13 Best Business Activities To Grow As An Entrepreneur: Spring & Summer

Co-authored by: Mike Khorev Managing Director at Nine Peaks Media

There is always a task; most of the time, it must be done immediately. That's what an entrepreneur has to do all the time: move pieces, organize activities, lead projects, put out fires, and make things happen. The famous book The Seven Habits of Extremely Effective People by Stephen Covey is right about this. 

We should devote more effort to the tasks that are Not Urgent but important. Every item on this list is firmly in the 2nd & 3rd business quarters, where things are not urgent but are still very important.

Finding time for these things is hard, and you must change how you think about them. But if we want to create, dream, and do well as entrepreneurs, we have to push aside things that are urgent but not important.

5 Activities for Entrepreneurs to Build Business:

1. Make Time for Yourself & Your Team

• Make time for yourself; take regular breaks away from work so you can stay fresh mentally and physically during busy times. Consider setting aside time like this also for your team.

2. Analyze

• Analyze customer data from last year to gain insights into how people responded during those times and use that data to inform decisions this year. Make sure all systems are updated so they’re ready for peak usage periods.

• Review budgeting plans for upcoming projects and promotions taking place over these seasons in order to ensure you have adequate resources allocated for them but also stay within budget limits set forth by your company/team/department managers or executives at large.

• Utilize digital marketing techniques such as SEO, PPC advertising, etc., to maximize visibility online and drive more website traffic during this favorable season.

• Increase staff where necessary, such as call center or customer service departments if there is an increase in demand expected for support services/inquiries due to any campaigns launched or deals offered during this period.

3. Seasonal Trends

• Take advantage of seasonal trends. Identify products or services that are in high demand during this time and create marketing campaigns around them.

• Promote events and activities related to the season. Utilize social media platforms to spread awareness about any upcoming events, special offers, discounts, or activities related to the time of year.

• Create new product launches. Take advantage of the warmer temperatures and longer days by having product launch events outdoors and connecting with customers in unique ways.

4. Get & Stay Ahead

• Stay ahead of the competition by staying up-to-date with market trends and consumer preferences. Monitor competitor activity so you can adjust your marketing strategy when necessary.

• Plan out a content calendar for blog posts, newsletters, emails, etc., that give customers an inside look into what’s going on within your business as well as share helpful resources and advice related to the season.

5. Collaborate

• Look into sponsoring local community events or supporting charities while doing good for others in need and seeing tangible ways your organization can serve; this could include hosting donation drives or charity runs as well as providing discounts on goods/services for those involved with certain causes.

• Reach out to influencers who have a following in your industry and collaborate on content that promotes both your business as well as theirs.

• Find ways to incorporate fun activities into workdays (outdoor lunch breaks, team building outings).

8 Activities to build the Business Owner

1. Preparing the Next Product

The money is in making new things. More and better sales will come if you can make more and better products. Let's say your business is open and doing well. You have customers already. Make another product to better serve these customers and grow your business. They'll purchase it. Your company will do well. You have to plan for the next product before you can make it.

2. Mentoring

If you've ever had someone help you with your business, you know how powerful mentorship can be. There are a lot of people who admire your skills and want to learn from you. The person you mentor could be a friend, an employee, or a co-founder.

Spend time with these people anywhere you find them. There are always two sides to mentoring. You also have things to learn, and it's always good to have someone to discuss your ideas with.

3. Examine your competitors

The best results come from a lot of competition. To be successful, you can't be afraid to look at what your competitors are doing and learn from them. Still, they could be doing something correctly that you can use to make more money in your own business. If you own a restaurant, you might be able to get information by eating at your competitors' places and asking other customers what they think. 

But you could be a company like a chemical company that has much less access to its competitors. In that case, you would collaborate with a business expert and an accountant to look at not only what the business shows the world but also any financial data you can find about the company.

4. Planning the Next Marketing Step

Not every business owner is naturally good at marketing, but every business owner has ideas for marketing. Some of the best business people in the world are not good at business, technology, or making products. They are skilled at marketing.

For example, Steve Jobs was a genius in almost every part of the business.

Looking at his life and work, you can see that he was a great marketer. He started the age of the hyped-up keynote, the suspense of waiting for the next big thing, and TV ads that changed the world. If you spend time dreaming and coming up with new ideas for your marketing, you can have the same degree of success.

