How to Prepare for Buying a Home

How to Prepare for Buying a HomeMany people try to buy a home backwards, a frustrating and unsatisfactory problem for all parties. It makes us sad when we see it happen. What do we mean by buying a home “backwards”? People who start home shopping before researching their loan options, learning what they can really afford, and uncovering all the costs associated with home-buying process.

For the inexperienced buyer, going into a home purchase ill-prepared is certain to lead to disappointment – if not failure. A home is the biggest financial commitment most families will ever make! Many are surprised to learn that more is involved than just a monthly mortgage payment and that they can’t afford the home where they set their heart.

There is a time-tested way to purchase a family home that makes for a much better experience. It involves choosing the right things to do first, before you start looking at houses to buy or build.

We know what we’re talking about. Peoples Bank has been successfully helping families get the home they need (and want) for more than 100 years – it’s something we care a lot about – and we’re here to help you too, in the here-and-now.

Buying a home should be a good experience.

Here are some “first-things” that have helped families reduce the stress and drama of home-buying:

  1. Explore your loan options. Talk to a friendly Mortgage Loan Originator at Peoples Bank who wants to help you succeed with the loan that’s right for your needs. Do research on our home loan website, download a great resource from the Consumer Finance Protection Agency called “Your Home Loan Tool Kit”. When you’re ready to start the process, you can even apply online!

    Banks have a number of different types of loans and can help you decide on the loan strategy that’s best for you. You don’t have to limit your options to Peoples Bank – talk to other bankers to make sure you are getting the best deal. (We feel pretty good about our ability to compete for your business.)

  2. Get pre-qualified. A good loan officer will help guide you through a process that will reveal how much loan you can afford (and what the bank would be willing to lend for home purchases). Such preparation will do much to take surprises out of the home selection and buying process, and help you be realistic about the type of home you should be looking for. It will also allow you to have greater control over the negotiating process, perhaps even to acquire the property for less than the asking price!

There are so many tips and techniques for successful home buying, we cannot list them all here. The important thing is to do research and get an idea of the loan amount for which you qualify before you start selecting your next family home. Get those things right first, and the rest tends to fall in place in an (more or less) orderly fashion.

In addition to the great people inside our bank and the materials and tools on our own website, you can also find good information from the US Consumer Financial Protection Bureau’s website.

Peoples Bank is interested in your family

We want you to be successful in purchasing your home because your success is an indication of our success. Come see us, call or send an email to let us know you want to initiate a conversation about a new home. Start now to be ready for the opportunity when you find that home you want at the price you know you can afford!

Useful links:

Five Questions and Answers about New Social Security Claiming Rules

Five Questions and Answers about New Social Security Claiming RulesWhen Congress unexpectedly eliminated two Social Security claiming strategies as part of the Bipartisan Budget Act of 2015, retirement planning got a little more complicated for people who expected to use those strategies to boost their retirement income. Here are some questions and answers that could help if you are wondering how the new rules might affect you.

What’s changing?

The provision of the budget bill called “Closure of Unintended Loopholes” primarily addresses two Social Security claiming strategies that have become increasingly popular over the last several years. These two strategies, known as “file and suspend” and “restricted application for a spousal benefit,” have often been used to increase cumulative Social Security income for married couples. The budget bill has eliminated those strategies for most future retirees, but you may still have time to take advantage of them, depending on your age.

File and suspend

Under the old rules, an individual who had reached full retirement age could file for retired worker benefits in order to allow a spouse or dependent child to file for a spousal or dependent benefit. The individual could then suspend the retired worker benefit in order to accrue delayed retirement credits and claim an increased worker benefit at a later date, up to age 70. For some couples and families, this strategy increased their total lifetime combined benefit.

Under the new rules, effective for suspension requests submitted on or after April 30, 2016 (or later if the Social Security Administration provides additional guidance), the worker can file and suspend and accrue delayed retirement credits, but no one can collect benefits on the worker’s earnings record during the suspension period, effectively ending the file-and-suspend strategy for couples and families. The new rules also mean that a worker who files and suspends can no longer request a lump-sum payment in lieu of receiving delayed retirement credits for the period during which benefits were suspended. (This previously available option was helpful to someone who faced a change of circumstances, such as a serious illness.)

Restricted application

Under the old rules, a married individual who had reached full retirement age could file a “restricted application” for spousal benefits after the other spouse had filed for retired worker benefits. This allowed the individual to collect spousal benefits while delaying filing for his or her own benefit, in order to accrue delayed retirement credits.

