GIVE YOURSELF AN INSTANT PAY RAISE

Last fall, I was working with a first-time buyer. He was seriously interested in becoming a homeowner. At the same, he was extremely cautious about " ...overspending and becoming house poor." Therefore, he established what I believed to be too conservative a purchase budget (based on his salary and other financial obligations). And, as it turned out, we were not having much success finding a home that he liked.

One day, I asked my buyer about his income tax situation. Specifically whether he usually got a tax refund from the IRS. He said he always received a substantial refund.

My response was that the big refund was indication that his semi-monthly payroll deductions were too high. That he could/and should increase his take-home pay by increasing his number of dependents and, thereby, reducing the withholding amount . Especially so as a homeowner who would be able to deduct mortgage interest and property taxes. I suggested that my client check with his lender or accountant to verify that my advice was sound. Which he did. And figured out that there would be no problem with upping his purchase budget by $50,000.

Within a week we successfullly negotiated a purchase offer in a newly converted high-rise building in the West Loop of Chicago. A happy client sent me a note of thank you for helping him "...buy more home" than he thought he could afford.