5. Human Behavior Research

I'm sure that every business owner should learn about how people act. Studying psychology, motivation, actions, development, or how people think is never a waste of time. You'll know yourself better, for one thing. Also, you'll be able to understand people better. When you know how people think, you can start figuring out what they desire and how to get it.

You know how they make decisions and how to assist them in making good ones. You know how they get into fights and how to keep them from getting worse. You know what makes them confused and how to clear that up. The more you know about people, the better an entrepreneur you will be.

6. Networking

I have something to say. I don't like the word "networking" very much. The way most people think about networking, it seems fake and slick. But we have to use the word. We still need to meet people. To use John Donne's words, no business owner is an island.

Looking at every business you've started, you can probably find someone with a key connection who helped it succeed. You can meet people like this in the strangest places, so it pays to be friendly. You should network all the time, not just at events.

7. Reading

There are some good things about reading books and some bad things. The good news is that some very smart and talented people write powerful and exciting books. The sad fact is that we don't have enough time to read them all because we're too busy.

We can read some of them, thank goodness. It's better to read one book a year than none. A book can change the way you think and your business and give you an idea for your next business. If you don't have time to read, try listening to books. You can likely find a few minutes to listen to just a few minutes of audiobooks on the way to work or during other daily tasks.

8. The Hard Part: Taking Time Off - Ding Ding Ding

The last "activity" isn't significant or much of a business activity. Ah, but it's no less essential. Take a break. Just stop working. Turn off one's phone, leave the house, and don't come back for one day, a week, or even a month. Do it, please. Entrepreneurs must turn off their devices, relax, and do something new. You can complete additional things on this list when you have time off. One unexpected benefit of taking a break is that we sometimes have our most insightful and creative moments during those times.

Wave of Bank Mergers: How they Affect You And Your Business

Co-authored by:

Garit Boothe Owner of Content Marketing Agency “Digital Honey”

Most people don't think about the banking business unless it's in the news. In the same way, banks may look like they will always be there, but many of them change or join with other banks for different reasons. Experts say it's nothing to worry about, but there are some things to think about and changes you might have to make.

Dive In:

• What is a Bank Merger

• Watch for changes in your account & Decide if you will stay: Co-authored by: Garit Boothe Owner of Content Marketing Agency “Digital Honey”

• Replacing cards and changing information

• Setbacks to business accounts

• Commotion in customer service?

What is a bank merger?

When two banks join together to make one company with new ownership and a new legal structure, this is called a bank merger. People usually consider it a friendly purchase because the two banks have agreed to work together, however, this is often not the case.

A bank might start deciding to merge with some other bank to cut costs or move into a new market. It also helps a bank grow and get more customers, giving it more money to use. When banks have more capital, they can give customers more loan options.

Two banks might also join forces to make up for gaps in technology or products. One bank may have a great team of people who lend money to businesses, while the other might be good at managing wealth. By coming together, the two banks can give their customers better services.

When banks join together, the name is sometimes the only thing that changes. In other cases, many products and services have been added to improve customer experience. Even though your bank has joined with another, that doesn't mean you need to find a new one. Most of the time, the new bank will be very similar to the one you've used.

Watch for changes in your account & Decide if you will stay:

Co-authored by: Garit Boothe Owner of Content Marketing Agency “Digital Honey”

After a bank merger, the new bank may change how it does loans. This could mean different loan options, interest rates, or rules for getting a loan.
For example, you may need a higher credit score or make more money to be approved for a loan.

It's also possible that the new bank will stop offering certain loans or change the terms of the loans that it does offer. If you have a loan with the bank, it's important to pay attention to any changes that are made and to check your loan documents carefully. If you have any questions or concerns, you should contact the bank's customer service team for help.

When two banks merge, they will combine their mortgages, business accounts, and loans together. This means that the terms and conditions of these accounts may change, as well as the interest rates and fees. Customers may also have changes in their account numbers, login information, and online banking portals. Some customers may not be able to use certain products or services that were offered by one of the banks. It's important for customers to read any information they receive from the bank and to ask any
questions they may have.

