Category: Mortgages

Budgeting Checklist for Buying Your First Home

Buying your first home can be an exciting, but overwhelming experience. With the right bank and agent, most of the hassle should be taken off your shoulders. So now, it’s time to make sure you’re checking these items off your list to allow for a smooth house buying journey – without breaking the bank.

Check Your Credit Score

This is always one of the top points on anyone’s list. Making sure your credit score is high and on the rise will allow you the opportunity for better rates! Look for any issues with your report and contact the credit bureau to get them fixed.

Gather Your Documentation

You’ll need to get your documents in order when coming to the bank to discuss a pre-approval letter and loan. To help you get started, you should plan to have the following documents when applying – but contact us to find out if there’s anything else you’ll need in advance:

Income verification/employment – Last two years’ tax returns, W-2s, 1099s and your last few pay stubs
Credit/ID – Drivers’ license, Social Security card or acceptable alternatives
Financial condition – Bank and brokerage account statements including retirement accounts, proof of funds to close or a gift letter (if your down payment is coming from a gift)

Secure Pre-approval

Having a pre-approval letter shows a buyer you are serious and have the funds to afford the home. This also lets you know how much home you can afford, so you don’t start hunting for houses that are out of your budget.

Decide On Your Max

Even if you can afford a certain amount, not spending it all may be wise. Scale back a little and decide on the price you’re willing to spend and hold yourself accountable to not pass that limit.

Think Of Additional Expenses

Repairs, maintenance, monthly bills, moving costs and closing costs will all factor into your budget. Know how much income you are making each month and subtract all of these costs, as well as other items like gas, groceries, loans and so forth. This will show you how much you’ll actually have left over to put towards your mortgage payments. Deciding on your max budget will only help you – instead of spending the full amount you may actually be able to afford.

We hope this checklist reminds you of the items you need to complete and think of to help you stay within your budget. If you’re looking for a great place to get your mortgage, we’re here for you! Contact us or stop on in to allow us to help you on the path to buying your dream home!

Peoples Bank & Trust Co.

Member FDIC

Equal Housing Lender

NMLS# 407724

8 Surprising Costs of Buying a Home You Need to Budget For

Buying your first home is so exciting. It can also be a little nerve wracking the first time around if you don’t have any guidance. Here’s what you should know about the home buying process before, so you aren’t shocked by the expenses that come along.

The Appraisal

An appraisal is when you have a home expert come and determine the value of a home. They have no stake in the outcome of their conclusion, so you can expect an honest answer. You will want to be sure to have an appraisal completed to ensure that you are not paying more for the home than what it is worth. This can cost upwards of $600 and should be factored into your budget.

Home Inspections

Some get appraisals and home inspections confused. They are both important, but the home inspections are more tailored to your needs and may help to answer some of your questions about the conditions of the home. By getting an inspection, you are able to have a better understanding of the home’s condition. This can cost an average of $300.

Closing Costs

Sometimes, you may be able to convince the seller to pay the closing costs. Yet this isn’t something that should be relied on. Closing costs cost an average of 2-5% of the value of the home’s purchase price. It includes costs such as loan fees, taxes and title searches.

Homeowner’s Insurance

If you’ve rented prior to this, you may be new to fire insurance or more commonly known as homeowner’s insurance. It differs from rental insurance, as that covers your liability and personal items, while homeowner’s insurance also covers the physical structure of a home. The average cost for this is $1,500 a year.

Home Maintenance

The nice part of renting is that you aren’t responsible for home maintenance. Surprisingly, many are unprepared for the maintenance that comes with home ownership and how this can create additional expenses. You are going to need to buy basic items like a lawnmower, snow blower and a leaf blower.

Cleaning

If the prior owners hadn’t cleaned, you may have an additional expense of getting the carpets cleaned before you move in. Carpets should be professionally cleaned once a year, so if they haven’t been cleaned immediately prior to your move in, you may want to schedule a cleaning. This can cost $300 for a 1,500 square foot space.

Homeowners Association Fees

A homeowner’s association is a part of an organization that enforces rules and regulations for your property. They charge a fee for the upkeep of the property in addition to shared services among the community. These are typically due at closing, but you should be aware that the average HOA fees increase by 5% each year.

The Big Move

Often forgotten or not factored, is the move itself. Moving is an expensive business, especially if it’s across state lines. You will need to figure in the costs of movers, moving materials and transportation. These usually cost an average of $3,000.

Budgeting for these costs will allow you to have a correct price in mind when house hunting. Our team offers great insight into our mortgage products. Discover more today!

