Qualified Mortgages: What It Means for Our Clients

For more than a year, Cornerstone Mortgage has been gearing up for the changes in the mortgage industry.  We have had fair warning about the new rules and were fully prepared for January 10th, 2014, the day the regulations drawn up by the  (CFPB) Consumer Financial Protection Bureau went into effect. 

Many cringe at the thought of more regulation, compliance & the possibility of not being able to obtain a home loan.  These are very real concerns.  To be frank, there is not enough room on this blog for all the changes, as the Act is thousands of pages long but here are a few of the basics.

A large portion of the rule are Qualified Mortgages.   QM sets a minimum standard for all lenders to ensure they only make  loans to borrowers who have the ability to repay the loan.

Qualified Mortgages are based on some common-sense ideas:

• The borrower should be able to repay the loan.
• The terms of the loan should be safer for borrowers.
• The loan should also be easier to understand. That means you won’t see QMs with complicated and risky features such as negative amortization or interest-only periods. (For more on the CFBP's definition: Qualified Mortgage)

In addition, the new regulations provide that there will be:

• no balloon payments
• no terms over 30 years
• points & fees cannot exceed 3% 

For most borrowers, the change will have little or no impact on whether they can actually get a mortgage, but there may be more loopholes to prove that they can afford one. We are here to help!  

All of these regulations are things that could put smaller lenders out of business, but are the reasons Cornerstone Mortgage is here to stay.

Please contact us for more information on how these changes impact you.

Keep up to date on industry changes by following us on Facebook

What You Should & Shouldn't Do During The Loan Process, Part 2

This is part 2 of the series 'What You Should & Shouldn't Do During the Loan Process.'  In this quick video I focus on what you should NOT do.

What You Should & Shouldn't Do During the Loan Process, Part 1-What You ...

In this two-part video series, I explain some of the things you should & should NOT do during the loan process. These are things we want our clients to be aware of upfront, so that there are no surprises. And some of these may surprise you!

How To Stay Afloat, in a Drowning Mortgage Market

It is all over the news.  You come across article after article about large banks cutting thousands of mortgage-related jobs.  Most recently, CitiMortgage has shut down its Midwest Retail mortgage operations.  There seems to be a lot of negativity surrounding these changes.

If you dive deeper you can see that a lot of lenders are laying off due to a decrease in refinance business.  While we have seen a slow in those that refinance, for some, it may still make sense.  (Not sure if it would make sense for you? Watch : "How Do You Know If You Should Refinance?").

I am proud to say, despite the volatile market, Cornerstone Mortgage still continues to grow. In fact, we have grown by more than 153% over the past 3 years. We currently have 10 locations with our 2 most recent additions in the last 6 months.  We were even ranked a top 5 lender in MO for the last 3 years, & a top 10 lender for the past 8 years. 

Why is this?  According to Finance Post "some reports show that lending trends are tending to favor the smaller banks over the larger lenders."  Cornerstone is large enough to get the best rates, but small enough to have a wide range of opportunities to serve our clients.  Not everyone can offer all the products that we do. And our service is unmatched.  Your Residential Lending Team regularly meets with our clients face to face, & we usually come to you.  We make it priority to attend all of our closings, and every client has our cell phone number to call anytime they have questions. 

Another edge we have is efficiency.  This is a benefit to our clients because they can get their loan closed quickly.  Our processing, underwriting, closing & servicing payments are all completed by Cornerstone.  Also, in 2013 we became the #1 largest lender in Missouri to have approvals from all three agencies: Fannie Mae, Ginnie Mae, & Freddie Mac.

Please contact us today to see why we are prospering in this current market & how you can benefit from it.

Sincerely,
Chris

Buying A House-What I Wish I Knew Then

Someone recently asked me, "What is one thing you wish someone had told you when you first bought a house?”

I thought about it and this was my response:

 

"I wish someone had told me that debt was a bad thing.  Instead of using my house as a credit card I should have been focused on paying it off as soon as possible.  Times were different and values were escalating quickly."