When thinking about staying with a bank after it merges, you should look at a few things. Some examples are:

• If the bank's fees and charges are good compared to other banks

• If the bank has the services you need, like online banking or loans

• If the bank's branches and ATMs are convenient for you

• If the bank's customer service is good

• If the bank is financially stable.

Replacing cards and changing information

One thing that will always happen when a bank changes hands is that customers' basic banking information will change. Since your account numbers will likely change after the switch, you'll need to replace any credit or debit cards you hold with the bank and stop any automatic payments linked to those cards.

Even though it's inconvenient, this might not seem like a big deal in the big picture of your banking life. But remember that this does not always go as seamlessly as the bank says it will. During mergers, debit cards, as well as other digital services, don't always work well. Hinsdale Bank & Trust's SVP and head of retail banking.

Customers already going through a lot of change quickly can find this very frustrating. Since many other customers will be trying to stimulate their new cards simultaneously, as you, this rush could cause delays. And the longer you go without your cards, the harder it will be to do the things you need daily.

Read Also: 10 New & Old Ideas For 2023 Businesses

Setbacks to business accounts

Problems with transitions can be annoying and inconvenient for personal accounts, but they can be very bad for business accounts. Sometimes, changing to a business bank account is harder than changing to a personal account. And if you can't get into your business bank account for a long time, your way of life is in danger.

Very important transactions could fail, which would be bad for you and your customers. Most business owners have set routines for one's books, and any changes that happen when banks merge can hurt their businesses. Also, remember that your bank's move could make it less familiar with the local business scene, making it harder for your bankers to help and understand you than before.

Commotion in customer service?

When you encounter a problem with your bank's transition, it makes sense to call customer service to help you find a solution. During the busiest time of a transition, however, customer service is likely to be busy, leaving you to deal with the effects of high volume.

If you need help, you might have to wait up to an hour because hundreds or thousands of other customers are also going through the change. Even if you get in touch with a customer service rep, they might not treat you like a person and give you a solution that isn't good enough or doesn't work.

It's also possible that your problem is so complicated that you'll be passed around to different people repeatedly, but nothing will get fixed. Staying with a bank that wants to treat you like just another account number isn't worth it.

Through all of life's ups and downs, you need a bank that you can count on to meet your long-term needs and understand your community just as well as you do.

"Unlocking Your Dream Home: The Pros and Cons of Rent-to-Own Homes"

Rent-to-own homes are like that intriguing mix of pros and cons you encounter in life. Let's talk about the sunny side first. They open the door to homeownership for folks dealing with credit hiccups or hefty debts. Here's how it works: You sign a lease for a place with the option to buy it down the road, usually spanning several years. During this time, you pay rent, plus a little extra, which often gets squirreled away for your future purchase.

The cool thing? They lock in the purchase price at the start of your lease, so even if the property's value skyrockets, you still get it at the original, lower price. Plus, you get a chance to stash some cash for a down payment – something that can be a real struggle in the world of traditional mortgages. And, perhaps the best part, you get to try the place on for size, just like you would a new pair of shoes. Make sure it's your dream home before you commit to the big purchase.

But, (you knew there was a "but" coming, right?) there are some not-so-rosy aspects to consider. The extra monthly premium can mean a higher overall monthly bill compared to plain old renting. There's a gamble involved because if you don't end up buying the place, you might wave goodbye to that extra premium you've been forking over. Also, the property's value may not jump up like you hoped during your lease, and you could end up paying more than it's currently worth. The lease terms can get pretty complicated, and they're not exactly one-size-fits-all, so you'll need to put on your reading glasses and scrutinize the contract. Lastly, not all landlords play fair, and some might take advantage of your rent-to-own newbie status. To avoid these pitfalls, do your homework, maybe talk to a legal whiz, and make sure your rent-to-own deal is as clear as day.

What Is A Rent-To-Own Home?

A rent-to-own home also called a lease-to-own home, is bought by renting it from the owner. During the time of your lease, some of the rent you pay each month will go toward lowering the price of the house. After that time is up, which is usually between 1 and 5 years, you can choose to buy the home.

When the real estate market is slow and it's hard for people to sell their homes outright, these deals happen more often. They can be a good choice for renters who want to buy their own homes. But lease-to-own deals aren't as popular when it's easier for a seller to sell a home.

