right?

 

There are actually a couple of different schools of thought about this.

 

First of all, if you don’t already have your financial ducks in order and have things high-rate credit card debt, you should take care of that first.

 

If your other debts are stable, it makes sense to pay down your mortgage faster, especially if there are no prepayment penalties or fees attached. Pay an extra check every year and you could shave as much as five years off of your thirty-year mortgage, which will save you a lot on interest and also you peace of mind.

 

Some finance experts have different opinions on this, though. The thought is that there are either better ways to prepay, or better ways to invest that extra money (if you have it).

 

Instead of tying up your extra cash in mortgage payments, some recommend that you save up the extra money and just make one extra payment at the end of the year. This way, you’ll have that cash available for emergencies and other investments during the year. One downside to this strategy is that the longer that you don’t pay down your mortgage, the more interest you’ll be paying throughout the year.

 

Some suggest that you consider whether or not that money is better spent on higher payout investments instead of prepaying your mortgage. If you’ve got a 7% mortgage then it makes sense to refinance or prepay. If you have a 4% mortgage, though, it’s likely that you can do better things with you cash than prepay the mortgage.

 

While there are many ways to accomplish paying your mortgage down faster, the bi-weekly strategy is one of the easiest—especially if you are the type of person who lacks the discipline to use extra money to pay down your mortgage and needs some sort of structure to make it happen.

 

There are also other factors to consider other than the savings. Getting rid of your mortgage sooner has a whole emotional angle in that it can lift the weight of a financial burden off of your shoulders and prepare you to start thinking (if you aren’t already) about focusing all of your energy and money on things like college tuition or retirement.

 

How Much Do You Know About FICO?

Ten Facts About the History of FICO

A three digit number that tells the story of your past and holds the potential of your future? Nope, it’s not your weight or your cholesterol. And hopefully it’s not the score of your latest golf round, yikes! Of course, it’s a credit score---one of the very first things you want to know about a potential borrower. So you always know your customers’ credit scores, but do you know anything about where they came from?

While the exact method behind calculating these revealing little numbers remains a mystery, here are a few fun facts you may not have known about the history of one of the most powerful numbers in our lives.
Ten Facts You Didn’t Know About FICO:

1. FICO actually stands for the Fair Isaac Corporation, a company started in 1956 by an engineer and a mathematician.
2. It wasn’t until 1958 that FICO created its first credit scoring system for American Investments.
3. Later that year, FICO sent out 50 letters to America’s biggest lenders asking to explain their credit scoring system. They got one response.
4. One of the best investments founders Bill Fair and Earl Isaac ever made? The $400 each of them contributed to start the Fair Isaac Corporation.
5. Remember Montgomery Wards? In the early 1960’s FICO built their first credit scoring system.
6. In 1995, nearly 40 years after FICO began; Fannie Mae and Freddie Mac recommended the use of FICO scores to evaluate mortgage loans.
7. In 2010 FICO introduced their national FICO certification for mortgage lenders with AllRegs.
8. FICO also boasts that it has more than half of the world’s top 100 banks as their clients.
9. Even more impressive, nine of the top ten Fortune 500 companies are FICO clients.

And finally…

10. Just how prevalent are FICO scores in the mortgage industry? Today, FICO scores are used in 3 out of 4 US mortgage originations.

Six Reasons to Pursue an ARM

Adjustable Rate Mortgages have gotten a bad name over the years, but that doesn’t mean that you shouldn’t consider one for your mortgage or refinance.

 

Adjustable Rate Mortgages or ARMs got a bad name during the housing market crash. Homebuyers took advantage of the super-low rates and then couldn’t keep up when the ARM adjusted and their monthly payments jumped a few hundred dollars. In the end, it caused many to lose their homes.

 

While this bad rap is understandable, it’s not totally justified. In part, it can be chalked up to uneducated homeowners who took a risk that they didn’t quite understand.

 

An ARM is not an inherently bad thing; it’s just a tool that can either be used constructively and with a purpose or haphazardly and perhaps destructively. It can be a great investment tool for people looking either for a primary mortgage or for a refinance.

Here are a few reasons to consider an adjustable rate mortgage:

 

1.) Low rates: the rates on ARMs are almost always lower than on 30-year fixed rate mortgages. ARMs are best when fixed rates are high and you think that they’ll go down in the future when you can refinance.

 

2.) You don’t plan to be in your home for that long: If you are only planning on being in your home for a few years, an ARM makes sense. Get a 5/1 ARM (meaning that the fixed rate remains for 5 years) at 3.32% vs. a 30-year fixed rate mortgage at 4.78%, and save a lot of money. Move after 5 years and you’ve come out ahead.

 

3.) Monthly savings: utilize an ARM and you can save hundreds of dollars per month, even with closing costs. Pay what you would be paying on a higher, fixed-rate loan and pay down your mortgage even faster.

 

4.) Market rates might go down: It does happen! Market rates might actually go down when it comes time to readjust your loan, which could leave you in an even better position.

 

5.) You are wealthy: If you are wealthy and have liquid assets that you can stand to lose, then you can probably handle the risk of a rate change.

 

6.) You are buying a cheap house: Most people need to stretch to purchase a home. However, if you are one of the lucky ones who is purchasing a house that is below your means, then take out an ARM and pay what you would have paid on a fixed-rate anyway and pay down the mortgage faster.

 

A dose of reality before you pursue an ARM

 

The ideal ARM homeowner is someone who can anticipate the increased costs after the fixed-rate period or has a solid exit strategy. If you can only afford a house at the lower teaser rate, then an ARM is not the right product for you.

 

You should always consider what would happen in a worst-case scenario. What if mortgage rates go up to the maximum allowed under the contract? Can you afford that? What if you are not able to refinance or flip your house after the set period is over? Can you afford that?

