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How much home can I afford?

How much can I reasonably spend on a home? This is a question every single prospective homeowner asks before purchasing a house, and this is exactly what we want them to be asking! While buying a home is a great financial investment to start building equity and wealth, no one wants to be house poor. Create a budget for yourself by using the tips below or jump straight to our mortgage calculator. 

Save for a Down Payment and Closing Costs 

A down payment on a house is what you pay for the home up front. The larger down payment you can do, the lower your loan amount will be. Not only does a large down payment lower monthly mortgage bills, but it cuts the amount of interest you pay on the home loan over time. 

Many loan programs allow first-time homeowners to buy a house with zero money down. This is a great option for some homebuyers, but many decide not to take this route because they end up spending more money on interest over a longer period of time. 

Another upfront expense to purchasing a home is the cost to close the deal, aka the closing costs. Many first-time buyers forget to save for the additional fees that are required on top of your down payment. Fees to consider are: 

  • Loan origination fees 
  • Appraisal and survey fees 
  • Title insurance 
  • Homeowners insurance 
  • Private mortgage insurance (PMI) 
  • Mortgage points 
  • Property tax (typically 6 months of property taxes) 
  • Escrow fee to the agent who helps you close  
  • Attorney fees 
  • Miscellaneous fees 

Down payments are typically 5-10% of the house cost (20% is ideal) and closing costs are typically 3-5%. So, keep that in mind when saving for your dream home! 

Add Up Your Monthly Expenses 

Most home loans are meant to be paid off over a thirty-year period, making your mortgage payment a monthly expense. Before you decide on a budget for your new home, you need to add up your current monthly expenses to determine how much of your monthly income is left for your mortgage. Monthly expenses include: 

  • Monthly bills 
  • Loan payments 
  • Food 
  • Subscriptions 
  • Childcare 
  • Etc. 

If you have not received a raise or started bringing in supplemental income since your previous home purchase, but you want a bigger house, you’ll need to pay a larger down payment. The larger your down payment is, the less your monthly mortgage payment will be. Obviously, if you’re making more money these days then you have more monthly income for a mortgage payment. 

Calculate Your DTI 

Your debt-to-income ratio is also vital to consider when establishing your home budget. Similar to adding up your monthly expenses, DTI is the total amount of monthly debt you have compared to your pre-tax income. The lower your DTI, the more home you can afford.  

A recommended DTI is 28% of your monthly income or lower. To calculate the DTI you should aim for, use this formula: monthly income x 0.28 = DTI. Once you pay off enough debt to reach that DTI, you are likely to get approved for a better loan, depending on your monthly expenses that are in addition to debt. 

Get Your Current Home Appraised 

If you currently own a home and you’re planning to purchase a new one, it’s a smart idea to get your current home appraised. Knowing the value of your home can help you predict how much money you’ll make from it. Homeowners in the market to buy a new home often use that surplus to pay for the down payment and closing costs on the new home. 

Have more questions about how you can afford your dream home? Reach out to our friendly and helpful mortgage lenders today! 

Peoples Bank & Trust Co.

Member FDIC

Equal Housing Lender

NMLS #407724

computer

Protect Yourself from Identity Theft

The Federal Trade Commission defines identity theft as theft that happens “when someone uses your Social Security number or other personal information to open new accounts, make purchases, or get a tax refund.” This kind of theft not only steals your money, but your precious time as you work to figure out what accounts are compromised and finding safe ways to re-open them. Keep reading to prevent identity theft. 

Start by Educating Yourself 

The first step to protecting yourself from identity theft is to learn what type of information a thief might be after. Different types of identity theft where criminals gather information about you include financial fraud, medical identity theft, social security theft, child identity theft, tax theft and others. For example: 

  • Financial Fraud – spending money with your debit and/or credit card numbers.  
  • Medical Identity Theft – personal information such as SSN, date of birth, etc. used to receive medical services under your name. 
  • Social Security Theft – using your SSN to open fraudulent accounts in your name. 
  • Child Identity Theft – family members who use a child’s SSN, birthday and address to open fraudulent accounts in the child’s name. 
  • Tax Identity Theft – using your personal information to file a tax return under your name and receive a refund. 

