Tag Archives: mortgage

Interest Rates - How They Affect Your Mortgage

Interest Rates: How They Affect Your Mortgage Loans 

It’s no secret house hunters have faced the grim reality of rising interest rates. Rising mortgage rates result in rising costs of buying a home. In this blog, we will outline how current interest rates are affecting mortgage loans, as well as outline the main differences between a fixed-rate mortgage and an adjustable-rate mortgage loan.  

What is a Fixed-Rate Mortgage  

A fixed-rate mortgage is a home loan in which the interest rate remains the same over the lifetime of the loan. Fixed-rate mortgages are the most popular form of mortgages in the U.S. Compared to ARMs, many find the initial introductory rate on an ARM may be lower than those on a fixed-rate mortgage, but with an ARM you may find it to be more expensive over the life of the loan. The two most prevalent types of fixed-rate mortgages are the 15-year fixed-rate mortgage, where the loan lasts 15 years or the 30-year fixed-rate mortgage, where the loan is paid off after 30 years.  

What is an Adjustable-Rate Mortgage (ARM) 

An adjustable-rate mortgage or ARM is a home loan where, like the name, the interest rate can change over time. An ARM differs from a fixed rate mortgage where the rate stays the same for the life of the loan.  The interest rate on an ARM is fixed for an initial period where it will not change. When the fixed period ends, the rate will fluctuate with limits based on the current market rates. A true ARM will have a fixed interest rate for just one year.  

Common Types of Adjustable-Rate Mortgages 

  • 1-year ARM: The initial rate is fixed for 1 year, after which the rate can be adjusted once a year. 
  • 3/1 hybrid ARM: The initial rate is fixed for the first 3 years, after which the rate can be adjusted once a year. 
  • 5/1 hybrid ARM: The initial rate is fixed for 5 years, after which the rate can be adjusted once a year. 

How Interest Rates Affect Your Monthly Mortgage Payment 

Your mortgage interest rate is very important to understand when utilizing a mortgage loan as it directly impacts your monthly payment, as well as your loan’s total cost over the life span of the loan. Dependent on the interest rate and your loan term, your monthly payment could be more than you expected to be spending. A 1.5% percentage point jump may not seem like a whole lot. Keep reading as we walk you through some examples.  

Fixed-Rate Mortgage Loan Example:  

For example, if you have a 30-year fixed loan at the amount of $300,000 with 3.5% interest, your monthly payment will be $1,347.00. Keeping the loan and interest amounts the same but with a 15-year fixed loan term, your monthly payment would be $2,145.00.  

If the interest rate were to be 5% on a $300,000 30-year fixed loan, your monthly payment would be $1,610.00. With a 15-year fixed loan your monthly payment would be $2,372.00.  

Adjustable-Rate Mortgage Loan Example:  

If you were to get a 5/1 ARM on a $250,000 loan amount, with an initial interest rate of 3.5% and with 2/2/5 caps your initial payment would be $1,122.61. Compared to a fixed rate, for the first five years you’d be saving $70.93 per month. In the sixth year, your ARM interest rate will rise to $1,377.05. In the seventh year, with a 7.5% interest rate your payment would be $1,648.71. Finally if the rates continue to rise your eighth year could be $1,788.81.  

As you can see from the examples above it is very important to look at your options when choosing to buy a house utilizing a mortgage loan. High interests’ rates can make a home you’d think you could typically afford out of your budget due to extra costs tacked on through your interest rate. As you can see it is also extremely important to go through your loan term options. The loan you choose to go with can make or break you home buying situation. If you have questions about our loan options, visit our website or stop in to speak with one of our experience local mortgage lenders. 

Peoples Bank & Trust Co.  

Member FDIC  

Equal Housing Lender  

NMLS #407724 

Three Things to Look for in a Starter Home

If you’re in the market for your first home, congratulations! Becoming a homeowner is an exciting step on your financial journey. At Peoples Bank & Trust, our dedicated mortgage lenders are here to help you find the best financing option for your new home. Remember to stop in and secure a pre-approval letter before you start your home search.