Peoples Bank & Trust Co.

Member FDIC

Equal Housing Lender

NMLS #407724

4 Ways to Stay Within Your Budget When Buying a Home

The weather is beautiful and homes are popping up for sale everywhere! If you’re on the hunt for your next house, it’s important not to bust your budget. Luckily, we’ve compiled some great ways that can help you stay within your budget when buying a home.

Have 20% Saved for the Down Payment

While you don’t need 20% saved in order to actually buy a home, there are plenty of benefits that come along with it. In total, you’ll pay less for your home since you’re avoiding interest being applied to a higher cost. You’ll also potentially get a lower mortgage loan interest rate because making a higher down payment is a sign that you’re stable financially, and thus are a good credit risk. Finally, this can help you avoid paying private mortgage insurance.

In 2016, the average home down payment was 11% according to the National Association of Realtors. Younger home buyers ages 35 and under, who usually have lower incomes than people in their 40’s and 50’s, put down 8% on average for home down payments in the same time period. If you can’t afford 20%, it’s okay – but try to work your way towards that goal!

Raise Your Credit Score

The balance on your credit cards vs the credit limit is called your credit utilization ratio. This ratio accounts for 30% of your overall FICO score. By paying off your cards, your credit score will raise and allow for a better loan. It’s also important to know that new accounts and hard inquiries make up 10% of your credit score. When you open a new account, your credit score will drop for a couple months. When you know you’re going to be applying for a mortgage in the near future, it’s best to hold off on buying that new car or applying for a different credit card.

Earn More Money

There are plenty of ways to earn more cash! If you want to stay within your budget, finding ways to add more savings to the pile can help with that goal. You can take money from your IRA without the 10% early withdrawal penalty when you use the money for a home. There are also other solutions that won’t take from your retirement savings, such as getting a second job or hunting for a new job that will pay more. If none of those options work for you, try hosting a garage sale or selling some lightly used items you don’t need online. You could also find ways to use your talents on the weekends or after work, like being a photographer for weddings and senior photos on the side!

Utilize First-Time Buyer Programs

Exploring local and national first-time home buyer assistance programs is an important step in the journey to homeownership. See what’s available to you to know what your options are.

We believe these top tips will advance your home buying skills and help your budget. If you’re looking for a place to put your savings for your new home, we’re here to help. We also have all the home loan options you’ve been searching for and are happy to talk to you about the next steps!

Peoples Bank & Trust Co.

Member FDIC

Equal Housing Lender

NMLS# 407727

7 House Buying Tips to Save Money

It’s finally house hunting season and you could not be more excited to get the ball rolling on your big purchase! Before you hit the road or the search bar, take these 7 tips into consideration.

1. Know Your Limits

Before signing the papers or falling in love with the first home you see be realistic about what is in your budget. We recommend spending no more than 25 percent of your monthly income on the mortgage. When you know what this number is, be sure to stick with homes in that price range. Don’t even go into homes that are going to be proportionately out of that limit, or you may kick yourself later as you feel straddled with a home you can’t afford.

2. Be Realistic About Fixer Uppers

While they are fun to watch on TV, if you don’t have the skillset to actually fix homes, a house that needs a lot of TLC is likely not for you. Many see a low price on a home and jump on it, thinking the work needed will be minimal and easy. When it comes to home improvement, no fix is simple and this is even more true if you are a newbie to the renovation game. Often people do not realize the time commitment and additional cost that come with dramatic improvements.

3. Provide a Strong Down Payment

The more you are able to give for a down payment, the greater equity you will already have in the home in addition to a lower monthly payment. This will save you money on interest in the long run.

4. De-clutter the Current Space

It’s time to spring clean your “extras.” We all have things sitting around our home that go untouched and unneeded. Start selling these items at a local thrift store or posting them for sale online. This will help to make your move easier and be a helpful way to start saving for the down payment!

5. Take Your Time When Shopping

Don’t let the desire to get out of your current living space cloud the judgement of the purchase. Take your time studying each home and realize that this is one of the most important big purchases you will make in your lifetime. It needs to be a thoughtful, decisive purchase.

6. Eliminate Other Debts

Get a great deal on the mortgage by making sure your credit score is in tip-top shape. A large purchase with a loan or credit card right before you buy a home will certainly have an impact on your mortgage rate. Boost your credit score by paying down the debt you have and stay away from any other purchases until after the home is in your possession.