Under the new rules, an individual born in 1954 or later who files a benefit application will be deemed to have filed for both worker and spousal benefits, and will receive whichever benefit is higher. He or she will no longer be able to file only for spousal benefits.

The bottom line

A limited window still exists to take advantage of these two claiming strategies. If you are currently at least age 66 or will be by April 30, 2016, you may be able to use the file-and-suspend strategy to allow your eligible spouse or dependent child to file for benefits, while also increasing your future benefit. To file a restricted application and claim only spousal benefits at age 66, you must be at least age 62 by the end of December 2015. At the time you file, your spouse must have already claimed Social Security retirement benefits or filed and suspended benefits before the effective date of the new rules.

Why did Congress act now?

Both the file-and-suspend and the restricted application strategies were made possible by the Senior Citizens Freedom to Work Act of 2000. Part of this Act’s original intent was to enable individuals to change their minds in the event they determined that they wanted to work longer but were already receiving Social Security retirement benefits. However, this opened up some claiming strategies, that while legal, went beyond the original intent of the legislation. Congress used the budget bill to close these loopholes in order to save money and slightly reduce the long-range actuarial deficit faced by the Social Security trust funds.

What if you’re already using one of these strategies?

If you are already using the file-and-suspend or the restricted application strategy, you will not be affected by the new rules. You have already met the age requirements.

If you sign up for a my Social Security account at the Social Security website, socialsecurity.gov, you can view your Social Security Statement online. Your statement contains a detailed record of your earnings, as well as estimates of retirement, survivors, and disability benefits, along with other information about Social
Security that will be very useful when planning for retirement. If you’re not registered for an online account and are not yet receiving benefits, you’ll receive a statement in the mail every five years, from age 25 to age 60, and then annually thereafter.

 

How are benefits for surviving spouses affected?

Rules affecting surviving spouses have not changed. If you are eligible for both a survivor benefit and a retirement benefit based on your own earnings record, you can still opt to receive one benefit first, then switch to the other higher benefit later.

What planning opportunities still exist?

Even if you can no longer take advantage of the file-and-suspend and restricted application strategies, you may still benefit from considering your Social Security filing options. The age when you begin receiving Social Security benefits can significantly affect your retirement income and income that is available to your survivors.

Basic options for claiming Social Security remain unchanged. Currently, the earliest age at which you can receive Social Security retirement benefits is 62, but if you choose to take benefits before your full retirement age (66 to 67, depending on the year you were born), your benefit will be permanently reduced by as much as 30%. On the other hand, if you delay receiving Social Security benefits past your full retirement age, you’ll receive delayed retirement credits, which will increase your benefit by 8% for each year you delay, up to age 70.

Determining when to file for Social Security benefits is one of the biggest financial decisions you’ll need to make as you approach retirement. There’s no “one-size-fits-all” answer–it’s an individual decision that must be based on many factors, including other sources of retirement income, whether you plan to continue working, how many years you expect to spend in retirement, and your income tax situation. It’s especially complicated when you’re married because you and your spouse will need to plan together, taking into account the Social Security benefits you each may be entitled to, including survivor benefits.

Although some claiming options are going away, plenty of planning opportunities remain, and you may benefit from taking the time to make an informed decision about when to file for Social Security.

Contact our Peoples Investment Services, Inc. representative at 828-464-5620 or  www.raymondjames.com/PeoplesInvSvcs. 

This information, developed by an independent third party, has been obtained from sources considered to be reliable, but Raymond James Financial Services, Inc. does not guarantee that the foregoing material is accurate or complete. This information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. This information is not intended as a solicitation or an offer to buy or sell any security referred to herein. Investments mentioned may not be suitable for all investors. The material is general in nature. Past performance may not be indicative of future results. Raymond James Financial Services, Inc. does not provide advice on tax, legal or mortgage issues. These matters should be discussed with the appropriate professional.

Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC, an independent broker/dealer, and are not insured by FDIC, NCUA or any other government agency, are not deposits or obligations of the financial institution, are not guaranteed by the financial institution, and are subject to risks, including the possible loss of principal.

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2016

Get ready for 2016 tax season with these helpful tips

2016 Tax TimeLast year the Consumer Financial Protection Bureau published some tips to help prepare for the 2014 tax season. This year we thought we would remind you to get ahead of your 2015 taxes using the same concepts and resources.

