Do you have w/holdings adjusted so you have more $ monthly?

Ok so I knew this was going to happen, where a lender is trying to get me to take on more of a mortgage. I need some insight here please.

I was told by a mtg specialist , that we could get with a CPA to help us figure out how much we could adjust our witholdings so we don't pay the taxes a much monthly, which means we could hold onto $200-300 a month. He says this means that instead of a refund at the end of the year we just increase our monthly budget. That a CPA could guarentee that we do this, so that we don't end up witholding to much, and end up oweing at the end of the year.

SOOOOOOOOOOOO ... does anyone do this, have does this sucessfully. What are the pro's and con's? I get a little leary of holding onto to much, as I worry we'll end up in trouble, but the lender says that's what the CPA is for.



I'm on the runs out of here and I know I have mispellings but don't have time to check them, don't hold it against me

[migirl]

I don't know the exact amount, but if you withhold too much you'll get socked with an underpayment penalty.

This happened to us this year, part of DH's salary last year was paid by a training grant where they didn't withhold any taxes. I didn't know about underpayment penalties at the time, so I just put away the amount we normally get taken out for taxes and put that money into an interest-bearing account figuring we would just pay it all on April 15. We ended up paying a couple hundred dollars in penalties because of it.

I'd check with a financial advisor or CPA to be sure, but I'm pretty sure you don't want too little withheld.

I agree with Jane.

I think I put a sticky in this forum with a link to an IRS page for withholding amounts.

I don't know if a CPA would gaurantee the withholding. If it came out wrong, I doubt s/he would be paying your taxes. I do think you can get pretty close by doing it yourself.

Hmmn... quick thought. And I'm no expert - I believe we'll have a few that'll chime in on this.

Sure, you can get less witheld throughout the year. Sure, many people do it. Sure, the CPA would help. Sure, in some ways that gives folks more money throughout the year to make interest on / do other things with. And yes, that means you're not loaning money to Uncle Sam.

Yet, my first bad feeling is that you're being pressured to really stretch yourself regarding your monthly payments / mortgage. My gut is that if the mortgage dude or gal has to resort to searching for monthly monies to meet the mortgage by looking at witholding strategies, you're getting really risky (IMHO).

You should figure out a solid budget and figure out where a potential mortgage fits into that solid budget, rather than trying to turn your budget upside down to make it work with the numbers your mortgage person is suggesting.

:02:

Hmmn... quick thought. And I'm no expert - I believe we'll have a few that'll chime in on this.


You should figure out a solid budget and figure out where a potential mortgage fits into that solid budget, rather than trying to turn your budget upside down to make it work with the numbers your mortgage person is suggesting.

:02:

This is exactly what I was thinking. We already have an amount we don't want to over, and want to go under it as much as possible and still the home we want. We are not the type to do what you have to, to get it all. We like a solid finance track. This really kinda make me feel unsettled, not that he was wrong, but unsettled - cause a larger loan is in his interest not necessarly mine.

[MissCrabette]

what Kevin said.

And (no need for numbers) is what he is proposing a radical departure from your budget? Are you working with a buyers agent for the property and what is this mortgage guy's relationship to the agent (if any)?

I guess I'm trying to get a sense of how much he's pushing you to go beyond what you're comfortable with.

Sounds like you've got the budget and your priorities set which is great.

ITA with Kevin.

If you do decide to work on the withholding, it would be nice to have that extra $200-300/month (if that is indeed what you can get out of it) for other unexpected and inevitable expenses that come up.

[Deebs]

Julie,
Are you guys looking somewhere that you absolutely can't afford without doing this? When we moved here, we based our mortgage solely on DH salary, knowing that I would probably work but didn't have a job secured yet.
Somehow, even after I got a job, we still have months where making our bills is tough. I don't regret for a second being very conservative in our mortgage payments. It has allowed us to enjoy other luxuries (I have a newer car, we eat out occassionally), as well as pay for things like the c-section I needed with DD, unexpected vet bills when our darling puppy ate one of her toys, new parts for the furnace when it broke and it was 10 degrees outside, and now getting our house ready to sell.
I don't know if you've owned before or always rented, but there are definitely more unforeseen expenses that come with homeownership.
After our experience here, we've really been reaffirmed that going conservative in a mortgage can work out for the best. It is not difficult at all for a physician to be approved for a loan - we were told with our next mortgage to name the price and we would be approved. We had to come down to reality and realize that we could not make the monthly mortgage payments and taxes on a home where the sky was the limit, and set our own boundaries. Just my thoughts...
-Deb

ITA with Kevin.

If you do decide to work on the withholding, it would be nice to have that extra $200-300/month (if that is indeed what you can get out of it) for other unexpected and inevitable expenses that come up.

Nellie this was exactly what I was thinking. IF, we could and it was a good idea to withhold so we have extra, I personally would want that as an extra buffer, not a bigger mortgage. We do have an amount we will not go above, and yes Kevin he suggested even we could use that w/holding money to increase the mortgage. My MIL, was a pt real estate agent, and was shocked he said this. She said it was borderline unethical. Really the lowest we can get the mortgage, and still get the housing we need, that is the way we intend to go.

And yes the housing maitenance is something we will have to shell out ourselves, which we having had to do. I read in one of the mortgage books I got that the budget should be 1% of the house price. So if it's $165, then $165 a month. Then you sock it away, and use it when needed, as some projects are little and no big deal and some are $$$.

I'm still waiting on DH's salary packet (or whatever they call it) to come so we can get the exact dips on health insurance costs, and pay period info and such.... We are leaving in 3 weeks to house hunt so I got to get all this figured out now. Now if only Suntrust would call me back

Deb, we are moving to quite an affordable town, so I'm sure we can find something to fit our comfort zone.

[ides]

All good advice here. While I was the only one working thru med school I had our deductions at 3, and with our income being low, I still only got back about 300 for the whole year from the irs and we even had tuition credits and such. So, unless you are getting huge refunds yearly I would not reset your deductions higher. As well, like others have said and you have reiterated, its better to stick with your budget and tell the guy you are firm with what you can afford. If you do get big refunds I'd say it's better to put it in a savings account for all of those extra house and life expenses that always come up. Good luck with the house & morgage hunt!

Julie -- there is a sticky at the top of this forum titled Paycheck Calculators that might be helpful to you.