The below article is in our JVM/Opes Newsletter (going out today). It is an important topic, however, and well-worth re-publishing in today’s comments.
Renters are often concerned about the potential increase in their housing payments after they buy a home, even though their debt ratios indicate that they can more than afford the payment. They are often overly concerned because they are taking home too little of their paycheck.
At JVM/Opes, as part of our education process, we always advise first-time-buyers to maximize their take-home pay by increasing the number of exemptions on their IRS W-4 forms. This allows buyers to immediately take advantage of the tax advantages that accrue from buying a home. Buyers can change their W-4 forms with Human Resources Departments.
Home-buyers should work with their CPAs or tax advisors to figure out the optimal number of exemptions, based on the total amount of interest and property taxes they will likely pay after they buy a home. This potential increase in take-home pay resulting from the increase in exemptions can often more than offset an increase in a housing payment.
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