Why take the risks of such a rent-to-own agreement when you could get something else? At the end of the lease, the tenant might not be able to get a mortgage, or, in the worst case, they might trash the place and leave the owner with a mess.

Some landlords use a lease-purchase as part of a rent-to-own agreement to avoid more risky outcomes. This makes the renter legally bound to buy the house at the end of the lease. Landlords willing to take on such risks could keep the option to buy the home open instead of making it a requirement.

How does rent-to-own (RTO) work?

Rent-to-own deals start when a buyer and a house owner agree that the purchaser can rent the property for a certain amount of time. Depending on the type of agreement, the buyer must buy the property after that time or has the choice to do so. 

Buyers who sign a rent-to-own contract pay a premium on top of the rent. This premium helps pay for the down payment on the house. Most of the time, this payment cannot be taken back. This gives renters more reason to be sure they want to purchase the property at the end of the lease.

The Renting-to-own process

After the seller agrees to a rent-to-own contract, you'll do the following:

Sign a rent-to-own contract: 

There are two rent-to-own contracts, so you must know what you agree to. Watch out for lease-to-own contracts because you may be legally required to buy the house at the end of the lease, even if you can't afford it.

Agree on a price to buy: 

If you look at similar listings in the neighborhood or nearby neighborhoods, you can get a general idea of what prices are like in the area.

Determine the length of the rental period: 

Most rental agreements last between one and three years. Think about your financial situation and how long it will take you to be able to get a mortgage. If your credit score isn't where it needs to be to get a good interest rate, you might consider renting for a longer time to improve it.

Define maintenance roles: 

Each rent-to-own contract is different, so it's important to get in writing what you, as the renter, will be responsible for. For example, do you only have to take care of the things inside the house, like appliances and other repairs, or do you also have to take care of the lawn and the AC unit?

Rent payments: 

The rent is normally more with a rent-to-own contract than in a typical renting situation. You might be able to alter the amount you pay, but knowing how much your payment will be spent on buying the property is essential.

Find a mortgage lender: 

As the property's rental period ends, you'll need to look for a mortgage just like you would for another home purchase.

Read Also: Best Search Engine Optimization Methods For A Small Business

Keep track of: 

Keep copies of checks, bank statements, or other proof of what you have paid to show what you have paid. Your lender may ask for this paperwork.

A rent-to-own contract lets people who want to buy a home move in right away while they save up a down payment or work on their credit. Still, a few things to consider before signing this kind of contract. Before signing a contract, you should always ensure you comprehend what it says.

Pros of Rent-to-Own

Building a down payment over time: 

Instead of saving up cash for a down payment, you may be able to accumulate equity in the home by paying the higher rent over one or more years.

Trying not to compete: 

You won't have to compete with other buyers if you sign a rent-to-own contract.

You need not qualify instantly for a mortgage: 

A rent-to-own contract can be a great option if you need to enhance your credit score or repay the debt before you can save up for just a down payment. It helps you get the house you want and gives you more moments before you start looking for money.

Cons of Rent-to-Own

The option can't be taken back: 

You may have to pay a portion of the home's purchase price upfront if you want to have the choice to purchase it at the end of your lease. Probably, you won't have this money back if you decide not to buy it.

Keeping up with repairs: 

You might have to pay for repairs on a house you don't own yet. You could lose hundreds or even thousands of dollars in a serious situation.

Home value drops: 

If you sign a rent-to-own agreement and your lease is for a long time, you can't know what will happen to the housing market. If the purchase price was based on higher prices than they were now when the contract was made, you could spend more for your home than it's worth. You might want to add a clause that says the appraised value must be at least the agreed-upon sales price.

You could decide differently: 

Things always change. You might have to move because of your job, or you might not be able to get the mortgage you need to buy the house. You can leave as long as you have a lease option. But if your rent goes up, you could lose thousands of dollars you can't get back.

In summary, rent-to-own homes offer a unique opportunity for individuals with credit challenges or substantial debt to venture into homeownership. These arrangements provide time to improve financial standing, lock in purchase prices, and allow for savings toward a down payment. However, they come with the risk of higher monthly costs, potential loss of premiums, and uncertain market value trends. It's crucial to fully understand the lease terms and ensure transparency in the agreement. Ultimately, rent-to-own homes can be a valuable stepping stone to homeownership, but careful consideration and research are essential to navigate the potential pros and cons effectively.