 

Even though we lend money (create debt) for a living, we should make sure people understand that debt, any debt is just that, a liability on your personal balance sheet that is costing you money every minute you owe it.

 

Not only is it our goal to help you find the house of your dreams at the best interest rate, we also want to make sure our customers know the difference between what they qualify for and what they are comfortable paying.  Among other things, we want our customers to know how much property taxes can affect the monthly payment so you can budget accordingly.  We will even give you tips on how to pay down the loan more rapidly.  And of course, educate our buyers on special programs and funds for those who qualify.  We walk you through every step of the process, because the last thing we want to hear from our clients if asked the same question is: "I wish someone had explained the entire process up front."

 

What do you wish someone had told you before you bought a house???

 

 

 

 

 

 

 

 

The Damage Has Been Done

I never like to be the bearer of bad news.  Well, I have good news and bad news.  The good news: the June jobs report showed job creation was better than expected.    The bad news?  It affects mortgage rates. 

 

 Why does the jobs report affect mortgage rates?  It is confusing, but was put perfectly in an article I read today (link below):

 

     "The connection between mortgage rates and job creation is the Federal Reserve. That is, as the labor market picks up, the central bank will begin to reduce its support for the economy. And because its support for the economy consists, in large part, of bond purchases, its retreat will result in higher interest rates."

 

So, as predicted, the damage from the Jobs report has been done. The trend for interest rates is up, although based upon most predictions we are at the high end of where rates will be for 2013. They should remain constant in a .25% trading range for the rest of the year. 

That being said, inventory is shrinking and if you want a great house you are going to have to be ready and able when it comes on the market. Get pre-approved and be prepared to offer full price. Getting houses on a discount will not work in this market unless the house has been for sale for over 30 days. 

 

Please feel free to contact me if you have questions, or to find out how you can get pre-approved. 

 

All the best,

Chris

Your Residential Lending Team

 

http://www.fool.com/investing/general/2013/07/06/fridays-catastrophic-surge-in-mortgage-rates.aspx

Taxes in June?!?!?!

Tax season is over, whew!  So why bring up this subject in June?!?!

Though it will be another 10 months before the looming April deadline rolls around,  it is important to pay attention to laws and changes, so that you can proactively save receipts and know what to expect.

If you have never itemized your taxes, or if this is the first year you will own a home, you may not know what deductions you are eligible for. 

The most common deductions for homeowners in 2013:

·        property tax

·        mortgage interest

·        points paid on a home loan

·        mortgage insurance

·        charitable contributions (cleaning out your closet or garage and donating)

                                                                                            

Don’t forget about the ”fiscal cliff bill” passed in Jan. 2013.  It will allow you credit for energy efficient improvements which include, but are not limited to:

Windows, insulation, a/c, heat pumps, furnaces, water heaters, roofs, and air sealing and duct sealing.  To see if an improvement qualifies check out the IRS website, or these websites below:

Home Heating & Cooling Equipment
http://www.energytaxincentives.org/consumers/heating-cooling.php
Home Shell: Insulation, Windows, Sealing
www.energytaxincentives.org/consumers/insulation_etc.php

Manufactures and retailers should be able to help you figure out whether a specific product qualifies, also.

 Other overlooked deductions are home improvements, or items that add value to your property. 

Though you can’t write off home improvements per say, keeping the receipts and invoices can help when the property is sold so you can offset any gains (calculated by taking your selling price minus original purchase price & provided you have lived in the property for at least three of the five years prior to the sale). 

Before remodeling or making home improvements check out what you can write off at:   http://www.irs.gov/taxtopics/tc701.html

Make sure you consult with your accountant or tax preparer because laws constantly change and are very complex.  They can help you understand how they affect YOU.  But this should help get you started.

If we can be of any assistance to you or someone you know, please contact us.  It is always our goal to make sure you can save money.  Follow me on Twitter @cscheer1961 to stay up-to-date on the latest changes in the market.  We are here to help!

Chris