Check Washing

Check washing involves criminals stealing checks from mailboxes and changing the name of the payee to their own and often increasing the amount on the check. These scammers use chemicals found in most household cleaning products to erase the ink used to fill out the check and then rewrite whatever they want. We have a few tips for how to spot check fraud to help prevent becoming a victim of check washing:

• Do not place outgoing mail in your mailbox with the flag up. Hand your mail to the mail carrier, place it in a secure USPS mailbox before the last pickup, or bring it into the Post Office.
• Check your bank account on a regular basis for unusual activity. If you catch something quick enough, it can be helpful in restoring funds and potentially catching the criminal.
• Use gel pens instead of ball point pens, as it is harder to wash this ink off. Also, place your numbers close together when writing, to avoid leaving space where a criminal could add in another digit easily.
• Use security envelopes with patterned lining that prevents someone from seeing what is inside.
• Use online bill pay when possible. This affords you the most security from check washing by eliminating the check entirely.

Other Types of Check Scams

Mystery shopping or personal assistant: Scammers will pretend to hire people as mystery shoppers or personal assistants. The criminals instruct their new hires to purchase gift cards. The shopper or assistant gets a check with instructions to use that to purchase gift cards to send to someone else or use that money to wire it to another account. Once the money is sent, the person on the other end disappears, essentially using you as a middleman to launder the money and being left with the loss.

Claiming prizes: Sweepstake’s “winners” are given fake checks and told to send money back to cover taxes or shipping and handling charges. However, that is not how legitimate sweepstakes work and you should never have to pay anything upfront for something you have won.
Overpayments: This is common when buying something online. A scammer will send you a check for more than the asking price and then ask you to refund the overpayment. Odds are the check is fake and you are repaying them with real money and will be left owing the loss when the check is returned as fraudulent.

Spotting a Fake Check and What to Do

• Check for misspellings, if the company the check is coming from exists and if it resides in the city and town the check claims and the maker name makes sense for the reason you should be receiving the check (i.e. the maker of the check is a construction company from out of state when you believe you obtained a job being a secret shopper for a retail store).
• Hold the check up to the light to see if you can see indentations from other writing, as this can be a sign of a washed check.
• If logos are faded, that is a sign the check has been copied. Also, if there is no perforated edge on one side of the check, odds are it was printed and could be a fake.

If you are suspicious of a check you received, do not cash it. Call the bank from which the check was issued to verify it is valid. Get the number from a source you trust, rather than the website or phone number listed on the check as that could also be fake. You can also seek guidance from your financial institution as the staff is trained to detect counterfeit checks.

How We Can Help

Cornerstone Bank has solutions for both individuals and businesses to help deter check fraud. We offer online banking and bill pay, which can automatically pay bills online for you directly from your account. This eliminates the need to send checks in the mail. For our business customers, we offer Positive Pay, the leading fraud prevention solution that will help protect your business from fraudulent checks being presented for payment.

Contact us to learn more about how to spot check fraud.

Are you or your child headed back to college? Getting finances in order to plan for the year ahead is an important part of the process. This could include changing banks, opening a new account or applying for a credit card. We have compiled six college banking moves to make before stepping foot on campus.

Research Banking Options

If you decide to find a new bank or open your own account for the first time, there are some things you should think about, including:

• How you will use the account. Do you just need a simple checking account, or do you also want a savings account to grow your money? Figure out exactly what you’re looking to do with your money and then you can decide what kind of account works for you.
• How you will move money in and out of your account. If you plan to transfer money back and forth between you and your parents, consider an account that that has zero transfer fees.
• The banking products and services you need. Online banking access, through mobile and desktop, is important and something that college students should look for in a bank. Young bankers should also look for a bank that reimburses or partly covers ATM surcharges and provides overdraft protection.
• Whether your parent or guardian will have access to the account. This is a necessary conversation to have, especially if you are transferring from an account set up by your parents to one set up by you. Having a parent on the account can be helpful should they need to quickly transfer money.

Create a Budget

College tuition is already expensive but things can get out of hand quickly when you tack on school supplies, food and extracurricular activities. Start with any monthly bills like rent or utilities and then work in other necessities like food and travel. Finally, factor in fun things like concerts, going out to eat and other activities. Figuring out how much you can spend each month will help you get in the habit of having a budget as well as potentially save you from begging mom and dad for more money mid-semester.