Consider the advantages and disadvantages of the situation carefully before deciding if rent-to-own is correct for you. Do your homework and have the home inspected and valued. Before you sign any papers or pay any money, you should hire a real estate lawyer who can advise you.

How Does Refinancing Work? When Should I Refinance My Mortgage?

Co-authored by:

Raul Hernandez Licensed Mortgage Loan Officer Leading “Competitive Home Lending”

Raul Hernandez is a licensed mortgage loan officer with over 20yrs of mortgage experience, a B.S. in Management and Finance, with a M.S. in Management. Currently, he leads Competitive Home Lending, a mortgage company that originates mortgage loans in Texas and Colorado, with the mission to promote direct-to-consumer wholesale mortgage loans.

When you refinance a loan, you pay off your old loan and get a new one, usually from a different lender. In general, the process is a lot like getting a regular mortgage. When you refinance a mortgage, you get a new loan to pay off your old mortgage. Before you start, you should know how the process works and the pros and cons of mortgage refinancing.

Let us Take a Look:

• Deep Dive with an Expert: Co-Author Raul Hernandez Licensed Mortgage Loan Officer at “Competitive Home Lending”

  • Refinance?

  • How it works

  • Why Refinance?

  • When Should You Refinance?

  • What to Consider Before Deciding to Refinance

  • 3 Major Tips for Shopping for any Home Loan

  • What to Consider During a Housing Market Change

    Tips and Hints
    

• How to Analyze your Situation

• Count the Numbers

• Put in your application.

• Close Your Loan

• Advantages of Refinancing a Mortgage

• Downsides to Refinancing a Mortgage

• Conclusion

Deep Dive with a Motgage Expert:

Co-Author Raul Hernandez Licensed Mortgage Loan Officer at “Competitive Home Lending”

Refinance?

A refinance home loan is traditionally a type of mortgage loan used to adjust the rate and term of an existing loan- known as a rate and term refinance. While a refinance can also be used to consolidate debt or for home improvements, those particular loan types are usually referred to as debt consolidation loans or home equity loans and home improvement loans, or renovation loans. Two main goals of a refinance home loan are to reduce the monthly mortgage payment and to reduce the amount of interest paid on the home loan. Here is how a refinance home loan works, how to get the best rate, and other helpful tips.

How it works

A refinance home loan is similar to a home loan used to purchase a home. The biggest difference is the fact that the borrower already owns the home. Therefore, the loan-to-value (LTV) ratio is based on the homeowner's equity and not based on a down payment.

Best Practices to Ensure if You Should or Shouldn't Refinance

Common reasons to refinance are to change a loan's term or rate with the goal of reducing monthly payments or interest paid over the life of the loan. A homeowner may decide to change a loan term from a 30yr mortgage to a shorter term such as a 20yr or 15yr term. The goal of a change in term is to reduce the amount of time remaining on the existing home loan and pay less interest over the life of the loan. A change in term can also mean refinancing from an adjustable-rate mortgage (ARM) or a balloon payment mortgage. In this situation, the homeowner is realigning the loan term to reduce the risk of increasing rates which would lead to an increase in the monthly payment on an ARM loan or paying a lump-sum balance with the end of a balloon payment's term. Another popular reason to refinance is to get a lower rate.

When Should You Refinance?

As with any refinance boom, it goes without explaining, homeowners should refinance when mortgage rates drop. A refinance is also beneficial when it makes sense to reduce a monthly mortgage payment to maintain a manageable household budget. Extending a loan's term can help reduce the mortgage payment. This is helpful when consumers need a little more flexibility with their discretionary income, or when combining a first and second lien into one mortgage for a lower payment.

What to Consider Before Deciding to Refinance

Closing costs and the breakeven point are two main things to consider before deciding to refinance. A home loan refinance has two costs a consumer must consider. The first is lender fees such as origination fee, underwriting fee, processing fee, etc. These fees can vary from lender to lender, and it is best to find a lender without excessive costs. The second cost to consider is third-party fees such as appraisal fees, title agent and title insurance fee, recording fees, and verification fees. These fees can be estimated prior to committing to a lender or running a credit report. However, these third-party fees should not vary much from lender to lender. An appraisal can be waived under certain circumstances, and title insurance can be discounted based on the age of the current title insurance policy.

