The end of the year can be a very joyous time for many of us. It is a time when we can spend some quality time with our families, experience the joy of giving to others, and reflect on how thankful we are. The end of the year also allows us to reflect on our previous year and come up with next years goals. Some people may have goals and aspirations to try to lose weight, others may try to find a better job or start a small business, and still others may want to buy their first home or even buy an investment property.
If your goal this year is to try to buy a new home you may have an added benefit in trying to buy your first home in the beginning part of the year. One benefit could be using your tax refund and leveraging that money toward the purchase of a new home. This can definitely help first time homebuyers make the unaffordable, affordable. If you used your tax refund you may actually be able to qualify for a larger home and at the same time lower your monthly payment by applying larger down payment and therefore lower you mortgage balance.
The larger the down payment is, the more interest you will save on the loan over time as well. If you truly did some research into what the average home price was selling for in your area I think you would be surprised at how low the monthly payments actually would be. Again, using your tax refund to buy a house could actually reduce your monthly payments.
Many people think it requires a 20% down payment to buy a home however mortgage companies like Riverbank Finance LLC offer mortgages with little to no down payment mortgages. For example, a Conventional mortgage requires only 5% down payment (and it can even be gifted to you from a family member). FHA loans require only a 3.5% down payment which can also be gifted. Both of these home loan options also allow for seller paid closing costs.
Example of how to buy a home with your tax refund:
Example 1: A family receives a $5,500 refund on their income tax returns. This tax refund would allow this family to buy a home with a sales price of $110,000 with a conventional 95% mortgage. A home such as this may have very affordable payments. You may be able to buy a home for less than you pay in rent.
Example 2: A family receives a $3,500 refund on their income tax returns. This tax refund would allow a family to buy a home with a sales price of $100,000 with a FHA mortgage. FHA home loans also offer flexible qualification terms with low credit scores.
If you are currently renting you may be throwing money away. Many times a first time homeowner can lower their monthly housing payment by purchasing a new home as opposed to renting their current home. Another important reason to buy your first home is to help build your own personal wealth. This is something renters cannot do. One of the paths to personal wealth in our country has always been from buying and living in their own home. Homes go up in value and when you make your monthly payment you pay your mortgage balance down as well. Your tax return can help set you on the right path to homeownership and help grow your independent wealth.
Now is a great time to buy. Interest rates are still at historical lows and home price values are still depressed from their historical highs of just 6-7 years ago. This all means that you can afford much more home today then you ever could have in the past. Your tax return refunds could be the answer and help you get a great deal on a new home and in the long run help you build your personal wealth. Be sure to speak with a loan officer to review how much home you can afford by calling us at 626-625-6305 or by requesting information below.