7. Conduct a Personal Roof to Basement Inspection

Know the property backwards and forwards before signing the dotted line. This means hiring a trusted inspector and having a contractor come to confirm the findings. After this, there is still a final step. You need to conduct a thorough inspection to ensure that you know exactly what you are in for. This is a great checks and balances system to confirm that you are getting a fair deal that won’t end up costing you thousands in repairs later.

Be smart with your finances and don’t spend all your money on a “dream home.” We’re here to help you know how much house you can afford, while offering mortgage solutions to fit your needs.

Peoples Bank & Trust Co.

Member FDIC

Equal Housing Lender

NMLS #407724

4 Steps to Buying a Home That Won’t Bust Your Budget

It’s that time of year when you’re likely to see ‘for sale’ signs on every block. Maybe you already have your eye on one and go out of your way to drive past it on your way home from work. Before you leap into purchasing a home, be sure to take these four steps before signing the bottom line.

1. Understand Your Monthly Expenses

Alarmingly, many Americans don’t have a true understanding about what money they have coming out each month. This can be a dangerous territory to get into, as it’s likely that there are a significant portion of the expenses that may be unnecessary. Take the time to have an understanding of what each of your monthly expenses are and if any can be cut or lessened. Maybe there’s a subscription you’ve forgotten about or haven’t realized how much money you are putting towards name-brand groceries each month.

2. Know What You Can Afford

Once you have your expenses broken down, you will have more of an idea of what you have coming out. Next, you should understand what you have coming in. Account for each person’s income contribution for the home. Subtract your monthly expenses from the after-tax amount and you will have an idea of what you can afford. You may want to consider meeting with a mortgage specialist to have a robust account of what homes could be in your price range.

3. Understand Home Buying Expenses

Being a homeowner comes with many responsibilities that sometimes can’t be accounted for. From broken pipes or a leak to a busted HVAC, the costs can be overwhelming at a moment’s notice. It’s important to understand the expenses that may come out of home ownership. Even if there isn’t something breaking, you have the responsibility of additional upkeep.

4. Set a Goal

Once you have a complete understanding of where you are and where you might be, you can set a goal. If the house you want is out of your price range, make it a goal to be able to afford a home like this. Take a look at what expenses can be cut in addition to how you can make additional income to get you to your goal within a reasonable time frame.

Don’t strap yourself into a payment that won’t fit your lifestyle. Allow us to help you purchase your dream home with a mortgage from Peoples Bank & Trust!

Peoples Bank & Trust Co.

Member FDIC

Equal Housing Lender

NMLS# 407724

5 Best-Kept Secrets for Buying a Home

Buying a home may be a common practice for the average American, but it is not a simple one. This is especially true if you are new to the game and have yet to learn the ins and outs of the process. No need to worry, we have plenty of experience from our years in the home buying business and are willing to share the best-kept secrets on the market!

1. Start Today

If buying a new home seems far into your future, that means you are in the perfect position to prepare. Often, many have dreams of a new home but don’t start planning practically for how to get there. Maybe you haven’t bought that new home yet because you’re not financially ready for the investment. However, that doesn’t mean you don’t have a way to prepare. With a home purchase, you will have closing costs and a down payment. Start saving for this now! Imagine how much quicker you can get not only to your goal of home ownership, but having the ability to purchase the home you want without the down payment and closing costs being an inhibition. Additionally, the more you’re able to put down up front, the less your monthly payment will be!

2. Don’t Go Big

The saying, “go big or go home,” doesn’t apply to the purchase of your home. The big, shiny house on the block may catch your eye, but may not be the house for you. Often, people see a big home and instinctively want it to be their own. Yet, this may not always be the best choice. Large homes can be difficult to resell, as the market for them is different. Not to mention, you’ll have additional utility and upkeep costs that come with increased square footage. You have a greater chance of profiting off of a smaller home when it comes time to sell than a large one.

3. Go Shopping

For the open houses that you see as you drive around town – go to them! Become familiar with a variety of homes and their details. What are they pricing homes at in the neighborhood? What is the structure like? Ask as many questions as you can, and expose yourself to a home you may have not considered before. You may be surprised by what you like!

4. The Secret Bid

Know your limits and stick to them. There are many that buy more house than they can truly afford. This is why it’s important to not fall in love with the home until everything is signed. Meet with an inspector and make a fair offer, but realize that this is likely not going to be accepted in round one. At the same time, it’s important to not automatically shoot too low, as it may offend the seller which can set a rigid precedent for any future bids. Do your research on the property and the neighborhood before deciding on the first bid.