Next Step: Protecting Yourself 

Use can these tips to start protecting yourself from identity theft right away. It’s much more easy to prevent fraud than it is to recover from it, so you can save yourself a lot of trouble by taking the initiative to follow our guidelines as soon as you can. 

  • Check your bank account activity at least once a week to make sure there aren’t any suspicious transactions. With an online banking account, you can quickly see all transaction history and alert your bank if you suspect fraud.  
  • Shred important documents instead of throwing them in the garbage. It’s odd, we know, but people even sift through trash to find things like bank statements with account information or medical bills with your personal information. Shredding it will make it impossible for someone to use paper documents against you.  
  • Guard your pin number when typing it into a card reader or ATM. You never know when someone is looking over your shoulder! Better yet, use the “tap” method on your card if you have it. Then you won’t be asked to punch in a pin at all. 
  • Don’t click on suspicious links in your email. Watch your emails for links that contain spam. If you ever receive an email asking for personal or banking information, verify it’s legitimate before replying. 
  • Make sure the sites are secure before making an online purchase. When banking and shopping online, check to make sure the sites security is enabled. A site with “https://” is secure, while one with “http://” is not secure. 

If you’re ever in the situation where you think your identity has been stolen, report it immediately! You can get in touch with your bank and the FTC and they will both be able to help you recover information or close fraudulent accounts. If you have more questions or you’re wondering if your identity has been stolen, contact us and we’ll set up a time to chat. 

Peoples Bank & Trust Co.

Member FDIC

Equal Housing Lender

money

How Can I Lower My Monthly Bills?

It’s the question that every household asks. What can I do to cut my monthly costs? And it’s a great question! No one wants to spend unnecessary money when there are mouths to feed and basketball uniforms to pay for. While you can tighten the budget by setting strict guidelines for yourself, your experts here at Peoples Bank & Trust have a few more realistic ways to lower monthly bills. 

Plan Meals Ahead of Time 

At first glance, planning meals ahead of time may not sound like it has anything to do with your finances but trust us – this can make a huge difference! When you plan meals ahead, you can write down the list of ingredients you need at the store that week. Taking a list to the store can help you cut down on wandering down the aisles and picking up food you don’t need. While getting groceries, you can also choose the store brand instead of the name brand! Lastly, having a plan in place for meals, with all the ingredients to cook them, will help you avoid eating out or ordering to your door. This saves you from spending extra cash on delivery fees, tips and expensive food. 

Refinance Your Mortgage 

Chat with one of our mortgage lenders to refinance your mortgage. We can give you options to try and lower your interest rate which can save you hundreds of dollars every month. The better your credit score, the better your interest rate will be. You can also check out our mortgage calculator to get an idea of how much you can save by lowering your interest rate just a little bit. 

Bundle Your Bills 

Bundling is when you purchase multiple products or services with a company to get a discount on each product. You can bundle with almost anything if you look into it! For example, most insurance companies will let you bundle services like home and auto insurance. You can also bundle: cable and internet, different TV streaming services (like the Hulu, Disney+ and ESPN+ bundle) and more. 

Set Up Automatic Payments 

We can’t stress this enough! Not only do many companies offer a small discount for setting up automatic payments, but it’s a great way to avoid late fees. That way you aren’t paying additional money every month that you didn’t budget for. We encourage you to check out the discounts for your wireless carrier, most will save you $5-$10 for automatic payments! 

Keep Track of Your Transactions 

Whether you do paperless banking or receive your monthly statement by mail, it’s easy to forget how costly everyday expenses are. Be sure to check those monthly statements to track how much you actually spent, instead of going off your own assumptions. We tend to think we spent less than we really did! You should also check individual transactions from throughout the month to be sure you don’t have any unwanted subscriptions. One way companies lure you in is by giving you a free trial, only after you give your credit card information, so you’re automatically charged after the trial. People often forget to unsubscribe if they weren’t happy with the free trial which is a really easy way to lose money. 

If you need more help managing your finances, check out other tips in our blog or contact us to chat. We’re here to help you save money and build your wealth to provide the future you want for your family. 

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Home Buying 101

Becoming a homeowner for the first time is no easy task! You’ve probably heard horror stories from friends about overpaying or missing a crucial piece of information before committing to an offer. Here are a few tips to help you prepare for buying your first (or next) home so you feel confident in the home you choose to buy! 