 

After speaking with a mortgage lender to help determine your family’s ideal price point, it’s time to start viewing potential homes. During this process you’re bound to find a home you’ll fall in love with, and others that may send you running for the hills. As you ride this rollercoaster of an experience, we recommend searching for the following three things in your family’s ideal new house:

 

  1. Good Bones. Starter homes are a great option to find a great house within an affordable budget. To ensure your investment lasts for the long-term, we recommend taking a hard look at any foundational cracks, leans, or other structural ailments. While the rest of the house could look fantastic, these three issues should be instant red flags signaling you to continue looking at other homes.
  2. Cohesive Neighborhood. The people you surround yourself could be the individuals you see at 6:00 AM taking the trash out, or the partiers you have to ask to turn down the music at 11:00 PM. As you tour properties, don’t be afraid to chat with any potential neighbors and see if there is any information they can give on families you’ll be living alongside.
  3. Suitable Layout. While some renovations are certainly possible when purchasing a starter home, obstacles such as load-bearing walls could limit your expectations. Consider the overall layout of the home at the showing, and see if you could picture yourself the way it is. If the answer is no, then you may want to find a few backup options should the renovations not be available within your budget.

 

 

The perfect home will look different to everyone. If you’re ready to start searching for your family’s new house, our experienced mortgage lenders are here to help. We work with many successful local realtors, and we would be happy to refer you to the one that fits your needs best. Give us a call or stop by to begin the search for your home today.

 

Peoples Bank & Trust Co.

Member FDIC

Equal Housing Lender

NMLS# 407724

5 Financially Savvy Ways to Use Your Tax Refund

Personal Finances

Getting your taxes done early not only takes one more thing off your to-do list but further allows you to start planning for the future. Working with your tax professional, determine how much your family may receive this year from a tax refund. No matter the amount, we recommend putting it towards your financial goals for the year. Here are some great strategies we’ve tried to get the best bang for our buck:

  1. Max out your 401(k) or Traditional IRA contributions. If you aren’t taking advantage of one of these two accounts, we highly suggest opening one soon! These tax-beneficial accounts help holders accumulate and grow their funds without the burden of tax at the time of deposit. Each account, however, is limited by how much you can contribute. By allocating funds into these account types it may not only help you save for retirement but also allow your money mature throughout the years, with no additional effort.
  2. Make an extra payment on your mortgage or student loan. Paying down your loan is always a great option when selecting financial goals. In the case of a mortgage, you earn more equity as you pay, while with student loans, you gain more momentum towards financial freedom. Instead of adding money to each monthly installment, we recommend creating one lump payment. By doing this you can you create a single but large decrease in your principal amount owed, drastically reducing your associated interest as well.
  3. Save for the 2017 holiday season. While holiday events, family gatherings, and memories are held dear, the burden of the season can pose potential problems for your personal finances. If you struggled saving last year, now is the perfect time to set aside funds for the holidays. Determine how much you need to pay for each aspect of your seasonal activities, and save as much as possible in a separate account from your tax refund. If additional funds are needed, automate your savings to transfer a specific dollar amount to this account each month.
  4. Pay off outstanding credit card debt. With one of the highest interest rates, credit cards are notorious for taking years to pay off. If you want to make a dent in your debt, we recommend tackling one card at a time.  Using your tax refund, see if you can eliminate smaller debts first. Then with the remaining funds, begin paying down each additional credit card. By paying off the card with the least amount of debt first, you can begin to snowball your way to financial freedom!
  5. Start saving for a vacation. Whether it’s a spring break, a summer adventure, or a fall festival, it’s never too early to start saving. Once you have determined a destination, then create a rough budget of the expected expense. Depending on your refund you may be able to pay for the whole trip outright, or you may need to couple the funds with some additional monthly savings. No matter how you choose to save, we recommend keeping your vacation funds in a separate deposit account so you’re not tempted to use them throughout the year.

If you still have questions on how to best use your tax refund, our personal bankers would love to help. At Peoples Bank & Trust, we can assist you in using all your savings options to help make the most of your money. Stop in and see us today!

 

Peoples Bank & Trust Co.

Member FDIC

Equal Housing Lender

How You Could Lose Money When You Move

Mortgage

Moving across town or across the country takes a lot of time and careful planning: from packing up beforehand to scheduling the closing on your past and future homes, and everything in between. Before you begin your next big move, be sure to look out for these common extra expenses and how you DO or DON’T want to handle them.

DO: Box up your belongings and have professional movers pack them into the moving truck.

DON’T: Rent a do-it-yourself to save money.

In this scenario, you run a much higher potential risk of damaged furniture and other valuables when items are packaged and shipped incorrectly. However, if you box them yourself and hire a professional moving crew, they will typically insure your goods up to a specific dollar amount to be sure your home goods are safe and secure.

DO: Ask your local grocery store or discount store for unwanted boxes.

