Buying an Older House vs. a New One: The Pros and Cons
One of the most common questions borrowers have is whether they should be devoting more of their home buying research to newly constructed homes or older ones. It’s a question with no one right answer. The final decision will come down to a number of different factors and preferences including maintenance costs, safety, convenience, and appearance. Brokers can play an important role in guiding borrowers as they navigate this issue, so here are the major pros and cons of buying a new versus an older home. New Home Pros Up to Code Building codes have changed remarkably over the years in ways that have greatly improved safety for homeowners. For example, lead paint, which can cause neurological issues, was banned at the federal level in 1978. Asbestos, which can cause diseases in the lungs, was commonly used in home construction until the 1970s as well. Many older houses with lead paint and asbestos have been remediated, but not all. Additionally, some building materials like aluminum wiring, while no longer up to code due to the potential for a fire hazard they pose, have been grandfathered in and therefore owners are not required to swap them out for safer copper wiring. New construction homes don’t have to worry about these safety…
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How Mortgage Limits Are Determined Every Year
As discussed in a previous First Savings Bank Mortgage article, conforming mortgages are those that meet the standards set by the Federal Housing Finance Agency (FHFA) and by the largest mortgage underwriters in the country, Fannie Mae and Freddie Mac. The limits set for conforming loans are determined annually on the basis of several criteria, but the most important is data reported by The Federal Housing Finance Agency House Price Index (FHFA HPI®), which tracks changing prices in the housing market. Conforming Limits As every lender and broker today is well aware, housing prices are at historic highs. The House Price Index reported an 18.05% increase in the third quarter of 2021 — and that figure was used to adjust the conforming loan limit (CLL). Ergo, the largest secured and conforming loan for a single unit home in a typical part of the country was raised 18.05% from $548,250 in 2021 to $647,200 in 2022. High-cost counties where 115% of the local median home value exceeds the baseline conforming loan limit — as well as Alaska, Hawaii, Guam, and the U.S. Virgin Islands, which are statutorily deemed high-cost areas regardless of actual home prices — can have an increased CLL (up to 150% higher, which they met for 2022). The…
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Important Tax Benefits Homeowners Should Know
Every taxpayer would like to minimize the amount of their income that is taxable. This effectively lowers their tax burden and potentially places them in a lower tax bracket — and because the federal government wants to incentivize homeownership, the IRS offers several significant itemized deductions (expenses that offset and decrease taxable income) connected to the cost of buying and maintaining a home. However, it’s important to note that the Tax Cuts and Jobs Act of 2017 greatly increased the standard deduction (a deduction available to any taxpayer that does not itemize their deductible expenses). For 2022, the Standard Deductions are: $12,950 for single people and for married individuals filing their taxes separately $25,900 for married couples filing their taxes jointly $18,800 for heads of households (unmarried adults with qualifying dependents, such as minor children, who pay over half the cost to maintain their home) Consequently, homeowners need to determine whether their itemized deductions would be larger than the standard deduction. Furthermore, not every home expense is deductible. The following common expenses associated with homeownership cannot be deducted: Depreciation Domestic employee wages Fire insurance Homeowner association fees Homeowner’s insurance premiums Mortgage down payments Mortgage lender costs (e.g. credit reports, appraisal fees) Mortgage principal payments Origination points Rent paid to live…
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5 Smart & Easy Home Upgrades Brokers Should Recommend to Prospective Borrowers
A home is more than just a place your borrowers will hang their hat. It’s also the single largest investment many of them will make in their lives. Protecting and adding to the value of that investment is simply a smart economic decision — one that more and more borrowers are interested in pursuing. The Joint Center for Housing Studies at Harvard University estimated that remodeling projects are on the uptick and will continue to rise. More than $337 billion is spent annually on renovation and repair of owner-occupied housing in the U.S. Brokers can burnish their brand, extend the reach of their marketing communications, and build larger social media followings by offering helpful information that prospective buyers and existing homeowners can benefit from. Prospective borrowers take notice when a broker consistently distributes good advice and is respected as a legitimate thought leader in the mortgage industry. It also shows that they are invested in the success of their clients even after the deal is closed, and borrowers want to work with organizations that can prove they truly care about them. Focus on Changes That Make Homes More Desirable, Modern, and Valuable The first thing most borrowers do once the papers are signed is start making the fixes that the…
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Real Estate and Mortgage Predictions for 2022
No one has a crystal ball that can tell you exactly how the real estate market or average mortgage rates will change in 2022. But what we do have is solid historical data from 2021, powerful analytical models, and insights from respected industry economists to guide us in our forecasts.
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10 Great Social Media Post Ideas For Brokers
Social media is more than just a place to keep up with friends and loved ones. It’s also an incredibly powerful marketing tool. Mortgage brokers that promote their services and share educational resources on social media regularly outperform their rivals that don’t.
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