Before You Buy 

  • Start Saving Early – the earlier you start saving, the better! Many first-time homeowners assume they just need to save for a down payment, but home buyers must also pay closing costs up front! Closing costs include the down payment, title insurance, homeowner’s insurance, property tax, closing or escrow fee and others depending on your lender. Plus, the larger your down payment, the less you’ll pay in interest as you pay off the home loan. 
     
  • Strengthen Your Credit Score – if you know you’re going to purchase a house in the next few years, it’s a good idea to take action to earn a higher credit score. Start by making sure your bills are paid on time, pay off debt you have and keep credit card balances low. 
     
  • Learn About Mortgage Options – there are several different mortgage options to look into before you commit to a home loan. These include conventional loans, Federal Housing Administration (FHA) loans, U.S. Department of Agriculture (USDA) loans and loans from the Department of Federal Affairs. 
     
  • Find First-Time Home Buyer Programs – many states will assist with your down payment! Check with us to see what programs we recommend. 
     
  • Decide How Much You Can Afford – it’s a good idea to set your budget before you start shopping or get pre-approved for a home loan. Check out this tool from NerdWallet to see how much house you can afford.  

While You Look for the Perfect Home 

  • Get Pre-Approved – ask your lender to draft a pre-approval letter to send to a potential seller when you’re ready. If it’s all sorted out beforehand, you can put an offer in on your dream house quickly. 
     
  • Don’t Look at Houses Over Your Budget – this is a great rule of thumb for sticking to any budget, don’t look at what you can’t afford! You don’t want to fall in love with something that’s not realistic for your income level and prior financial commitments. 
     
  • Create a Priority List – decide what home features are important to you. This will help you weigh the pros and cons of each house. For example, if an office space is more important to you than having a large backyard, you’ll be able to narrow down your search easier. 

When You’re Ready to Make an Offer 

  • Pay for an Inspection – not only do inspections help you negotiate the price of a home down, but they also help you know what you’re paying for.  
     
  • Negotiate with the Seller – don’t be afraid to negotiate! In most instances, the worst-case scenario is that the seller will come back with a counteroffer. 
     
  • Buy the Right Home Insurance – home insurance covers the cost to repair or replace your home and belongings if they’re damaged by an incident covered in the policy. It also provides liability insurance if you’re held responsible for an injury or accident. Buy enough home insurance to cover the cost of rebuilding the home if it’s destroyed. 

If you’re in the market to buy a home, reach out to us! We’re here to help you find the right home loan for your budget. 

Peoples Bank & Trust Co.

Member FDIC

Equal Housing Lender

NMLS# 407724

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Spring Savings Guide

Spring is the perfect season for fresh starts, personal growth and positive changes. This season, along with the loads of spring cleaning and organizing, consider making your finances a priority. A great first step is to read through this practical guide to saving money so you’re ready for summer! 

1. Prepare for the heat by making sure your cooling system runs efficiently. 

Summer is on its way which means you’ll be cranking the AC before you know it. The best way to cool your home affordably is to schedule regular maintenance for your cooling equipment. Before the temperatures rise, you can make sure that your cooling system is running correctly and you’re not overpaying because of a leak or other issue. 

2. Revisit your budget. 

Something many people often forget to do is adjust their budget periodically. Life changes and so do your expenses, so make sure your budget matches your current stage of life. If there’s been an addition to your family, you’ve moved to another apartment or home or are starting to save for a new car, your budget should reflect those changes. 

3. Contribute to your emergency fund. 

Whether you’ve had an emergency fund for years or haven’t started one, it’s important to continue adding to it over time. You never know when unemployment or times of financial crisis may hit, so the more you decide to save for emergencies, the better. 

4. Make transferring money to your savings account automatic. 

A common issue that individuals run into is either forgetting to contribute to their savings each month or skipping it to avoid transferring money. By automating your savings, you’re contributing to the account without even thinking about it.  

5. Focus on getting rid of your debt. 

Contributing to your savings can seem difficult if a big portion of your income is going towards paying off debt. Getting rid of debt can be a big hurdle in the way of contributing to your savings, so it’s smart to make being debt-free a priority. Once you no longer have those monthly payments, you can put a much larger portion of your income towards your savings account. 

