As my buyers go through the lending process and determine what they are comfortable paying for their monthly mortgage payment one overlooked aspect in this process is their tax refund. When determining the monthly mortgage payment comfort level a common concern pertains to whether or not they will they be able to enjoy their current “lifestyle” once they buy a home. As they begin to consider how buying a home will affect their their post purchase lifestyle cash flow I ask them if they received a refund on their taxes the prior year. For many, the answer is a resounding “YES”. I then suggest that they work with their accountant and/or run some scenarios on their tax software that allow them to see what their new refund would be with the mortgage interest and property tax deduction. If all were to remain the same, most clients would see an increase in their refund. Therefore, to offset any reduction in lifestyle cash-flow all they would need to do is modify their employer with-holdings to start receiving that money NOW versus at the end of the year. Once they see how this transfer of cash can work they are more comfortable with their final decision.
Published on 2015-10-01 14:41:27
