How Much Can You Afford to Spend on a New Home?

Home Blog How Much Can You Afford to Spend on a New Home?

Posted On: February 19, 2024 by Peoples Bank of Kankakee County in: Budget Home

Embarking on the exciting journey of purchasing a new home is a significant life milestone, but it comes with the crucial question: How much can you truly afford? Peoples Bank understands the importance of making informed financial decisions, especially when it comes to such a substantial investment. In this blog post, we'll guide you through the essential considerations to help you determine a realistic budget for your new home, ensuring that your dream home aligns harmoniously with your financial well-being.

1. Evaluate Your Financial Health: The Foundation of Home Ownership

Before diving into the specifics of home prices, take a holistic look at your financial health. Consider your income, expenses, and existing debts. A comprehensive understanding of your financial landscape forms the foundation for establishing a budget that is both realistic and sustainable.

2. Calculate Your Debt-to-Income Ratio: Balancing Act for Financial Success

Your debt-to-income ratio (DTI) is a crucial metric that lenders use to assess your ability to manage monthly mortgage payments. Calculate your DTI by dividing your monthly debt payments by your gross monthly income. Ideally, your DTI should be below 40% to ensure a healthy financial balance.

3. Factor in Additional Costs: Beyond the Purchase Price

Owning a home involves more than just the purchase price. Consider additional costs such as property taxes, homeowner's insurance, maintenance, and potential homeowner association (HOA) fees. These expenses should be factored into your budget to provide a comprehensive view of the financial commitment associated with homeownership.

4. Explore Mortgage Options: Tailoring Financing to Your Needs

Peoples Bank offers a variety of mortgage options, each with its terms and conditions. Explore different mortgage programs to find one that aligns with your financial goals. Consider factors such as fixed-rate or adjustable-rate mortgages, down payment requirements, and interest rates. Our mortgage experts are here to guide you through these choices to ensure you make an informed decision.

5. Create a Realistic Budget: Setting the Stage for Financial Success

Armed with a comprehensive understanding of your financial situation, debt-to-income ratio, additional costs, and mortgage options, you can now create a realistic budget for your new home. This budget will serve as your financial compass, guiding you towards a home purchase that not only fulfills your dreams but also ensures your long-term financial success.

In conclusion, determining how much you can afford to spend on a new home requires a thoughtful and thorough examination of your financial picture. Peoples Bank is committed to supporting you in this journey, providing expert guidance and a range of mortgage solutions tailored to your needs. With the right information and resources, you can confidently step into home ownership, secure in the knowledge that your dream home aligns harmoniously with your financial well-being.

Peoples Bank of Kankakee County. Member FDIC. Equal Housing Lender.

An overdraft occurs when you do not have enough money in your account to cover a transaction, but we pay it anyway. We can cover your overdrafts in two different ways:

We have standard overdraft practices that are available after your account has been open for 30 days and as long as you maintain your account in good standing.
We also offer an overdraft protection plan, Overdraft Protection Sweep, a link to a savings account. It may be less expensive than our standard overdraft practices. To learn more, ask us about this plan.

This notice explains our standard overdraft practices.

What are the standard overdraft practices that come with my account?

After your account has been open for 30 days and as long as you maintain your account in good standing, we do authorize and pay overdrafts for the following types of transactions:

Checks and other transactions made using your checking account number
Automatic bill payments

We do not authorize and pay overdrafts for the following types of transactions unless you ask us to (see below):

ATM transactions
Everyday debit card transactions

We pay overdrafts at our discretion, which means we do not guarantee that we will always authorize and pay any type of transaction.

If we do not authorize and pay an overdraft, your transaction will be declined.

What fees will I be charged if Peoples Bank of Kankakee County pays my overdraft?

Under our standard overdraft practices:

We will charge you a fee of up to $30 each time we pay an overdraft.
The maximum daily overdraft fee per presentment or item paid using the Overdraft Reserve Program is $150.00 per day.
No per item handling fee will be charged on de minimis overdrafts. De minimis overdraft for this policy means transactions that overdraw your account by $30 or less.
There is an overdraft fee of $5 per day that will be charged beginning the 4th consecutive business day your account is overdrawn.

Nonsufficient funds (NSF) fees - if an item drafted by you (such as a check) or a transaction you set up (such as a preauthorized transfer) is presented for payment in an amount that is more than the amount of money in your account and we decide not to pay the item or transaction, you agree that we can charge you an NSF fee for returning the payment. Be aware that such an item or payment may be presented multiple times by the merchant or other payee until it is paid, and that we do not monitor or control the number of times a transaction is presented for payment. You agree that we may charge you an NSF fee each time a payment is presented if the amount of money in your account is not sufficient to cover the payment, regardless of the number of times the payment is presented.

PAYMENT ORDER OF ITEMS - The law permits us to pay items drawn on your account in any order (for purposes of this section "items" means checks, orders and electronic transactions). To assist you in handling your account with us, we are providing you with the following information regarding how we process those items. When processing checks and orders drawn on your account our policy is to pay lower numbered checks and orders in numerical sequence, but electronic transactions are paid first in the order received. The order in which items are paid is important if there is not enough money in your account to pay all of the items that are presented. There is no policy that is favorable in every instance. If the smallest items are paid first, you may have fewer NSF or overdraft fees, but the largest, and perhaps more important items (such as rent or mortgage payments) might not be paid. However, if the largest items are paid first, your most important items might be paid but it may increase the overdraft or NSF fees if funds are not available to pay all of the items. We think our policy attains a reasonable balance between minimizing additional costs to you and paying your more important items. We encourage you to make careful records and practice good account management. This will help you to avoid creating items without sufficient funds and incurring the resulting fees.

What if I want Peoples Bank of Kankakee County to authorize and pay overdrafts on my ATM and everyday debit card transactions?

If you also want us to authorize and pay overdrafts on ATM and everyday debit card transactions after your account has been open for 30 days, you may opt in.

You have an ongoing right to change this consent at any time. If your overdraft privilege has been revoked for any reason, the opt-in or opt-out selection may not apply. Please contact your nearest office for more information.

Alternate ways to Opt In/Out or make changes:

By Phone. Our Customer Care Representatives can be reached at 815-936-7600.
By Mail. Peoples Bank of Kankakee County, 333 E. Court Street, Kankakee, IL 60901
In Person. Please visit your local office and ask a representative to help you decide which plan is best for you.