6. Reward yourself for reaching goals. 

Motivating yourself is easier when there’s a reward waiting for you once you reach your goals. Whether you’ve been eyeing a new item of clothing or want to go out to eat at a nice restaurant, treating yourself occasionally is a great incentive. Set a goal every month with small rewards or a long-term goal with a larger reward. 

This spring and summer, make it a goal to contribute to your savings account as much as possible. If this past year has taught us anything, it’s that you never know what’s coming and how it could affect you financially. To learn more about how we could assist you in your financial journey, contact Peoples Bank & Trust today! 

Peoples Bank & Trust Co.

Member FDIC

Equal Housing Lender

budget-goals

Get Back to Budgeting

Have you recently fallen off the budget wagon? Have no fear, Peoples Bank & Trust is here to help! Creating a budget is one thing but sticking to it is often hard. If you’re someone who struggles sticking to their budget, read these tips to get back to budgeting. 

Total Your Monthly Bills 

If it’s been a while since you last followed a monthly budget, it’s a good idea to double check your monthly bills. Take a look at your monthly bank statement as an easy way to total up your bills. Write down what each bill costs and then write down the total as well. This is your new budget base – a.k.a the amount you need for essentials every single month.  

Set Up Automatic Payments 

After you check your bank statement to remember what monthly bills need to be paid, set up automatic payments for all monthly plans and subscriptions! Then you don’t need to worry about obtaining late fees you didn’t plan on. If you’re worried about spending your paycheck before all the bills are paid, schedule your automatic payments to be paid on the first of the month. That way your essentials are taken care of first thing and you don’t need to worry about overspending to the point where you can’t afford to pay those. 

Cap Your Fun Money 

When we fall off the budget wagon, it’s most likely because we’re spending money whenever we feel like it, instead of giving ourselves healthy spending restrictions. After you total your monthly bills, essentials (gas and groceries) and determine how much to send to savings each month, set a limit for “fun money.” Fun money is the amount you let yourself spend on absolutely anything you want, but after you spend x amount, it’s time to stop! If you have your eye on something particularly expensive, try not spending the fun money for a few months so you can afford the item! 

Open Online Bank Accounts 

The easiest way to keep track of your money is setting up online banking for your checking and savings accounts. Online banking lets you see account activity for any account you have with the bank at the drop of a hat! Setting up online banking can help you keep track of your spending and savings habits to hold yourself accountable to your budget. 

If you need help managing your finances further, feel free to reach out! Our experts are more than happy to sit down with you or give you a call to go over financial strategies that fit your goals and lifestyle. 

Peoples Bank & Trust Co.

Member FDIC

Equal Housing Lender

computer

Online Safety Tips for Seniors

It’s an unfortunate reality, that many criminals target senior citizens as they can be susceptible to online deception. If you’re keeping up with the times by staying online, it’s also important to keep up with online security measures!  

1. Look Out for Suspicious Emails 

You would be surprised how often people are fooled by phishing emails. ‘Phishing’ emails are sent from cybercriminals who pretend to be a person or business they are not. Oftentimes, the cybercriminal has enough information about you to make the email seem very legitimate. It’s very common for individuals to receive phishing emails that pretend to be from the individual’s bank. When they pose as a familiar business or person, they add corrupt links and attachments that could compromise your computer and/or personal information. If you receive an email you weren’t expecting, be sure to make sure the email address doesn’t look phony and that all the information is actually correct. 

Ex – From: Apple <apple-suPport5@icloud.net> 

Ex – A receipt for a subscription you don’t pay for. 

2. Use Strong and Unique Passwords 

Strong passwords are important because they’re harder for cybercriminals to guess. A strong password can be a phrase from a song you remember with capitalization and symbols. Unique passwords are important because if one password is compromised, then you won’t have to worry about other account passwords being compromised. LastPass is a great (and free) way to keep track of all your different passwords. So, all you have to do is memorize the one password you need to log into LastPass!  

