Let Uncle Sam Help!
Buy more with the tax deduction
Tom and DonnaTom and Donna could only afford to pay $1500 month. However they could not find a home in this price range. They needed at least $40,000 to $50,000 more to buy something really nice. We utilized the tax deduction to help them buy more of a house.
Here is how: Instead of “waiting” until tax time to get their refund, Tom and Donna did the following. Since we knew they would easily get a refund of $4800 – they went to their employer and requested to increase “dependents” to allow them to take home $400 more per month. Using this $400 we determined that approximately $100 would go towards the additional real estate taxes and $300 for additional mortgage payment. This $300 allowed Tom and Donna to increase their purchase power by $48,700.**.
The Seller Can help you buy a home!
Kristen wanted to buy a condo, she had $6,000 total. For a down payment and closing costs. Not enough to cover both items.
We found a condo listed for 205,000, Kristen was approved for an FHA loan with a 3% down payment, using her $6,000, this covered the 3% of the asking price needed. Now we needed the $5,000 for closing costs and prepaid items, we negotiated the asking price of the condo $200,000 with the seller to “contribute” $5,000 for the buyers closing costs, In this case the seller would be effectively netting $195,000 before closing costs.
Kristen paid $200,000 for the condo, she put $6,000 down making her mortgage amount $194,000. At the closing the seller gave Kristen a credit for $5,000 which covered the closing costs. Kristen has her condo she is happy and the seller is happy, a win win for all...
Mary was renting a condo for 1200 per month; she basically was throwing $14,400 out of the window. She wanted to buy a condo she wanted to pay not much more than rent, she thought waiting a year to save more money was the way to go. When we asked the question “how much can you save” her reply was minimal and not enough to make a dent. We structured a deal for Mary where she
* Prequalified for first time buyer program or FHA program. 5% down
* purchase a condo for 200K
* 3% down payment = 6000 plus $5000 closing costs
* Total monthly payment = approx $1700 (including mortgage, taxes, maintenance fee)
*Using the tax deduction of $16,800, Mary was able to get a refund of approximately $4,200 per year. Spread this $4,200 over 12 months = $350 per month.
Mary’s effective monthly payment is $1,350 - so for $150 more per month, Mary owns her own home.
The Rebalancing Act!
Joanne and TedJoanne and Ted needed to upgrade their home, their 3-bedroom, 1-bath was just too small for their growing family. They “had” to sell their home for $269,000 and they wanted to buy a 4-bedroom 2.5 baths for approximately $470,000. They became stuck on the number of “Had to get” $269,000. After many months, several other realtors and rejections, we proposed a plan to reduce the price by $40,000. Their house sold and the homes that they liked previously for $470,000, we were now in a position to negotiate. We zeroed in on a home suitable and negotiated a sale for $430,000 which was $40,000 below the asking price of what they thought they had to pay. So by reducing their home we made this up on the “buying" end.
**always consult with your tax advisor regarding your individual tax circumstance.