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Buying Your First Home

Buying your First Home

Owning your own home has been part of the American Dream for years.  The pride of ownership and sense of belonging somewhere have been strong factors in motivating over 60% of all households to own their own homes.  In addition, there can be true financial rewards from home ownership.  But, not always.

How Much Home to Consider
Buying and owning a home is expensive.  You will need to consider many different factors:

  1. A down payment (perhaps 20% of the purchase price)
  2. Mortgage closing costs
  3. Monthly mortgage payments
  4. Property taxes
  5. Insurance. 
  6. Utilities
  7. Furnishings

Deciding how much to spend for a home can be complex.  You probably want as nice of a home as possible, but you want to be able to afford it.  What you can afford depends on the size of your mortgage, mortgage rates, costs of home ownership, your other expenses and your income.  One rule of thumb to consider is that the total of your mortgage payment, property taxes and insurance should be no more than 28% of your household income.  Here is a worksheet and a table of mortgage payments to help with the calculation.

Sample Monthly Mortgage Payments for a 30 Year Fixed Mortgage

Interest Rate

Mortgage Amounts

 

$100,000

$150,000

$200,000

$250,000

5.0%

$536.82

$805.23

$1,073.64

$1,342.05

5.5%

$567.79

$851.68

$1,135.58

$1,419.47

6.0%

$599.55

$899.33

$1,199.10

$1,498.88

6.5%

$632.07

$948.10

$1,264.14

$1,580.17


Check out our mortgage calculators to provide more precise payment levels and you can also calculate mortgage payments for other lengths of mortgages.

Worksheet

 

Sample

Sample

 

 

Mortgage amount

$100,000

$150,000

$

$

Monthly payment x 12

($599.55x12)

$7,195

($899.33x12)

$10,792

 

 

Property taxes

$2,625

$2,625

 

 

Insurance

$1,200

$1,200

 

 

Total

$11,020

$14,617

 

 

 

 

 

 

 

Household income

$50,000

$50,000

 

 

Times 28%

x.28

x.28

x.28

x.28

What you can afford

$14,000

$14,000

 

 

Difference

+$2980

Affordable

-$617

Stretching affordability

+ or

+ or

The sample is based on buying a $175,000 house with a 6% 30 year mortgage.  As the chart shows, this person can probably comfortably afford buying the home with a much larger down payment.  As a practical matter, the person could probably be comfortable with a mortgage in the $125,000 to $130,000 range.

Tax benefits from home ownership
Many taxpayers find that the interest on their mortgage and the annual property taxes they pay are large enough to enable them to itemize their deductions instead of using what is commonly referred to as the standard deduction.  The standard deduction for single filers on their 2011 tax returns is $5,800 and $11,600 for joint filers.  For many homeowners, their interest and property taxes exceed those amounts.  Be sure to keep track of when you pay your property taxes.  Some taxing districts have due dates close to the end of the year and you must have paid the tax before December 31st to get the deduction.

The IRS also allows you to exclude any gain on selling your house up to $500,000 if you file a joint income tax return and meet certain requirements.  You may want to investigate these tax advantages further or talk to a tax accountant to completely understand the tax advantages.

Potential gains from selling your home
The housing market in many areas of the country is currently suffering.  While that may be bad news for existing owners, it can be very good news for those buying their first home.  When the housing market improves, and the odds are good that it ultimately will, the value of your home may rise. 

Summary
If you are like millions of others, owning your own home is a primary financial and lifestyle goal.  The pride of home ownership and the financial rewards are attractive.  Just make sure you understand that there can be some downsides before you make the decision.

Contact a Representative Today

Back to Education Resources

Mutual News
  • MutualFirst Financial, Inc. Declares 20% Increase in Dividend

    Muncie, Indiana – MutualFirst Financial, Inc....

    Monday, February 23, 2015

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Mutual Blog

Proactive Steps to Take in Light of Anthem Data Breach

Chances are you are a person who has Anthem insurance coverage or you know someone who does. As a result, either you or your friend has a reason to be concerned.

A typical data breach includes a compromise of debit card numbers or partial personal identifying information. This kind of breach, though inconvenient, can typically be ‘fixed’. An initial investigation indicates that the Anthem breach includes a compromise of name, birthday and/or social security number. This kind of information is all one needs to steal someone’s identity.

According to Anthem this particular breach could affect up to 80 million people. Instead of trying to ignore this has happened or just being upset, it’s now time for you to be educated and try to protect yourself as best as you can. We have some tips that will help you accomplish that.


1. Review Your Statements


First, take a moment each month to view your eStatement or monthly statement. You can monitor your accounts throughout the month with Online Banking and the MutualBank App. Monitoring your accounts will give you the quickest opportunity to see if your accounts have been compromised. If you notice any transactions that are unfamiliar or questionable, please get in touch with your MutualBanker. Call us at 800-382-8031.