DON’T: Pay for cardboard boxes.

The only thing more expensive than moving, is preparing to move. Instead of using your valuable funds for room specified boxes, reach out to local businesses and offer to take their surplus boxes away for free!

DO: Pack one room at a time.

DON’T: Procrastinate packing.

Denying the increasing deadline of the move will only make packing that much worse when you realize it must be done. Instead of taking two weekends of 24-hour packing, designate a timeline of which rooms you want packed. This way you can stay on track without having to tackle the entire home at once.

DO: Research the costs associated with your new potential city.

DON’T: Move for a career where you will make more, but your expenses may skyrocket.

Many expenses, such as housing or groceries, here in the Midwest are relatively affordable compared to other areas of the country. If you and your family are planning to move across the nation, or just across the state, make sure to check the average expenses for the area. Although a new job may offer additional pay or benefits, the expenses of the area may be more than your current household budget in the Midwest. Always take this into account before fully committing to a move.

Wherever your next home takes you, Peoples Bank & Trust is here to help! Speak with one of our experienced mortgage lenders to see what your home value could mean in other areas!

Peoples Bank & Trust Co.

Member FDIC

Equal Housing Lender

NMLS#407724

4 Ways New Homeowners Can Save on Their Taxes

Home owners

Becoming a homeowner is an exciting and trying time in your life. Once all the papers are signed, and the keys turned over, it all seems worth it. That is until a pipe bursts, lightning knocks out the tree, and your dog decides to burst through the screen door. Not all hope is lost however. In return for your endless work, and commitment to a never ending to-do list, the U.S. Government has provided four tax-based ways to reward you for home ownership. See how to take advantage of these four tax breaks, and make the most of your new home purchase:

  • Early IRA Withdrawal: For many new homeowners, securing the initial down payment can be the first hurdle in their real estate journey. If you’re a first-time home buyer and have an IRA, or Roth IRA, the IRS will allow you to withdraw up to $10,000, penalty-free, to aide in the cost of your new dwelling!
  • Valuable Deductions: Between your mortgage interest, mortgage insurance, and real estate taxes, your home deductions could make a big dent in your taxable income. When preparing your taxes as a new homeowner, be sure to bring any mortgage documents, and escrow account information, to your tax professional to gain the full benefit of the deductions.
  • Renewable-Energy Tax Credit: Did you upgrade your home appliances to more efficient and environmentally-friendly options? Did you install a geothermal system in your home? If so, this helpful tax credit may be able to take a portion of that improvement cost out of your deductible income!
  • Tax-Free Profit on Sale: When you go to sell your home, the IRS allows you to avoid the capital gains tax on the profits you generate from the sale. This means that if your home’s value goes up $35,000 in the two or more years you live there, you are then able to retain the additional $35,000 your home is sold for without having to pay any taxes on those funds. One other major stipulation of this benefit is that in order to avoid the capital gains tax, you must purchase a new home as your primary residence within the next two years.

With these key homeowner tax breaks, the next thing to put on your to-do list is to make a plan for those tax refunds! If you have questions on how to best budget for your new home, don’t hesitate to stop in. We’d love to talk taxes, financing, or other improvement ideas you have for your home!

 

Peoples Bank & Trust Co.

Member FDIC

Equal Housing Lender

Make the Most of Your Spring Projects with a Cash-Out Refinancing!

Refinance

How do you decide if cash-out refinancing is for you? Do you like your home? Do you need more funds for repairs or renovations? Do you have a portion of your mortgage already paid off? If you can answer yes to all these questions, then refinancing your mortgage with a cash-out may be the best fit for you!

How does it work?

Refinancing is a strategic and beneficial financial tool. By utilizing the equity built into a home, owners are able to negotiate new rates of their loan, and potentially borrow additional funds. These funds are typically limited to the amount of the original mortgage, minus the current outstanding loan. The difference between these numbers is the amount home buyers may be able to use for renovations and other current financial needs.

What’s the benefit?

Once you receive the funds you are not tied to any one project. So whether you want to build a new deck, remodel a bathroom, or pay for another planned purchase, the options are endless. With a home equity loans however, borrowers are required to take on an additional monthly payment on top of their existing mortgage. Unlike a home equity line of credit, a cash-out mortgage refinancing offers a specific amount that is tied within your mortgage, typically offering a lower comparable interest rate. This lending option also allows the home owner to replace their existing mortgage with updated rates, so they have one affordable monthly payment instead of two!

Get started today!