3. Take the Romance Offline 

It’s becoming more and more common for seniors to try out online dating. And why not? It can be a great way to find companionship! However, it’s vital you verify the person you are talking to is a real person and genuinely wants to connect. Sometimes, cybercriminals pretend to be someone completely different online in order to trick people into giving out their personal and financial information. You can avoid this by taking an old friend to meet your new online friend and gauge their intentions. And remember: never give your personal or financial information to someone you recently met online! 

4. Be Aware of Suspicious Calls and Voicemails 

Ever gotten a voicemail from a robotic-sounding voice telling you that your credit card has been compromised? That was a scam. Individuals of all ages and backgrounds get scammed over the phone every day. Be on the lookout for robotic voices that request personal information as this is a way criminals disguise their voice or send voicemails to the masses. If you don’t recognize the number and/or you weren’t expecting to receive a call from a certain business requesting information (like credit card numbers and insurance IDs), it’s best not to give them what they ask for! If you’re unsure, hang up and call the business number you are familiar with. They will be able to tell you whether or not they are trying to get in contact with you. 

Peoples Bank & Trust is here to protect your financial information and your wealth! If you have any questions as to how we protect you, feel free to contact us. Or if you aren’t sure about suspicious individuals requesting your financial information, give us a call and we can tell you how to proceed. 

Peoples Bank & Trust Co.

Member FDIC

Equal Housing Lender

coins

6 Ways to Save This Spring

With spring comes a freshness that everyone enjoys. There’s different weather, new things are happening and the winter blues begin to fade away. Spring also brings spring cleaning! Peoples Bank & Trust wants to focus on different actions you can take to spring clean the way you save. By giving you six ways to save this spring, we hope you can begin to enhance your financial journey. 

1. Find Ways to Go Fee Free 

If certain fees suit your needs, that is okay. You don’t have to go fee free for everything, but it doesn’t hurt to see if there are some different options for a few items. When it comes to savings and checking accounts for example, there are many solutions that don’t require fees. If that works for you, then open an account like that. Another example would be credit cards. Find a credit card that offers no fees and other rewards to help you save money. 

2. Create a Fun Fund 

With all of the stress from COVID-19, it’s important to make sure you are taking care of yourself and still enjoying life during the new season. Put money aside into a fund meant for something you’ll enjoy. Be sure to continue to travel (maybe not oversees but there’s plenty of great outdoor travel options to continue social distancing here in the US). Another way to spend it could be renting a movie, getting your favorite takeout, buying something fun for the house and so on. 

3. Collect Change & Loose Bills 

You’ve heard about this before, but have you actually tried it? By collecting any change and loose bills you have lying around the house, in a purse, in your pockets, and so forth, you’ll begin to accumulate more than you realize. You can place a mason jar in your laundry room as a reminder to check for change there. Then use the savings for something special, whether it be your fun fund, child’s savings or a new pair of shoes. 

4. Download a Savings App 

By utilizing your online and mobile banking account features to stay on track of finances and also downloading a saving or budgeting app, you’ll be more connected on where you fall each month with your finances. There are many apps available that allow you to organize and plan out your expenses and savings. This will help those who have a hard time saving or sticking to a budget, as it will make you more accountable. 

5. Inspect Your Home 

By making any needed updates to your home, you’ll be sure things are running smoothly as the warm weather begins to come. Check your A/C, look for leaks on your roof, add insulation to the attic and so on. By making sure your home is in tip-top shape for the spring and summer, you’ll help avoid any random costs that may pop up in the future regarding updates or fixes. 

6. Make Use of Your Tax Refund 

If you received a tax refund, try not to spend the money. Put it into a savings or retirement account to help set you up for future success. If you don’t really need that money, be strict with yourself to not dip in and use it. 

We hope you found one or two helpful ideas that will encourage you save this season! If you’re looking for help, we have the products and professional experience to find the perfect solution for you. 

Peoples Bank & Trust Co.

Member FDIC

Equal Housing Lender

home

How much money do I need to buy a home?

With rates continuing to be low, now is a great time to purchase a home! It may seem daunting at first, but it’s a great experience and can be fun if you are prepared. Whether you are a first-time homebuyer or have purchased a home before, keep reading to see how much money you need to buy a home. 

You may not need the full loan amount offered. 

While you can get a loan for a large amount of money, you may not want to get that full amount. Think about all of your other expenses first and the salary you make. Be sure to break it all down and make sure the monthly payment isn’t going to be too much when everything else is added on. 

