First time home buyers – when you are planning to buy your home let that be your number one goal !
Here are a couple of mistakes I see people make when purchasing a home.
Taxes: The tax preparer has the job to complete the taxes legally and at the same time reduce the amount of taxes that the client will pay. But, if that client is going to be buying a home it is wise to let a mortgage lender review the taxes before they are sent to the IRS. Every deduction does not have to be declared. FHA does reduce the unreinbursed employee expense (form 2106) from the total income. If this expense is large it can take a client out of the home buying market.
Car Payments: For gosh sakes buy the expensive car after you get into the home. We had a customer how had 0 consumer and credit card debt purchase a car 30 days before deciding to purchase a home. The car payment is $681 per month. This dropped this clients buying power from a $650,000 puchase to a $530,000 puchase. In my area that takes away alot of potential homes that this customer could have purchased.
Recap: Ask a mortgage lender to review taxes before they are sent or at least find out what effects write offs can have on the way banks underwrite income.
Car – just wait. They will be there next year and all the years to come. I recommend if you are going to buy a home that you put on blinders and don’t make any other financial committments until this one committment is fulfilled.
