Beyond the Brokerage: Development Strategies Every Real Estate Agent Should Embrace

In real estate, success isn’t solely about property sales or market transactions—it’s about developing oneself to deliver real value to clients. While brokerage-provided training offers a foundation, personal development as an agent, independent of the brokerage, can make a real difference in building trust and ensuring career growth. From mastering market trends to embracing fiduciary responsibility. Every agent should focus on their growth outside the brokerage walls.

Understanding Market Trends: The Core of Agent Success

A primary skill that every real estate professional should continually develop is the ability to read and interpret the market. Real estate markets are highly dynamic, with shifts influenced by interest rates, local economic factors, and even global events. By staying ahead and understanding these trends, agents can provide their clients with accurate, valuable insights, rather than simply following broker trends or hearsay.

Learning to analyze market reports, understanding economic indicators, and staying updated on local housing demands can set you apart as a trusted advisor. Remember, not every client needs you for the transaction. But every client expects you to perform better than what they can do or know on their own.

For example, an agent who understands the impact of fluctuating mortgage rates and economic reasoning on buyer behavior will be better equipped to guide clients on the right timing for buying or selling. This knowledge elevates your role beyond that of a typical salesperson to a strategic consultant who can anticipate and act on behalf of clients’ best interests.

Fiduciary Duty: Upholding Integrity and Trust

In real estate, fiduciary duty is the cornerstone of the agent-client relationship. It’s the agent’s ethical and legal obligation to act in the best interests of the client, often placing the client’s needs above their own. While fiduciary duty is a requirement, agents can benefit from exploring what it means in real-world situations beyond the contracts and paperwork.

Developing a strong sense of fiduciary responsibility through self-guided ethics courses, mentoring, or real estate ethics workshops reinforces your professional commitment and elevates your reputation. When clients know that their agent prioritizes their well-being over personal gain, they’re more likely to recommend your services and become repeat clients. In the long run, this integrity pays off by building a loyal client base founded on trust.

Prioritizing Client Interests in Multiple Offer Situations:

Suppose an agent is representing a seller who receives multiple offers on their property. The agent receives a higher commission on one offer due to a bonus from the buyer's agent. Despite this potential personal gain, fiduciary duty requires the agent to present all offers impartially, focusing solely on the benefits to the seller rather than personal financial incentives. The agent must explain the pros and cons of each offer based on the seller's needs and objectives, without bias.

Referral to a Home Inspector:

The agent recommends a home inspector who offers a referral fee to the agent for every client sent their way. In this scenario, the agent's fiduciary duty requires them to disclose this financial arrangement to the client.

Moreover, the agent should ensure that the referral is made based on the inspector's qualifications and the quality of service they provide, not the potential financial benefit to the agent. The client’s interest in getting a thorough and unbiased inspection must remain the top priority.

Handling Confidential Client Information:

An agent learns that their client, the buyer, has recently received a significant promotion that will substantially increase their income. This information is crucial because it affects the buyer's borrowing capacity.

Despite knowing this could make the buyer willing to offer more for a property, the agent must maintain confidentiality and negotiate in the buyer's best interest, rather than using this information to push for a higher price negotiation to close the deal quickly. This ensures that the buyer's financial capabilities are not used against them in negotiations, maintaining the agent's duty to act with integrity and prioritize the client's interests.

Prioritizing Service Over Profit

For agents truly invested in their careers, service should always come before profit. While a successful real estate career can be lucrative, clients can quickly sense when an agent is focused solely on the sale rather than genuinely helping them. Agents who develop a mindset of serving—seeking to match clients with properties that meet their unique needs—are more likely to see long-term success and satisfaction.

This mindset can be cultivated through various personal development avenues. Self-reflective practices, attending service-oriented workshops, and learning from other service-focused professionals outside real estate can all reinforce this philosophy. By putting clients’ interests first, agents can foster a more fulfilling career, driven by relationships and client satisfaction rather than transaction numbers alone.

Real Estate Events: The Pros and Cons of Attending for Professional Growth

Attending real estate events can offer excellent opportunities for networking, learning from industry experts, and gaining new perspectives.

No matter what event, or who is hosting it, do your own research. This is vital for all forms of development. Remember, you are there to grow and not be a “yes man”, per se. If your intuition tells you there is advice that doesn’t align with your values, morals, or ethics… take note of that. It is better to use your conscience than lose it.

When attending real estate conferences and workshops, the logistics of travel shouldn’t be a distraction from your learning goals. Utilizing Navan as a business owner traveling can streamline your travel arrangements, track your business expenses for tax deductions, and get exclusive hotel booking discounts without the extra fees. Focus on networking and absorbing knowledge. Explore Navan’s solutions to manage your travel efficiently, ensuring you arrive at your professional development events refreshed and ready to engage.

Book your Real Estate Hotel with exclusive hotel discounts for business owners and their teams.

Attend the 2024 ULI Fall Meeting

“The 2024 ULI Fall Meeting is one of them. With 6,000 professionals from all sectors of real estate expected to attend, this event is a prime opportunity to network with top industry leaders, innovators, and decision-makers from around the globe.

