Buying a home with Heike Grossi

Home Buying Tips

Know Your Budget

Prior to house hunting take the time and assess your finances! Let your real estate consultant help you and also connect you with trusted financial professionals.

Find out about interest rates
Understand your closing costs
Determine your income, debt and down payment
Calculate how much home you can maintain!

Buying Versus Renting

If you are currently renting, it is easy to calculate your costs - The monthly rent you pay. (utilities, phone, cable and other costs can be ignored in this comparison because they will be approximately the same whether you rent or buy.) Calculating the cost of home ownership is much more complicated, because income tax considerations affect your bottom line. As a tenant, you may be taking a standard deduction on your income tax return. This is the time to judge how that standard deduction stacks up against the amount you would be able to subtract from income if, like most homeowners, you itemized deductions instead. For second home owners and investors you should consult with your CPA or attorney to determine which property purchase would fit best into your overall financial portfolio.

Once you itemize, you can deduct:

Home mortgage interest;
All real estate taxes on any property you own;
Your state income taxes;
Charitable contributions;
Medical and dental expenses that exceed 7.5% of your income;
Personal property taxes if your state has them;
And certain moving expenses

Between the mortgage interest and the property tax deductions, you can figure that Uncle Sam is shouldering part of your monthly mortgage payment - 28 percent of it, in fact, if that is your tax bracket. Your state income tax bracket can also be added to that, before you calculate how much you save on income tax as a homeowner.

Talk to your real estate consultant and your financial professional about what type of mortgage is best suited to your situation. Your information will be kept confidential.

Closing Costs

On the day you actually buy your property, in addition to your down payment you will need cash for various fees associated with the purchase. Charges will vary depending on what type of property you are purchasing - a single family home or multi family complex will be different from a condominium or a co-op. The type of mortgage you are purchasing will also make a difference. These expenses are known as closing costs and are paid by both buyers and sellers. Closing costs should be considered when evaluating your financial situation.

These may include, but are not limited to:

Title insurance fee
Survey charge
Loan origination fee
Document preparation fee
Prepaid property taxes
Homeowners insurance premiums
Doc stamps payable depending on the amount of your mortage

Ask your real estate consultant to give you an estimate of the charges depending on the property you are planning to purchase. Your financial professional based on the mortgage you are going to purchase will provide a good faith estimate to you.