3 Major Tips for Shopping for any Home Loan

1. Shop multiple lenders. Data from Fannie Mae states that the majority of borrowers do not shop around for the best home loan.

2. Work with a wholesale mortgage broker. A broker can offer the same products and services as the major lenders but at a lower wholesale rate.

3. Update the shortlist of lenders at the same time. Rates can change from day to day and even intraday. If rates drop, they will drop for every lender; the same goes for rate increases. An outdated quote can cause a borrower to pay a higher rate or even discount points.

What to Consider During a Housing Market Change?

A change in the housing market can affect a refinance in several ways. If housing prices are flat or begin to decline, then the loan-to-value ratio could alter the refinance terms and loan amount. Adjustments to market conditions on the secondary market can increase or decrease refinance rates. However, improvements in market conditions and home prices could offer an incentive for a homeowner to refinance even if their current rate is the same or a bit lower than current rates. An example would be to refinance from an FHA loan where the MI will continue for the life of the loan to a Conventional loan where MI is not required with an LTV of 80% or lower.

Tips and Hints

The best way to find the lowest rate is to avoid a major retail mortgage lender. Wholesale mortgage rates from mortgage brokers are usually lower. Mortgage brokers have the authorization to offer mortgage loans from the nation's best lenders at a wholesale rate. It is still wise to shop between mortgage brokers to get an even lower mortgage rate.

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How to Analyze your situation:

To refinance a mortgage, you must meet the same requirements as a new loan. Lenders will examine various things, including:

• The history of credit and score

• Your loan's past payment history

• What you make and where you've worked

• Equity in the Current home value the home

• Other loans and debts

So, to see if you qualify, you'll need to look at where you stand in these areas. For example, if you have a good income, good credit, and a lot of home equity, you may get a new loan with better terms. If your credit score has dropped since you got your first mortgage or if you have more debt in general, it may be harder to get better terms.

Research: Browse around

Do the preapproval process with more than one mortgage lender to compare interest rates and other terms. This will provide you with the greatest chance of getting the best deal you can get. You should also compare the terms of the refinance offers you're looking at to the terms of the mortgage loan you already have. This can assist you in determining if refinancing is a good idea.

Count the Numbers

Once you've picked the best offer, look at how much you could save and how much it could cost. For instance, if refinancing your loan with such a new lender costs you $5,000 upfront and your new monthly payment are only $100 less than what you were paying before, you'd have to live in the home for at least 50 months for refinancing to be worth it.

If you don't plan to stay in the house for very long, refinancing might not be the best choice. Also, keep an eye out for penalty fees, which can cause problems if you repay your mortgage early or remortgage again.

Put in your application.

When you're ready to send in an official application, you'll do that directly with the lender you choose. You will have to give this information about yourself, your home, and your mortgage loan. You'll also have to show proof for different parts of the application. Potential documents include:

• Recent pay stubs 

• W-2 forms

• Bank statements

• Tax returns

• Statements of income for a business

• Investment account statements

• Details about alimony and child support, if applicable

• Copy of the photo ID you got from the government

• Legal proof of living in the U.S.

• Funding sources

• If needed, a gift letter says you don't have to pay back the money you were given.

ICE Mortgage Technology, a firm that works with lenders, says that this process can take an average of 48 days from the date of the application to the date of the closing. But some lenders say they can close the deal faster.

Close Your Loan

When the lender is prepared to close the loan, you will meet up and sign some papers to make it official. Then, the creditor will pay off your first loan and set up an account for your new loan. If you get a cash-out to refinance, the money will be sent to you by check or bank transfer.

Advantages of Refinancing a Mortgage

Homeowners want to refinance their mortgage loans for several reasons. 

Lower interest rate and payment: 

If your credit has gotten better since you got your first loan or if market rates have gone down, you may be able to keep money on interest by getting a lower rate and monthly payment. This is possible with a loan called a rate-and-term refinance.

Change the type of rate: 

With a rate-and-term refinance, you can also change your loan from having an adjustable rate to having a fixed rate. This can help you avoid the effects of market changes.