Learn about Overdrafts

Overdraft fees can make a small purchase turn into a very expensive venture. Some banks have fees related to overdrawing on your checking account and some also have a minimum amount you need to keep in your savings. Some banks will waive overdrafts fees a certain number of times or offer the option to not allow your account to overdraw, so your card would be declined to avoid the fee.

Explore Credit Cards

In irresponsible hands, credit cards can be a dangerous thing, but building credit while you are still in college can help after graduation. There are a few good options to consider for a first-time credit cardholder:

• Looking into secured credit cards. These cards are perfect for a student looking to build credit who isn’t ready for the full responsibility of an unsecured card. If approved for a card, you will be asked to place a deposit down, which is kept in a savings account that can’t be touched until the card is closed.
• Become an authorized user on a parent or family member’s card. Depending on the credit card, this could help you build credit if reported to the three credit bureaus. This does require a fair amount of trust on the part of the cardholder.
• Research student credit cards. Many of these cards have less stringent income and credit requirements. However, these may come with much higher interest fees so be sure to do your research.

Start Building Savings

It may be difficult to save money while in college, but if you can put away a little each month by working while in school, it will greatly help you, in the long run, should any emergencies arise. Consider splitting your deposit into two, some going into checking and some going into savings every month.

Use Student Discounts

You can also try to build your savings by taking advantage of student discounts. Be a savvy shopper and flash that student ID or use your student email for your login whenever you can. There are more opportunities than you may realize to utilize your status as a student to get a discount.

We Can Help

With flexible savings and checking accounts, online banking and bill pay and our mobile app, we have all the features a college student needs in a bank, including conveniently located branches and ATMs across Central Massachusetts. Contact us to learn how we can make banking easy for you.

It's National Homeownership Month, so we want to educate potential homebuyers about financing options. We know the past year has been challenging for many, with the COVID-19 pandemic increasing uncertainty and decreasing housing inventory. While we can’t alter the overall market trends, we can ensure you have the knowledge and the tools you need to take the necessary steps toward homeownership.

Housing Loans 101

Which housing loan will work best for you and your family? Here is a brief overview of some of the primary options we can provide:

• Fixed-Rate Mortgage. The fixed rate is determined at the start of the mortgage term and does not change for the duration of the mortgage. This option provides stability and is optimal if you are ready to make steady payments for an extended period of time.
• Adjustable-Rate Mortgage. This type usually has a lower starting rate than a fixed-rate mortgages, but is subject to change. This is a good alternativeif you initially need smaller monthly payments or if you haven’t yet moved up to your long-term dream home. We can provide various terms.
• Construction Mortgage: This option covers costs as you build your own house, and can then be converted to a permanent, traditional financing option. We offer fixed-rate mortgages for all types of home construction.

Already a Homeowner?

If you’re already a homeowner and looking to upgrade, you can use the equity in your current home towards a new one. The more equity you have, the more you will profit from the sale, allowing you to lower your mortgage on a comparable house or purchase a more expensive one.

Cornerstone Bank Can Help

No matter what steps you’re looking to take, we can help make sure you’re making a good financial decision. If you’re interested in learning more about the benefits of homeownership for National Homeownership Month, contact us today. You can check our current rates and get connected to one of our mortgage loan officers who can answer your questions.

One of the benefits of owning a home is the ability to build equity and tap into that to pay for major expenses like remodels, debt or tuition. But what exactly is home equity and how can you use it? We break down the basics of home equity to help you understand why it is so valuable.

What is Home Equity?

Equity is the difference between what you owe on your mortgage and what your home is currently worth. For example, if you owe $150,000 and your home is worth $250,000, you have $100,000 of equity in your home. To determine your equity at any one time, you will need to have an accurate assessment of the value of your home. Only a real estate appraiser can give you an official evaluation of your home’s everchanging worth, but you can estimate the value based on comparable home sales in your area.

How Do You Build Home Equity?

There are numerous ways to build equity in your home.