5. Negotiate, Negotiate, Negotiate

This is where the communication gets tricky and scares the newbies. Haggling might not be a common practice in our culture, but this is the time to be bold. Don’t hesitate on going back and forth on an offer. This is a normal process and it makes you a smart buyer.

When looking to buy a home, Peoples Bank & Trust offers options suitable for your financial needs. Contact us today for more info.

Peoples Bank & Trust Co.

Member FDIC

Equal Housing Lender

NMLS #407724

5 To-Dos Before Buying a Home

Are you about to begin the hunt for your future home? We understand that the home buying process can become overwhelming, which is why we’d like to offer you a little insight. Start your home buying journey off right by completing this checklist!

Strengthen your credit.

A 620 FICO score means you can get a mortgage, but that doesn’t mean you’ll want to. According to recent data from myFICO.com, someone with the minimum credit score can expect to pay over $82,000 more in interest over the life of a $250,000, 30-year mortgage than a person with a 760-plus score. Working on making your credit higher, such as paying bills on time, will help lower your interest and save you some big bucks.

Get preapproved for a mortgage.

This is a very important step, and sadly, it’s missed frequently. Getting preapproved means you’ll have some advantage over other potential buyers. This letter shows Realtors and sellers that you’re serious about buying and provides evidence that you have the funds to pay for the home. Set up an appointment with us to get preapproved and utilize our handy-dandy mortgage calculators!

Figure out how much house you can afford.

You may get preapproved for a certain amount and have a good portion of money put away in savings, so why not spend it all on a home? Even though you have the funds, be sure to think ahead to future bills and emergency expenses that will have to be paid. You’ll also need to plan on spending in the range of 1-3% of the home’s price for closing costs. It’s important to downsize your budget a bit in order to make future costs and purchases feasible.

Get a real estate agent.

Hiring an agent does cost money, but they will help you through every step of the way. Real estate agents will make sure all of your closing documents are in order and give you recommendations on trusted inspectors, which will take a lot of stress off of you. They supply you with the knowledge of the buying process, so you don’t miss any steps.

Schedule an inspection.

Once you find your home sweet home, it’s important to cover your bases. Schedule an inspection to be sure a new HVAC system or roof isn’t in the near future. You’re going to be spending a large sum of cash, so spending a little more to have everything checked out is a good plan of action.

Congratulations! You’re now on the right track to becoming a homeowner. Peoples Bank & Trust offers mortgage options that fit your lifestyle. Stop in or give us a call to discuss your options today.

Peoples Bank & Trust Co.

Member FDIC

Equal Housing Lender

NMLS# 407724

5 Creative Ways to Save for Your New Home

You’ve made the decision that you are tired of renting and ready to step into the world of home ownership. Good for you! You may be wondering what your next steps should be in order to be financially prepared for this major investment. Here are some creative ways to ramp up your savings for this exciting adventure!

1. Consider a Move Now

Is the place you’re living now truly the most cost effective for your budget? Consider moving to a temporary location that can significantly trim your monthly expenses. This is especially helpful if your home purchase is far into the future. No, it might not be the nicest place you’ve ever lived in, but imagine your dream home even closer on the horizon because of the sacrifices you are making right now. Place all of the added savings directly into your savings account.

2. Show Up for Your Budget

Many people begin the new year with excitement about all of the ways they are going to change their purchasing habits in order to achieve their big financial goals. However, like most resolutions, they are abandoned within the first few months. This is the time for you to show up for yourself, your goals and your budget. How? By continually reviewing how you are meeting or faltering your savings goal on a weekly basis. This will keep the financial goal of buying your first home at the forefront of your mind.

3. Purge and Sell Your Belongings

This is a great way to prepare for the big move in more ways than one. Like many adults, we have plenty of items that we don’t need or use gathering dust in our closet. It’s time to part ways and sell them at a garage sale or post them online. Put the profits directly into saving for the down payment that will likely be a minimum of 3.5 percent.

4. Look for a Side Gig

Every little bit counts! If you even have ten hours a week extra that you could commit towards another job, it can be a big boost to your savings. Whether it’s freelance work in an area you are experienced in or applying to be a server at a local restaurant, this is a great way to see your savings climb.

5. Automate Savings

Although this isn’t exactly creative, we would be remiss to not include this incredibly important part of any savings plan. For every amount of money you take in, automate a percentage of that towards your savings account to take any of the temptations of spending out of the mix.

Open a savings account today to begin to build the funds you need for your dream home.