Change the length of the loan: 

If you change the length of your loan from, say, 30 years to 20 or 15 years, you can usually get a lower interest rate. If you do this, you can save money on interest over the loan, but you'll probably have to pay more each month. On the other hand, you might be able to lower your monthly payment if you stretch out the length of your loan.

Get cash from your home: 

If you have a lot of equity in the home, you may be able to utilize a cash-out refinance to get some of that equity. Homeowners may do this to pay off debt, make a big purchase, invest, or buy out an ex-spouse during a divorce.

Pay down your balance:

 A cash-in refinance a rare way to pay off your loan. Instead of taking cash out, you will refinance your loan and put cash into it to pay down the balance. You might think about this if your loan is worth less than what you owe or if you want to get rid of private mortgage insurance.

Read Also: 10 Effective Best Practices Used by New Business Owners for 2023

Downsides to Refinancing a Mortgage

When you think about why you want to refinance your mortgage loan, it's important to consider the risks, such as how they will affect your credit. Here are several things to believe about before you start:

More interest: 

If you extend the loan length, you may pay more interest throughout the new loan.

Chance of getting paid more:

 If you cash out some of your equity, your new mortgage loan will be for a higher amount, which could make your monthly payment go up.

Closing expenses can be expensive:

If you expect to sell your house before you break even on closing fees, it may make sense to keep your present mortgage.

How the market is doing can change your choices: 

You can't be sure that the new loan will have better terms. During times when interest rates are going up, this is especially true.

Affects length of credit history: 

This credit score element, which makes up 15% of your FICO® Score, could take a hit when your old mortgage loan is paid off and replaced with a new one.

Knowing where your credit stands are important when considering applying for a refinance loan. Check your credit score often to ensure you don't get caught off guard by bad or wrong information. If possible, don't take out any new credit before or during refinancing. This can help you get your credit ready for the process and find problems that could affect your approval until the closing.

How To Handle Taxes For First-Time Homeowners

Co-authored by:

Andrew Latham Certified Financial Planner & a Director at SuperMoney.com

Tax season can be the most exciting or anxious time of the year for anyone. It can be a little stressful when you're not ready for something. If you have or are moving into a new home, you might wonder what else you should know.

What you should remember as you prepare for tax season this year:

• Who is considered a first-time homebuyer?

  • Who qualifies as a first-time buyer?

• The current reality of First-time Homeowner Taxes & steps to get Ready: Co-Authored by Andrew Latham of SuperMoney.com

• What is the First-Time Homebuyer Act of 2021?

• What are first-time buyer tax credits?

• How does the $15,000 tax credit for first-time homebuyers operate?

• Take advantage of available tax deductions.

• Conclusion

Who is considered a first-time homebuyer?

It would be best if you met a few conditions to get a first-time homebuyer's tax credit. The credit isn't just for people who may have never bought a home, despite what its name says. If you haven't owned a home or been a cosigner on a mortgage in the last three years, you are considered a first-time homebuyer.

You must meet one of the following requirements to qualify as a first-time buyer:

• Have not owned a house or been a cosigner on a home loan in the past three years

• Be a single parent who only owned a home with a former spouse when they were married. Be a displaced homemaker who only owned a home with a spouse.

• Have only lived in a house that was fixed to a foundation.

• Have only owned a home that doesn't meet state or local building codes and can't be fixed for less than what it would cost to build a permanent structure.

The current reality of First-time Homeowner Taxes & Getting Ready: Co-Authored by Andrew Latham of SuperMoney.com

Buying a home for the first time can be an exciting but overwhelming experience. The tax side of things is pretty straightforward, though. As long as you pay your property taxes, you should be fine. Realtors like to wax poetic on the tax benefits of buying a home, but the truth is most homeowners don't get much nowadays.

The Tax Cuts and Jobs Act (TCJA) reduced the maximum mortgage principal eligible for the tax deduction, removed the personal exemption, and nearly doubled standard deductions. These changes made it pointless for most taxpayers to itemize since they could no longer take both the personal exemption and itemized deductions. In most cases, first-time homebuyers are better off claiming the standard deduction even if they do qualify to itemize the mortgage interest payments.