• Make a big down payment. The larger amount you put down in the beginning, the more equity you will start out with.
• Focus on paying off your mortgage. Your minimum monthly mortgage payment covers interest, taxes and insurance, with some of it going towards your principal balance. Paying a little more than the minimum each month will allow you to lower your principal balance faster, growing the equity in your home.
• Stay in your home for at least five years. If your home increases in value, you will grow your home equity. One way to do that is to stay in your home for at least five years to see its value jump.
• Add value to your home by renovating. Updating your kitchen or bathrooms or even adding on an addition can make your home more appealing.

How Do You Use Home Equity?

You can use the equity in your home to help you financially in several ways, including as a tool to help buy a new home. The more equity you have inside your current home, the more you will profit from the sale. This allows you to make a larger down payment on the next home, lowering your mortgage on a comparable house or allowing you to purchase a more expensive one.

You can also borrow against your home with a home equity loan or home equity line of credit (HELOC). A home equity loan works like a second mortgage, allowing you to borrow a specified percentage of equity you have in your home in a lump sum you will then pay back monthly. A HELOC is more like a credit card, except the limit is tied to the equity in your home. You only have to pay back what you borrow.

How We Can Help

We can help you finance your next big project, help pay off other debt and dozens of other uses through a home equity loan or HELOC. Contact us today to learn more about our rates and be connected to a mortgage loan officer who can answer any of your questions.

Do you know your credit score? If you are applying for a loan or credit card, your score is important. A credit score ranges between 300 and 850 and the higher the number the better. Potential creditors use the number to estimate whether a borrower will pay back a loan, determining whether to let the person borrow and with what stipulations. The higher the score, the easier it is to buy a house, a car, rent an apartment and even land a job. We have eight ways to build and maintain your credit score in honor of National Credit Education Month.

How to Build Credit

1. Get a secured credit card. If you are building credit from scratch, this is a good first option. A secured card is backed by a cash deposit you make upfront, which is usually the same as your credit limit. It functions like any other credit card and you will receive your deposit back when you close the account. This is an option to help build credit, but these cards are not meant to be used long-term.
2. Get a credit-builder loan. With these loans, the money you borrow is held by the lender in an account and not released to you until the loan is repaid. Essentially a forced savings plan, these repayments are reported to credit bureaus and can help build your score.
3. Use a co-signer. It is possible to get a loan or credit card if someone with a solid credit score co-signs with you. This requires a lot of trust because if you don’t pay back the loan, the person who co-signed with you is on the hook for what you owe.
4. Become an authorized user. A family member or significant other could add you as an authorized user to their credit card. This adds the card’s payment history to your credit files, so be sure it is an account in good standing.

Maintain your Credit Score

5. Make payments on time. This is the most important thing you can do to maintain your credit score. Try to pay at least the minimum payment, and if you can pay more than the minimum, it will be helpful for your score. Setting up automatic payments through our online banking and bill pay makes this simple.
6. Keep credit card utilization low. A good rule of thumb is to keep your card usage under 30 percent when possible and avoid charging anything you don’t have the money to pay for when the bill arrives.
7. Avoid applying for multiple credit accounts close together. With each application comes a small, temporary drop in your score. Multiple applications in a short time can cause more significant damage. Try to space them out by at least six months if you can.
8. Keep credit accounts open. Unless you have a compelling reason to close an account, like a high annual fee or poor customer service, consider keeping it open. Closing one can reduce your average account age, which can have a big impact on your score.

If you are ready to apply for a loan to finance your next big life event, like buying a car or a home, we are here to help with personal loans, auto loans, mortgages and more. Contact us today.

With the new year no longer brand new, it may feel like the prime time to set new goals has passed, but it is never too late to better manage your finances. There is a multitude of ways to alleviate today’s financial stress. Just like you should make it a priority to see your doctor at least once a year, you should also check in on your financial health at least once a year.

Steps to Evaluate Financial Health

There are several steps you can take to reduce your financial stress and improve the health of your finances.