 

While an adjustable rate is a good deal it is a gamble that shouldn’t be taken lightly. Only do it if you totally understand the risks and have cleared it with a financial professional who understands your finances. It can be a positive experience if you totally understand the risks involved.

 

For more information on ARMs, check out the Federal Reserve’s guide to ARMs.

 

Things Not to Do Before Purchasing a Home

Debt-to-Income Ratios and Car Payments

You see, when determining your ability to qualify for a mortgage, a lender looks at what is called your "debt-to-income" ratio. A debt-to-income ratio is the percentage of your gross monthly income (before taxes) that you spend on debt. This will include your monthly housing costs, including principal, interest, taxes, insurance, and homeowner’s association fees, if any. It will also include your monthly consumer debt, including credit cards, student loans, installment debt, and….
…car payments.

How a New Car Payment Reduces Your Purchase Price

For example, suppose you earn $5000 a month and you have a car payment of $400. Using an interest rate of 8.0%, you would qualify for approximately $55,000 less than if you did not have the car payment.
Even if you feel you can afford the car payment, mortgage companies approve your mortgage based on their guidelines, not yours. Do not get discouraged, however. You should still take the time to get pre-qualified by a lender.
Next, you contact a loan officer to get prequalified for a mortgage loan. You state your desired price and how much you can put down. You provide your income and may even supply pay stubs and W2 forms. The loan officer methodically crunches the numbers (by telephone, in person, or even over the internet).
However, if you have not already bought a car, remember one thing. Whenever the thought of buying a car enters your mind, think ahead. Think about buying a home first. Buying a home is a much more important purchase when considering your future financial well being.
Do not buy the car. Buy the house first.

No Major Purchase of Any Kind

Review the article titled, "Don’t Buy a Car," and apply it to any major purchase that would create debt of any kind. This includes furniture, appliances, electronic equipment, jewelry, vacations, expensive weddings…
…and automobiles, of course.

Don’t Move Money Around

When a lender reviews your loan package for approval, one of the things they are concerned about is the source of funds for your down payment and closing costs. Most likely, you will be asked to provide statements for the last two or three months on any of your liquid assets. This includes checking accounts, savings accounts, money market funds, certificates of deposit, stock statements, mutual funds, and even your company 401K and retirement accounts.
If you have been moving money between accounts during that time, there may be large deposits and withdrawals in some of them.
The mortgage underwriter (the person who actually approves your loan) will probably require a complete paper trail of all the withdrawals and deposits. You may be required to produce cancelled checks, deposit receipts, and other seemingly inconsequential data, which could get quite tedious.
Perhaps you become exasperated at your lender, but they are only doing their job correctly. To ensure quality control and eliminate potential fraud, it is a requirement on most loans to completely document the source of all funds. Moving your money around, even if you are consolidating your funds to make it "easier," could make it more difficult for the lender to properly document.
So leave your money where it is until you talk to a loan officer.
Oh…don’t change banks, either.

Choosing Between Mortgages

One of the most critical aspects to the process of purchasing a home, besides choosing the actual home, is deciding which type of mortgage will best suit the consumer. Most mortgages are made for 15 or 30 year loans. That can be a long time to be tied down to a payment. The loan applicant will need to take into consideration how much money they can qualify to borrow, how much they have to set aside for payments and whether they are comfortable taking a risk with a variable interest rate loan.
Many consumers want the reassurance they will be able to access the lowest interest rates at all times. A fixed rate mortgage will not allow this. With a fixed rate mortgage, the interest rate remains at whatever the prime rate was when the loan was originated, for the duration of the loan; even if that is 30 years. A variable rate mortgage loan offers more flexibility but also more risk. With a variable interest rate loan, the consumer will be able to take advantage of lower interest rates if the prime rate falls. This can be a substantial amount of savings over the course of the loan. There is a risk, however that the prime rate will rise, which means the homeowner will be paying more money in interest on the mortgage loan. The fixed rate consumer does not have this concern.
There is a compromise between the fixed rate mortgage loan and the variable rate mortgage loan. A capped loan allows consumers to access lower interest rates if they become available, but protects them from high interest rates above a certain limit. Another compromise is a discounted mortgage. In this type of mortgage loan, the consumer takes out a mortgage for a variable interest rate loan. While the interest rate will fluctuate in accordance with the current prime, the interest rate the consumer pays will always remain a certain number of points below whatever the current prime rate is.
While it is important for the consumer to shop around for the best interest rate, the lowest interest rate is not always the best. Lenders, like other companies, rely on competition and advertising for their business. Some banks and lending institutions will advertise a phenomenally low interest rate in order to attract prospective borrowers. The interest rate may be as much as a few points below what other lenders have offered. Consumers should be aware, however that this low interest rate may come with a high price tag. In order to makeup for the lost revenue of the low interest rate, lenders will include restrictions and penalties in the terms of the loan. Frequent restrictions included limiting the attractive low interest rate to only a portion of the entire length of the loan, such as one to three years. After that time period, the interest rate will rise to the current prime rate at the time. Another common restriction allows the lender to charge a penalty to the consumer should they decide to refinance the loan with another lender at a later point in time. The penalty is often so cumbersome it makes the savings of refinancing minimal.
Finally, lenders may try to make up the difference by requiring the consumer to purchase home insurance through them, rather than allowing them to shop around for competitive rates. Provided there are no requirements or penalties attached to a low interest rate, it can be quite advantageous for a consumer to shop around before making a final decision on a lender.
The prospective homebuyer will also need to make a decision between a 15 year mortgage and a 30 year mortgage. Both have advantages and disadvantages.