That doesn't mean buying a house doesn't come with extra tax homework. The first step is to get organized. As soon as you close on your home, gather all of the documents related to your purchase and keep them in a safe place. This includes your mortgage statement, closing statement, property tax bill, and any other related documents.

As a first-time homeowner, you may be eligible for certain tax benefits, such as the mortgage interest deduction and the property tax deduction. However, these deductions don't apply to most homeowners because the vast majority of homeowners are better off claiming the standard deduction. Nevertheless, itemizing does make sense for some homeowners, so do the math and check which option works best for you.

• Keep track of home improvements. If you make any improvements to your home, make sure to keep track of the costs. These improvements can also be tax-deductible, so it's important to have documentation of the costs.

• Keep accurate records. Make sure to keep accurate records of all your expenses related to your home. This will make it easier to claim deductions and credits on your taxes.

• Hire a tax professional. If you're unsure about how to handle your taxes as a first-time homeowner, consider hiring a tax professional to help you navigate the process. Most tax preparation programs, such as TurboTax and TaxAct, are all you need to navigate homeowner tax questions, but in some cases hiring a tax professional can save you a lot of time and money. They can answer any questions you have and ensure that you're taking advantage of all the tax benefits available to you.

What is the First-Time Homebuyer Act of 2021?

Several Democratic lawmakers put forward the First-Time Homebuyer Act of 2021 in response to a campaign promise made by President Joe Biden. This bill would have brought the tax credit first used after the housing crisis in 2008. It would have included many of the same requirements.

Under the new bill, however, eligible homebuyers could get a tax credit of up to 10% of the purchase price of their home, up to a maximum of $15,000. The proposed homeowner tax credit for 2021 is meant to help low-income and middle-income Americans buy homes and build wealth in communities of color that will last for generations. This bill hasn't been signed into law as of December 2022.

What are first-time buyer tax credits?

Tax credits are a method by which the government rewards taxpayers financially for doing certain things or acting in certain ways. When you file their tax return, they directly lower the amount of tax you owe. For instance, if you owed $10,000 in federal taxes and got a $1,000 tax credit, your tax bill would drop to $9,000.

Tax credits are a better way to get people to do something than deductions, which let you lower your taxable income. Deductions lower the amount of taxes you have to pay, but not as much as a credit for the exact amount. People who buy their first home can get credits against their federal income taxes through first-time homebuyer tax credits.

How does the $15,000 tax credit for first-time homebuyers operate?

The first-time homebuyer tax credit in 2021 would work the same way as the one in 2008. Homebuyers who were eligible could get a loan for up to 10% of the purchase price of their home, up to a maximum of $15,000.

Unfortunately, this credit no longer exists. However, bills to create a new refundable tax credit of up to $15,000 for first-time homebuyers were introduced in April 2021. As of March 2023, the legislation still has not passed in Congress.

Even though the original first-time homebuyer credit from 2008 has ended and the First-Time Homebuyer Act of 2021 has not yet been officially passed, there are still some other programs you can glance into as a new homeowner:

Mortgage interest deductions: 

This detailed deduction lets homeowners take any interest they paid on loan for their home and deduct it from their taxable income. You'll need proof this tax season to get the mortgage interest deduction. The lender you used to buy your home will send you a 1098 Form that shows how much interest you paid on your mortgage over the past year.

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Property tax reductions: 

When you buy your first home, paying property taxes can be scary. However, when it's time to file your taxes, you can write off the state and local property taxes you've paid. You can get a tax break for your main home, vacation home, land, cars, and boats.

Home office costs: 

Over the past two years, more people have started working from home. This may have caused your costs for home office supplies to go through the roof. Depending on what you bought, you might be able to get a tax break if you are self-employed or work from home full-time. If you want to save money on your tax return for office costs, your room must be used mostly as an office and be less than 300 square feet.

Conclusion

If the First-Time Homebuyer Act of 2021 becomes law, many Americans with low and middle incomes could get a tax credit for buying a home. Plus, you wouldn't have to pay back the tax credit unless you sold the house in the first four years of owning it.

In the meantime, first-time homebuyers must look into programs like FHA loans, MCCs, and IRA withdrawals that can help them buy a home for less money. If you just bought a home, ensure you understand what costs you can deduct from your taxes. This could help you pay less in taxes.