1. Determine your net worth. This will help you see where you stand financially. Calculate this by taking the value of all your assets and subtracting your liabilities. Assets include your savings, car, home, investments, etc. Your debt is your mortgage, loans or credit card balance. This tells you what you currently have versus what you owe. Don’t worry if your net worth is negative, especially if you are nowhere close to paying off your mortgage. Focus on paying off debt and working to increase your net worth by five to ten percent each year.
2. Calculate your debt-to-income ratio. Your debt-to-income ratio is calculated by taking the total amount you pay in debt payments and dividing it by your monthly gross income. You want your ratio to be below 30 percent. This is crucial when it comes to lending and is the primary factor in your credit score. If your ratio is higher, you want to work to lower your expenses.
3. Evaluate the cost of your housing. One of your biggest monthly costs is likely your housing, whether that is rent or a mortgage. Aim to spend no more than 30 to 40 percent of your monthly income on housing. If you’re paying more, it may be time to reevaluate your situation.
4. Categorize where your money is going. Track where your money has been going over the past few months and put it into categories such as housing (rent or mortgage), transportation (car payment, public transport or gas), food (groceries and take-out), etc. This lets you know if you are spending too much in one category so you can take steps to cut back.
5. Assess your investment strategy. Even if the amount is small to start, invest in a 401(k), Roth IRA or a similar retirement savings plan. A savings account is not a retirement account. If you need help establishing an account or selecting the best option for your situation, and many people do, talk to a financial advisor for help.
6. Automate payments and savings. Life can get hectic, so having your bills automatically deducted can help you avoid costly penalties for missed payments and a negative impact on your credit score. You should still look at your billing statements to ensure prices have not increased or you are not being overcharged. Also, set up your direct deposit so a certain amount goes into your savings each month.

We Can Help

When it comes to getting your finances in order, there is no shame in asking for help. Having a trusted advisor or financial planner can be a key asset in keeping your finances healthy. That’s where we can help. Our trusted staff can help steer you in the right direction when it comes to saving money, buying a home, investing and much more. Contact us to learn how we can help.

When you’re shopping for a home loan, you should know the difference between APR and interest rates to assess if you are really getting the best deal. Scott Auen, senior vice president, retail lending, answers some common questions to you make the most informed decision.

What Is the Difference between APR and Mortgage Interest Rates?

The interest rate on a mortgage loan is what it will cost you to borrow the money; it’s the percentage charged by the lender on the amount you borrow. The APR, or annual percentage rate, is the interest rate plus the finance charges and fees that are incurred over the life of the loan. The APR usually, but not always, ends up being higher than the interest rate. It gives you a better idea of the total cost of your mortgage, assuming you keep it for the entire term.

How Do Banks Calculate the APR for a Mortgage Loan?

The APR for a mortgage loan is the interest rate plus the finance charges and fees over the life of the loan. However, all lending institutions don’t include the same fees in their APR calculation. By law, every APR must include mortgage insurance, broker fee, interest, points and loan origination fee. Third-party fees that legally can’t be included are notary, home appraisal and attorney costs. And there are other fees that some lenders include, and others don’t. That’s why you should ask specifically what is included so you can make an accurate assessment when comparing offers.

And How Is the Interest Rate Determined?

Overall mortgage rates are determined by external market forces such as the state of the economy, inflation rates, job growth and other economic indicators. Then, individual lenders set their interest rates based on factors such as the level of risk they are willing to incur, how competitive they want to be in the market and other considerations. Finally, internal factors—such as your credit score, the amount of the loan you are seeking and the loan-to-value ratio for your purchase—also play a major role in determining the interest rate the lender will offer you.

Which Should I Pay More Attention to?

This is not a simple answer. Basically, the interest rate will let you know your monthly mortgage payment, while the APR will give you a bigger picture of what the total cost is over the life of the loan. Which is more relevant to you depends on a number of factors.

For example, if you are buying a small home with plans to move within five (or even 10) years as your family grows, it makes more sense to pay attention to interest rates to keep your monthly payments lower. The same is true if you are likely to refinance. There are a lot of factors to consider, including the type of mortgage, however, so it’s best to talk to a mortgage loan officer who can guide you through your options.

How Can I Find the Best Mortgage for Me?

In general, take a look at both the interest rate and APR from lenders to make sure they aren’t compensating for a low-interest rate with higher fees. There are online calculators you can use that will help you calculate costs based on several factors, but for your best assessment before deciding, consult with a professional.

It’s important to compare apples with apples. The type of mortgage you are looking to get—such as fixed-rate or adjustable-rate—is also a key factor. Comparing the interest and APR rates against two different types of loans will not give you an accurate assessment.

We can help you find the best mortgage that works for you. Our loan officers are highly trained and ready to answer any questions you may have. Contact us today for more information.