Peoples Bank & Trust Co.

Member FDIC

Equal Housing Lender

Why Choose a Local Bank?

local

Whether in bustling cities or the rural Midwest, community banks improve lives in the communities they serve. This seems to be a popular notion across the nation, as can be seen by their large local support. According to the ICBA, community banks make up 96 percent of all banking institutions in the country. They are successful because they work and are a positive light in the community.

You take great care when it comes to choosing a financial institution that you trust. If you haven’t made the switch to a local bank yet, here are just a few reasons why you may want to make the switch.

They support community organizations.

While we can’t speak for every community bank, we make it a priority to give back to the area. We realize the importance of donating to local charities and even encourage employees to volunteer to local regions of need. Every individual at every level of service in the bank is personally connected to the community and wants to see it thrive.

They have the same state of the art resources of big banks.

Some may think that community banks are still in the Stone Age when it comes to technology. This could not be further from the truth. We know that the future of banking is online and we have made it a priority to meet our customers in a way that is easiest for them.

Customers can access their account information, make deposits or withdrawals when the office is closed or if they are traveling out of the area. Although, we still love to see your smiling face in person when you have a chance to come into one of our locations.

In addition to being technologically up-to-date, we have competitive individual and business services that a big bank has to offer, but likely at a better rate.

They have a personal approach to lending.

Unlike big banks, we know our customers. Our kids might play baseball with yours or we may have even gone to high school together. Whatever the case, our approach to lending is more personal, because it is personal. We take a more rounded approach to lending instead of simply seeing you as a credit number like a large bank might do. We are here to serve the average Joe and play no favorites.

They maintain great customer service.

Community banking is about relationships. With that comes a customer service approach that is caring and helpful. You will likely see the same people working there every time you need assistance and can develop relationships. You are able to really feel like your bank is looking out for you because they know you and have your family’s best interests at heart.

They invest in the community.

Because they are a small business themselves, community banks value local businesses and understand the benefit they have on the economy. When you invest locally, the entire community prospers. We aren’t interested in siphoning out investments to Wall Street. Right here is where we want to be and see the area grow.

We can’t wait to meet you. Stop by our bank to see all the benefits our products can offer you!

Peoples Bank & Trust Co.

Member FDIC

Equal Housing Lender

How to Save for A House Down Payment

down payment

If you’re looking to buy a house, having a larger down payment will offer you a lot less financial stress in the long run. However, in order to put a larger sum of money down, you will need to take the right steps to save. Follow these 5 steps and you will be on your way to being a first-time home owner!

Step 1: Figure out how much you will need to save – If possible, secure a number or range on the amount you can responsibly spend on a house. You can plan to sit down with a mortgage lender or use a home buying calculator to help figure out how much you can afford. With the use of a calculator, be sure to remember that it will not take in account every aspect of your financials.

Step 2: Find the best ways to save – After you know an estimated range of how much you need to save, the next step is to figure out what expenses you can cut down – maybe skip vacations for year. The money you would spend on vacation can make a huge contribution toward a down payment. Next, take a look at your monthly expenses and see what you can reduce or eliminate; put that extra money into a down payment savings account. Lastly, work more. This may be easier said than done, but when there is opportunity to work an extra shift or add on hours, do it. Working more will be worth it when you are able to find your dream home!

Step 3: Transfer a fixed amount into a savings account each month – In addition to saving that extra money, set up a savings account specific for your house down payment. Then, with each paycheck you receive, have a certain amount automatically taken out each time and deposited into that savings account. That way it will remove any temptation to spend the money on other purchases. Before you know it, you will have enough money for a down payment.

Step 4: Leave room for flexibility in your savings – With all of this saving, it is equally important to leave room for flexibility. There will be other demands on your finances such as: car repairs, uncovered medical expenses or even loss of a job. You will need to be ready when and if these happen to occur – it is also helpful to create an emergency fund!

Step 5: Reduce your high interest rate debt – If you have high interest rates on your credit cards, it can painfully limit your ability to save. For this last step, do yourself a favor and pay off those high interest credit cards. Begin with your highest card and once that is paid off, close it and proceed to the next card. Lastly, transfer your credit card balances to the card with the lowest interest rate.

The process of buying a house can be very long and probably will require a big hunk of your savings. However, creating a larger sum for your down payment will sure be rewarding when you become a first-time home owner! Follow these 5 steps, and we can ensure much less stress in the long run.

Peoples Bank & Trust Co.

Member FDIC

Equal Housing Lender

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