Purchasing a Primary Residence

Take the necessary steps to prepare your finances for homeownership before making one of the biggest financial commitments of your life.

  1. Potential Direct Financial Impact

    • The amount that you are pre-approved to borrow will impact your target purchase price
    • The amount of your down payment will affect your mortgage payment affordability
    • Any fees associated with the home inspection and appraisal
    • Closing costs paid out of pocket or wrapped into your mortgage.
    • The outstanding balance on your mortgage after you close
    • Monthly mortgage payments made up of principal and interest
    • Tax deductibility of mortgage interest based on the size of your mortgage and the state where you live
    • Escrowed funds to cover property taxes and homeowners insurance premiums
    • Private Mortgage Insurance (PMI) if you put less than 20% down.
    • Costs associated with home repairs & maintenance and/ or a home warranty program.
    • Tax deductions on your mortgage interest and property taxes up to the new tax code limits
    • Costs associated with moving and relocating – Any increased utilities costs and/or yard maintenance fees
    • Any potential fees to break an existing lease (if currently a renter)
    • Timing and potential financing needs around sale of existing residence and purchase of the new one (if applicable)
  2. Potential Secondary Impacts

    • The need to make sure that your mortgage payment will be affordable as your life changes (future day care costs, any decreases to household income if leaving the workforce to raise kids, etc.)
    • The need to determine your mortgage term and repayment strategy
    • The potential need to evaluate neighborhoods based on school districts and potential resale
    • Potential lifestyle impact and reallocation of monthly cash flow needed to make room for any increases in your monthly housing costs, including higher utilities and/or yard maintenance costs
    • Potential rebalancing of your investment portfolio depending upon the source of down payment
    • Potential tax implications from realizing any gains if your down payment was invested
  3. Self Completion/Execution Risks

    • Not getting the best mortgage rate for you in the context of your broader financial plan.
    • Not optimizing for tax-efficiency
    • Overextending yourself financially
    • Not factoring in the true costs of home ownership into your decision (mortgage payment, property taxes, insurance, PMI, HOA fees, etc.)
    • Not maintaining a separate emergency savings to cover any unexpected home repairs, major medical bill, or job loss
    • Commingling assets that were previously considered separate property or held in a trust
    • Buying a home if you do not plan to keep it for at least 5 years, which is about how long it takes to breakeven.
  4. Situations where expertise adds the most value

    • Tax Adviser
      Consulting a tax adviser any time you have a major change, like becoming a homeowner, is advisable to better understand the estimated tax savings before you adjust your tax withholdings and itemize your deductions. They can also help you ensure you are aware of special tax treatments of gains on a primary residence and home improvements.
    • Legal Adviser
      If you live in a community property state and/or there’s a significant differential between you and your spouse in terms of your assets, working with a trust and estates attorney can be prudent to understand how to maintain any separate property status on a existing assets or inheritance like a trust.
    • Financial Adviser
      Working with a financial adviser may be particularly helpful to evaluate your purchasing power and optimal structure for financing (if applicable). Additionally they can help with your strategy to generate liquidity from your investments to make the down payment. A financial adviser may also be able you rebalance your brokerage account after liquidating assets to fund the down payment.

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We’ll start by working with you to create a personal balance sheet and current financial outlook. From there, we present a curated list of Financial Advisers, CPAs, and Trust & Estate Attorneys from which you can choose.