You'll gain firsthand insights into the latest trends, emerging markets, and cutting-edge technologies that are shaping the future of urban development. The meeting offers a wealth of educational opportunities, with workshops and sessions designed to deepen your knowledge in areas like sustainability, resilience, investment strategies, and urban design.”

Rudy Tjokrosuwarno, CEO, Multimo

Join the NAR Conference & Success Summit

“One excellent real estate event in the upcoming Fall '24 and Winter/Spring '25 seasons is the National Association of Realtors (NAR) Annual Conference & Expo. This event, scheduled for November 2024, is a must-attend for new agents looking to deepen their understanding of the industry, especially in the context of an economic downturn. The NAR Conference is renowned for its comprehensive sessions that cover everything from market trends to practical strategies for thriving in challenging economic conditions.

The NAR Conference provides new agents with the opportunity to learn directly from industry leaders who have navigated previous recessions successfully. The event features workshops and panels focused on building resilience, understanding shifting market dynamics, and leveraging technology to create more efficient and effective business practices. Additionally, there is a strong emphasis on relationship building, with numerous networking events that allow agents to connect with peers, mentors, and potential collaborators.

What makes this conference particularly valuable for new agents is the focus on genuine relationship building. In an industry where connections are key, the NAR Conference facilitates collaborative possibilities through its interactive sessions and networking opportunities. Attendees can expect to leave with actionable insights on how to pivot their strategies in response to economic challenges while forming connections that can lead to long-term, mutually beneficial partnerships.

For those looking to extend their learning into the Winter and Spring of 2025, the Real Estate Success Summit in January 2025 is another excellent option. This event is specifically designed to help agents of all levels, but particularly newer ones, to refine their skills and strategies in a supportive environment. The summit offers in-depth training on how to sustain and grow a real estate business during times of economic uncertainty, with a strong emphasis on ethical practices and client relationships.

Both of these events provide the tools and connections necessary to not only survive but thrive in a recessionary market, making them invaluable opportunities for any agent looking to build a solid foundation in their real estate career.”

Samantha Easton, Chief Executive Officer, Blue Diamond Sales & Rentals, Inc

Experience Inman Connect in New York

“If you're a new agent looking to really get ahead and understand how to thrive during a recession, I highly recommend checking out Inman Connect in New York this January. This event is known for its forward-thinking approach, and with the market's volatility, there's no better place to learn how to adapt and build resilience. Inman Connect brings together top minds in real estate, from tech innovators to seasoned agents who've weathered previous downturns, so you're getting a full spectrum of insights.

But what really sets Inman Connect apart is the emphasis on genuine relationship-building. It's not just about exchanging business cards; it's about having meaningful conversations with people who are just as eager to collaborate and grow as you are. Whether it's through roundtable discussions, workshops, or even casual meetups, you'll find plenty of opportunities to connect with others who share your goals and values. For any new agent, this event isn't just a learning experience—it's a chance to start forming the kind of professional relationships that can carry you through any market conditions.”

JD Lloyd, Business Development Manager and Project Manager, Bella Virtual Staging

Not every event will be exactly what you expected. Here are some pros and cons to consider:

Pros:

• Networking: Events allow agents to connect with a broad range of industry professionals. From seasoned agents to experts in real estate law, these connections can offer fresh perspectives and open doors for collaborations.

• Learning Opportunities: Many events feature workshops, panels, and speakers covering various topics, from emerging market trends to advanced negotiation skills. These sessions provide insights that can directly impact your daily work and client interactions.

• Inspiration and Motivation: Hearing success stories and lessons learned from industry leaders can be inspiring, helping agents stay motivated and committed to growth.

Cons:

• Cost and Time: Real estate events can be pricey, often with travel expenses on top of ticket prices. Time is also a factor, as events can take you away from your daily work.

• Unfulfilled Expectations: Sometimes, events may not deliver the expected value. This can happen if sessions are too general, if content doesn’t resonate, or if networking is minimal.

Maximizing the Benefits of Any Event

Even if an event falls short of expectations, you can still gain value by setting clear goals beforehand and focusing on specific outcomes. Here are ways to make the most of any real estate event:

• Set Clear Objectives: Identify a couple of skills you want to improve or topics you want to explore. This focus helps you prioritize the most relevant sessions and interactions.

• Network Intentionally: Have meaningful conversations, even if only with a handful of attendees. This focused networking approach can often be more impactful than broad attempts to meet everyone.

• Seek Practical Takeaways: Instead of aiming to absorb everything, focus on actionable ideas you can implement immediately. This could mean adopting a new market analysis technique or adjusting how you communicate with clients.

Personal development outside your brokerage is about more than career advancement; it’s about building integrity, skill, and service-oriented values that will set you apart as an agent. By honing market insight, upholding fiduciary responsibility, and prioritizing service over profit, you create a professional foundation that clients will trust and appreciate.

Attending real estate events, though not without potential drawbacks, can further enhance these qualities. And no matter the event’s quality, your commitment to growth will always ensure you walk away with something valuable.

"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.

---

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.

Read Also: Google Analytics Tracking Optimization Tips

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.