2. Be Cautious with Any Anthem Emails You Receive


Next, if you receive an email stating it is from Anthem, be cautious. Anthem’s website warns customers not to reply with information, click any links or open any attachments within the email. Anthem is not calling their customers and will not ask for information. Never give your credit card information, social security number, or other sensitive information to someone via email or over the phone.


3. Consider Freezing Your Credit


If you are a resident in Indiana, the Attorney General’s office website (http://www.in.gov/attorneygeneral/2853.htm) is offering and encouraging you to sign up for a free credit freeze with each of the three credit bureaus. A credit freeze places a hold on your credit where a new line of credit could not be obtained without you unfreezing your credit. This doesn’t affect already open credit lines like an existing credit card, yet helps to protect you against someone opening new lines of credit in your name.


4. Keep in the Know


Finally, try to keep in the loop on the Anthem Breach. The best source for current information about this breach can be found at Anthem’s Frequently Asked Questions. (http://www.anthemfacts.com/faq)

MutualBank is here to help inform you of ways to help protect against identity theft. Thank you for trusting us.

Sunday, February 15, 2015

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Buying Your First Home

Buying your First Home

Owning your own home has been part of the American Dream for years.  The pride of ownership and sense of belonging somewhere have been strong factors in motivating over 60% of all households to own their own homes.  In addition, there can be true financial rewards from home ownership.  But, not always.

How Much Home to Consider
Buying and owning a home is expensive.  You will need to consider many different factors:

  1. A down payment (perhaps 20% of the purchase price)
  2. Mortgage closing costs
  3. Monthly mortgage payments
  4. Property taxes
  5. Insurance. 
  6. Utilities
  7. Furnishings

Deciding how much to spend for a home can be complex.  You probably want as nice of a home as possible, but you want to be able to afford it.  What you can afford depends on the size of your mortgage, mortgage rates, costs of home ownership, your other expenses and your income.  One rule of thumb to consider is that the total of your mortgage payment, property taxes and insurance should be no more than 28% of your household income.  Here is a worksheet and a table of mortgage payments to help with the calculation.

Sample Monthly Mortgage Payments for a 30 Year Fixed Mortgage

Interest Rate

Mortgage Amounts

 

$100,000

$150,000

$200,000

$250,000

5.0%

$536.82

$805.23

$1,073.64

$1,342.05

5.5%

$567.79

$851.68

$1,135.58

$1,419.47

6.0%

$599.55

$899.33

$1,199.10

$1,498.88

6.5%

$632.07

$948.10

$1,264.14

$1,580.17


Check out our mortgage calculators to provide more precise payment levels and you can also calculate mortgage payments for other lengths of mortgages.

Worksheet

 

Sample

Sample

 

 

Mortgage amount

$100,000

$150,000

$

$

Monthly payment x 12

($599.55x12)

$7,195

($899.33x12)

$10,792

 

 

Property taxes

$2,625

$2,625

 

 

Insurance

$1,200

$1,200

 

 

Total

$11,020

$14,617

 

 

 

 

 

 

 

Household income

$50,000

$50,000

 

 

Times 28%

x.28

x.28

x.28

x.28

What you can afford

$14,000

$14,000

 

 

Difference

+$2980

Affordable

-$617

Stretching affordability

+ or

+ or

The sample is based on buying a $175,000 house with a 6% 30 year mortgage.  As the chart shows, this person can probably comfortably afford buying the home with a much larger down payment.  As a practical matter, the person could probably be comfortable with a mortgage in the $125,000 to $130,000 range.

Tax benefits from home ownership
Many taxpayers find that the interest on their mortgage and the annual property taxes they pay are large enough to enable them to itemize their deductions instead of using what is commonly referred to as the standard deduction.  The standard deduction for single filers on their 2011 tax returns is $5,800 and $11,600 for joint filers.  For many homeowners, their interest and property taxes exceed those amounts.  Be sure to keep track of when you pay your property taxes.  Some taxing districts have due dates close to the end of the year and you must have paid the tax before December 31st to get the deduction.

The IRS also allows you to exclude any gain on selling your house up to $500,000 if you file a joint income tax return and meet certain requirements.  You may want to investigate these tax advantages further or talk to a tax accountant to completely understand the tax advantages.

Potential gains from selling your home
The housing market in many areas of the country is currently suffering.  While that may be bad news for existing owners, it can be very good news for those buying their first home.  When the housing market improves, and the odds are good that it ultimately will, the value of your home may rise. 

Summary
If you are like millions of others, owning your own home is a primary financial and lifestyle goal.  The pride of home ownership and the financial rewards are attractive.  Just make sure you understand that there can be some downsides before you make the decision.

Contact a Representative Today

Back to Education Resources

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