Buying a home is an exciting time in a person’s life, but it can also be stressful and overwhelming. There are many costs associated with buying a home in addition to the price of the house, and a lot of that can come with the closing costs. So, what should first-time homebuyers know about closing costs? We have put together a guide to help you prepare to buy a home, especially if it’s your first. Plus, we offer a special discount on closing costs for first-time homebuyers!

What Are Closing Costs?

Closing costs are the fees and expenses that allow you to finalize a home purchase. This can include mortgage-related fees, property title insurance, inspections, taxes and more. You will receive an estimate for your closing costs within three days of filing your mortgage application. As you approach your closing date, your lender will alert you to any anticipated changes to the costs quoted. Then, a few days before closing, you will receive what’s called a closing disclosure; this will confirm the final fees that will be due at the closing. Closing costs will vary based on the size of the home, down payment, type of loan you chose and any negotiations you make with the seller. Typically, closing costs range from 2% to 5% of the price of your home.

Closing Costs: Breaking It Down

You know closing costs are necessary to the purchase process, but you may be wondering: What exactly am I paying for? Here, we explain the specifics of this homebuying expense. Note that most closing costs are due on your closing date, but some may be due sooner.

Costs before Closing Date

• Earnest money: This is not technically a closing cost, but buyers are asked to provide what is known as earnest money as a show of faith toward the seller when they sign the offer to purchase and the home purchase contract. This could be as much as 1% to 5% of the purchase price. This cost can then be used towards closing costs or your down payment at the time of closing.
• Appraisal: An appraisal is required to make sure the home price is justified. This is usually about $500 to $690 but could be more for a larger home.
• Home inspection: A home inspection is necessary before closing to make sure the home has no major structural issues before purchasing. This cost could be about $500 or higher depending on the size of the home.

Costs at Closing

• Points: If you choose to, or have to, pay points as part of your loan, they are charged as a percentage of the loan. By paying a point at closing, you can get a lower interest rate.
• Credit report: The lender will charge you to check your credit, which is usually about $50 to $75. Make sure to unfreeze your credit reports before applying so a lender can pull your credit report.
• Flood determination: A lender must determine if the property is in a flood zone. This is usually only about $15.
• Tax monitoring services: This is to ensure property taxes have been paid through the life of the home. This could cost $50 to $100.
• Title-related costs: The lender will conduct a title search and take out title insurance to make sure there are no complications. The search fee is usually around $350, and the insurance is usually a half percent of the home value.
• Homeowner association fees: Not everyone will have this fee but if you are joining a homeowner’s association, those fees will be due at the closing.
• Document and processing fees: These are often called “origination fees” and can include underwriting, application processing and other administrative tasks. These costs will vary by institution.
• Attorney fees: A buyer may want representation throughout the process and at the closing. This cost will vary depending on the attorney’s fee structure.
• Home insurance: Whether the insurance payment is in escrow or not, lenders usually require the buyer to pay the first year at closing.
• Property taxes: At closing, you will likely pay taxes for the rest of the year, or at least for the next six months. This cost varies depending on where you live.

How Can Homebuyers Reduce Closing Costs?

Negotiating with the seller is one way to minimalize costs for the homebuyer. Sometimes if the house needs some work, the seller will pick up the closing costs to help “cover” some of the work the buyer needs to do right away. Or the seller may lower the asking price, which could then allow the buyer to use some of their planned down payment for closing costs.

If you use Cornerstone as your lender, we offer $750 off your mortgage closing costs if you are a first-time homebuyer,* in addition to our competitive rates on all lending products. We want to help make your dream home a reality. When it comes to what first-time homebuyers should know about closing costs, we can help every step of the way. Contact us to get started today!

*Only valid on first-time homebuyer applications approved and closed with Cornerstone Bank. Other fees may apply. Validated coupon must be received no later than ten (10) days prior to closing or the offer is null and void. Valid only for residential owner-occupied mortgage applications received by Cornerstone Bank. At least one applicant must be considered a first-time homebuyer. Valid for applications dated on or after July 1, 2021, through September 30, 2021, with a closing date on or before November 01, 2021. Speak with a Mortgage Loan Officer for details. Cannot be combined with any other offer. Only one (1) coupon per mortgage application allowed.