In 2015 the average kitchen remodel cost between $11,261-$28,716, and the average bathroom remodel totaled $9,285. With spring time approaching, now is the perfect time to look at the benefits of refinancing your home! With other projects such as a new deck, pole building, or landscaping project, spring is the perfect time to start evaluating your home refinancing to see what your equity is capable of.

We’d love to help get you started, call us at (636) 528-7001 or check us out online today!

Peoples Bank & Trust Co.

NMLS# 407724

Equal Housing Lender

Member FDIC

How-To Make Your Spring Renovations with a Home Equity Line of Credit

Home Equity

Remodels can be an exciting and trying experience. If you’re looking to make some updates to your home, a Home Equity Line of Credit is the perfect way to use the equity you have already built in your house. Here at Peoples Bank & Trust we offer both Home Equity Loans and Home Equity Lines of Credit, let us show you which may work best for you!

Home Equity Loan: Using your home as your collateral you are able to borrow funds in addition to your mortgage to complete home projects or unexpected repairs. After speaking to a Peoples Bank & Trust loan officer, a loan amount will be determined along with a loan term for repayments. The funds from this loan are presented in one check to use as needed.

Home Equity Line of Credit: Also utilizing your residence as collateral this option allows you to obtain a line of credit, with an agreed upon loan amount. Accessed through the use of a checkbook, a credit line allows you to access funds as you need them instead of receiving one lump sum at the loan closing. With a designated cap there is a limit to your available funds.

Regardless of which loan type you choose, the loan amount will be determined by the current value of your home, your individual financial history and other factors.  If your home appraises for more than you anticipated, that’s great news; but remember, it is always recommended to secure a loan only for the amount you need, ensuring you don’t overextend your budget!

If you’re interested in beginning the process for your next home renovation, start the journey with Peoples Bank & Trust and our Home Equity options!

 

Peoples Bank & Trust Co.

NMLS# 407724

Equal Housing Lender

Member FDIC

Home Buying in 5 Easy Steps

Mortgage

So you’ve decided to buy a home. Congratulations! You are about to embark on one of the most important purchases of your life. With so many options and financial decisions ahead of you, here are some key tips we want to share to help determine your ideal path to home ownership.

  1. Evaluate your Financial Readiness

There are many factors in determining your current financial capabilities when considering the purchase of a home. Add up your current monthly expenses, except for your current rent payment, and see if a mortgage payment can effectively be added without diminishing your overall monthly budget. If the answer is yes than it’s time to check your credit history! Every bank, and the individual loan types they offer, have various requirements. Take the time to research these programs and determine which suits your specific needs.

  1. Get a Mortgage Pre-Approval

Once you know your ideal lending option, it’s time to get pre-approved! By speaking with one of our experienced lenders you can determine if you qualify for various loan offerings, and at what amount and terms.

  1. Determine Your Overall Budget

Even if you qualify for more, it may be beneficial to cap your budget at a smaller amount. This will help you prepare for any unforeseen expenses, or higher than anticipated utility bills. Other factors to consider in setting your budget are savings goals, planned future expenses, additional costs to commute, and any unplanned repairs or renovations to the home.

  1. Find Your Perfect Home

Take your time while searching for your perfect home. Most home buyers stay in the same home for nine years before moving again, so you want to make sure this new house has everything your family needs. By working with a trusted local realtor you can ensure that you see all available properties within your budget, and act on new listings quickly!

  1. Close the Deal

Once you’ve made an offer on your dream home it’s time to make the purchase official! Work with your realtor to sign the purchase agreement, and close the transaction. Your mortgage lender at Peoples Bank & Trust will work to ensure the funds for your home mortgage arrive quickly and hassle-free. Once the t’s are crossed and the i’s are dotted, you are officially a home owner!

After becoming an official home owner it’s time to celebrate! You did it! At Peoples Bank & Trust we want to help guide you through your home buying adventure! Give us a call at (636) 528-7001 or apply online today to get started.

 

Peoples Bank & Trust Co.

NMLS# 407724

Equal Housing Lender

Member FDIC

Building Your Dream Home in 10 Steps!

construction

It’s almost spring, which means it’s construction season! In a time where anything can bloom, learn the ins-and-outs for how to grow your dream home into reality. Discover how to navigate the home building waters with these 10 easy tips to constructing your ideal home:

  1. Budget

No matter if you’re building the city’s largest mansion, or a humble abode out in the country, you’ll need proper financing to make it happen. To secure your home lending you’ll need a plan, and a budget. Sit down with your family and decide the bare bones of what you’re looking for and what it will cost. Be sure to account for potential problems, additions, and upgrades.

