The holiday season is here, and while Santa is busy making his list and checking it twice, you might want to add one more thing to yours: planning for tax season. If you’re thinking about purchasing a home or making any real estate investments in the new year, now is the time to prepare.
It’s Not About the Refund—It’s About Mortgage Approval
Many people approach tax season with one goal in mind: getting the biggest refund possible. While that’s great for splurging on a holiday getaway or tackling household expenses, it’s not always the best approach if you’re planning to buy a home or invest in real estate.
When applying for a mortgage, the way you structure your finances on your tax return can directly impact your ability to get approved. Mortgage underwriters don’t just look at your credit score and savings—they’ll also comb through your tax returns to determine your income and financial stability.
Self-Employed or 1099? Pay Special Attention
If you’re self-employed, a freelancer, or receive 1099 income, this advice is especially critical. Many people in these categories write off as many expenses as possible to lower their taxable income. While this might save you money on taxes, it can also make your income look smaller than it actually is—potentially causing issues when you’re ready to qualify for a mortgage.
Why You Should Speak to a Mortgage Professional Before Filing
Before you send off your tax return to the IRS, consider speaking with a mortgage professional. Here’s why:
- Tailored Financial Guidance: A mortgage expert can help you understand how your reported income will impact your mortgage application.
- Strategic Planning: They can work with you and your tax advisor to ensure your financial profile looks solid to underwriters, without sacrificing all of your deductions.
- Avoiding Surprises: Filing your taxes before consulting a mortgage professional could result in lower qualifying income or delays in your home-buying timeline.
Make This Holiday Season Count
Santa may be bringing gifts, but the best present you can give yourself is a solid financial plan. By preparing your taxes with a home purchase or investment in mind, you’ll be ready to face the mortgage process with confidence.
Remember, the key isn’t about getting the biggest refund—it’s about structuring your finances in a way that sets you up for success. Before you file, take the time to consult with a mortgage professional to ensure your financial strategy supports your goals.
Need help preparing for your home buying journey? Contact me today, and let’s make sure your name is at the top of the “approved” list this holiday season!