Free Filing Resources

Many people file their own taxes, rather than use a tax professional or accountant, and for them there are still some free tools to help at the IRS’ Free File web site:

  • If your income is below $62,000, you can use free filing software from the IRS’ website.
  • If your income is greater than $62,000, you can download free forms for filing.

Some organizations offer free assistance for filing taxes known as VITA (the acronym stands for the Volunteer Income Tax Assistance program). Generally, such programs are available for people making $54,000 or less and would include persons with disabilities, the elderly, or those who have limited ability to speak English. In addition to VITA, the Tax Counseling for the Elderly (TCE) program offers free help for all taxpayers, particularly for ones 60-years old or more. Most of the TCE locations are operated by the AARP Foundation’s Tax Aide Program.

The IRS provides information on how to find a VITA or TCE organization near you, and just as important, what to bring before you visit. Browse to https://www.irs.gov/Individuals/Free-Tax-Return-Preparation-for-You-by-Volunteers for these resource links and more. You can also call 800-906-9887 to find a VITA or TCE organization near you. To find out if the AARP has a local TCE, call 888-227-7669.

Peoples Bank, via its North Carolina Banco de la Gente offices, provides assistance to people for tax filing and for applying for a Tax Identification Number (TIN). Visit BancoDeLaGente.com to get more information.

Expecting a tax refund?

The tax professionals will tell you that there are ways to make your money work harder for you than it does when the US Government is holding it until your refund. And they discourage excessive tax payments that lead to refunds where possible. However, if you are among those people who expect a refund, consider 2 simple tips that may help make the most of your refund:

  • Try to avoid using your refund for every day expenses, but put some or all of it in savings to help pay for unexpected big-ticket items such as a car or home repair. Using direct deposit, you can even split the refund to different accounts at your bank, a checking and savings account for example, with no additional charge.
  • Directing part or all your refund to a savings account or to purchase special US Series I Savings Bonds may provide a useful strategy for certain investment periods. Such directed savings may help you establish a savings account for a child or grandchild. US Series I Savings Bonds offer an interest rate that includes a Cost of Living or inflation rate, and you can generally get your money back in as soon as 12 months (longer terms are available).

There is simply no substitute for preparation. And few events provide such economic opportunity as tax season prep. Let us know how we can help. Peoples Bank has skilled professionals with the financial tools to help your family enjoy economic security. Talk to one of our friendly people today.

Get Fiscally Fit for 2016

Fiscally fitIt seems like everybody is getting into a fitness routine. Maybe you know some who are spending a lot of money, as well as time, on their physical health. We think that financial health is just as important and provide some helpful tips to get (and stay) fiscally fit.

Perhaps the greatest way to improve your financial health is to develop a good plan, have the right tools and make both of those things work together for a time. Financial experts have always recommended a budget. But even before you create a budget, there steps to take first.

Setting aside time to talk to your significant other and family members about financial matters is a hugely important thing to do first. People do better with decisions when they hear the context; they behave better when they know the boundaries and limits of their activities, and cooperate when know what the goals are. So, talk about the money and what it needs to do, specifically. If done in a calm, clear way, it should reduce friction, perhaps deliver helpful collaboration and, most importantly, help to make the budget successful. We just love the idea of a family enjoying financial harmony.

There are hundreds of budget tools available and you don’t have to pay money to make them work. Most have access to Microsoft’s Excel software that offers lots of templates to help you get started. Mint is a popular free online service. It’s free, and can only show you what you have spent money on, so projecting future expenses is left up to some other tool.

However there is one budget tool that costs money, and we like how it works. It’s called, appropriately, You Need a Budget (YNAB). The one-time $60 charge delivers software needed for tracking and projecting financial transactions, but for most people it uses the method needed for imposing fiscal discipline. YNAB’s most appealing feature is its ability to project personal cash flow by including future expenses—very helpful to avoid cash flow crises. The website has free videos to help you even if you don’t buy the software and offers a free trial of their software. There are even free online classes.

Once you have a good budget and are committed to making it work, stick to it! Focus on the small steps of paying down debt, living simply for a time, and enjoy the happiness of watching your savings grow.

Want some more information about the tips here? Read 7 Tips for a Financially Fit 2016 from the Future of Business and Tech website, and check out the free tips and videos on YouNeedABudget.com.

Peoples Bank cares for the community, and is doing its part to help improve your financial fitness. Good health to you all!