  1. Find your ideal land.

With so many options, sizes, locations, and other factors, be sure the price tag on your ideal plot is factored into your budget. Working with a realtor and your financial lender can help determine what factors to consider when choosing.

  1. Get a home mortgage from Peoples Bank & Trust

Now that you know your price point, you can get a pre-approved mortgage from Peoples Bank & Trust. Make the search for your future contractor easier by having quick and easy access to your designated financing.

  1. Hire a contractor.
    Ask your realtor to provide some contractor recommendations, and be sure to research companies before investing in a signed contract. Contractors are like any other company, they want your business, so shop around and don’t be afraid to negotiate.
  2. Set Timeline and stick to it

Work with your contractor to establish a goal for both the big picture, and all the little projects to get there. Speak with your provider and if you’re handy, there may be projects that you can complete to save on labor, such as speaker wiring or painting.

  1. Adjust Financing if needed.

Building a home is a process, and along the way there may be aspects of construction that change. We’ll help work with you and your budget to adjust your financing as needed, or work to include an option for a line of credit.

  1. Complete the Home Building Process

Ta-da the day is finally here! Now that you have your keys in hand it’s time to start making your house a home. Decorating, and adding those family details will help make your new construction feel like a familiar family retreat.

  1. Reorganize Finances

After the building process is complete it’s time to take another look at that budget. Did you stick to your financial goal, spend more or less than you planned for? If you’ve spent less than planned for congratulations! You can now lower your principal amount by paying off a portion of your mortgage with the surplus of funds. If you’ve spent more than budgeted for, just be sure to look into your finances and see if you need to adjust your spending or if you have the cushion to continue with larger payments.

 

  1. Make a New Household Budget

With a new home, come new expenses. Be sure to keep your eye on the prize by tracking monthly expenses and creating a strategic spending plan including utilities, mortgage payments, insurance, and any home owner association fees.

  1. Enjoy Your New Home

After all the time and effort that goes into creating a home it’s time to enjoy it! Have a house warming get-together or just sit back and relax, but be sure to celebrate because this is surely an accomplishment!

We know home building can be a hectic process, and that’s why we’re here to help you along the way! Stop by or call us today to learn about all of our home financing options! We can’t wait to see your dream home come to life.

Peoples Bank & Trust Co.

Member FDIC

Equal Housing Lender

NMLS#407724

Choosing Your Ideal Mortgage Lending

Mortgage Lending

Mortgage Options

Winter is the ideal buyers-market for purchasing your next home. With motivated sellers, bargain prices, and available professionals, the chilly months offer the perfect opportunity to find your ideal home at an ideal price. When it comes to searching for your next abode be sure to begin by securing an approved mortgage. At Peoples Bank & Trust we offer a variety of mortgage options to suit every family and circumstance:

FHA Loans: Popular among first time homeowners and those rebuilding credit, the Federal Housing Administration backed loan, enables buyers to obtain a mortgage with little down, even if they have a lower credit score. Mortgage insurance is required for FHA loans, which adds an additional monthly cost that is included in your mortgage payments.

USDA Loans: For those looking to move to rural areas, the United States Department of Agriculture offers loans to aid low or moderate income families in buying, repairing, and renovating homes. There are three categories of loans for various incomes and buying intentions.

VA Loans: For those who have served in the military, or are currently serving, Veteran Affairs offers home loans in conjunction with local lenders. This loan requires no money down or mortgage insurance.

Once you’ve spoken with one our helpful lenders, the hunt is on for the perfect home! Be sure to keep these simple steps in determining the ideal home for you and your family.

  1. Look at homes only within your budget.
  2. Decide your ideal area, and your potential commute.
  3. Plan for the future, if your family is growing, additional bedrooms may a something to consider.
  4. Think for the seasons. Make sure that if Mother Nature throws some bad weather your way the house will remain safe and stable.
  5. Work with a realtor who knows the area.
  6. If you have questions, ask! Whether it’s about searching for your home, or extending your financing, make sure you’re educated in all of the options in front of you.

At Peoples Bank & Trust we are here to assist you with all of your home financing needs. Learn more about our mortgage lending options or visit your local bank branch. No matter the season, we’re here to help you on your way to home ownership.

Peoples Bank & Trust Co.

Member FDIC

Equal Housing Lender

NMLS #407724