Think about the upfront costs. 

Closing costs can be around three to four percent of your loan or more and it’s nice to try to have a down payment anywhere from ten to twenty percent. If you want to avoid paying additional private mortgage insurance (PMI), you’re looking at a twenty percent down payment. Here are some of the items included in closing costs: 

  • Application fee 
  • Appraisal fee 
  • Title search 
  • Title insurance 
  • Attorney fees 
  • Home inspection 

These are large upfront costs so it’s important to factor them in and begin saving for them. If you work on saving at least twenty five percent of the sale of the home, then you’d be in a good place to cover the down payment, closing costs, moving fees and so forth. You can try to negotiate that the seller pays for your closing costs which could help save you some money – your realtor can help you know if this is a good option or not depending on the circumstances of the area and home. 

Make note of utility, insurance and tax increases. 

If you are moving to a new area, even if it’s across town, utilities, taxes and home insurance prices could all be different than what you currently pay. Be sure you’ve calculated this into your monthly payments as well because it could be a couple hundred dollars more than what you are paying now depending on the new home you are looking at and the area it’s in. 

Ask your bank questions so you fully understand what the costs will be. 

If you have any additional questions, or just don’t fully understand what you’d potentially have to pay upfront vs monthly and when those payments would start, ask your bank. We are here for a reason – to help you and create a smooth home buying journey. Our mortgage options suit any need so contact us today with your questions and concerns so we can help put your mind at ease! 

Peoples Bank & Trust Co.

Member FDIC

Equal Housing Lender

NMLS #407724

home

4 Steps to Home Buying

Whether you’ve been looking for a while or have just decided to begin the hunt, buying a home is an exciting adventure! With rates so low, it’s the perfect time to become a new homeowner. But do you know some of the things you should be doing before stumbling upon your dream home? We’re here to explain our top four steps to home buying so you can enjoy the journey. 

Know How Much You Can Afford 

Even though you could get a loan for $300,000, this may not mean you want to spend that much on a home. Go through your current debts, what equity you’d get back on your home, your salaries, monthly bills and expenses to know how much money you spend each month. Then calculate what your new mortgage would potentially be (including taxes, insurance and utilities as those may change) to know how much you are comfortable spending each month while allowing room for savings. This will help give you a final number you are truly comfortable spending, so you don’t go over your max when making an offer. 

You will also want to think about closing costs and the down payment. Closing costs are normally around 3% of your loan and it’s nice to try to have a down payment of 10-20%. These are large upfront costs so it’s important to factor them in and begin saving for them. 

Get Pre-Approved 

You may begin your search and think you’re in no rush – but what if you come across the perfect home and there’s already offers that could potentially be coming in? You want to make sure everything is lined up so you can put an offer in right away to get ahead of others. Waiting a whole day to meet with your bank and go over finances could cost you that slot that would get you to owning your dream home. You need to know how much you can actually afford, if you need the sale to be contingent on your home selling and so on. We can help you manage all of this and get you pre-approved for a mortgage. 

Don’t Just Look on Home Sites 

Don’t just wait to see a home on a website like Realtor.com or Zillow. You want to check Facebook and follow realtors there as they may post a home before it becomes live on the site. You can also ask around if anyone is thinking about selling so you can get your foot in the door first before it goes on the market. The same goes for your realtor – if you want to use a realtor, choose one and make sure they are looking for you to alert you to a home that fits your criteria before it may go on market. 

Get a Home Inspection & Appraisal 

After putting in your offer and getting it accepted, be sure to have an inspection. You’ll want to know everything is running smoothly before you make this big financial decision. You will also need the home to be appraised. A home appraisal is a review that gives the current value of the property you want to buy. You must get an appraisal before you buy a home with a mortgage loan. Lenders require appraisals because they can’t lend out more money than a home is worth. 

Even though this seems like a lot, it will leave you confident in your decision to buy a home. When you have everything above worked out, all you need to focus on is finding a home that fits your needs instead of wondering if you can even afford it. Keep in mind our team can help you with any of the above, so contact us today! 

Peoples Bank & Trust Co.

Member FDIC

Equal Housing Lender

NMLS #407724