Get The Most Out Of Your Tax Refund
It's April 15th... that means today is deadline day to file your taxes. Or maybe you've already filed your taxes and received your tax refund but haven't yet spent it and are wondering what to do with the money. Whether you've received your tax refund or are still waiting for it, are you thinking about buying the home of your dreams but aren't sure how to come up with a down payment or closing costs? Maybe your tax refund is your key to buying a home.
According to data released by the Internal Revenue Service (IRS), Americans can expect an estimated average refund of $3,143 this year.
Many buyers still believe that a 20% down payment is needed to qualify for a mortgage. It's not! Loan programs from the Federal Housing Authority (FHA), Freddie Mac, and Fannie Mae allow for down payments as low as 3%. There are conventional loan programs, also, that allow for a 3% down payment. Veterans Affairs Loans (VA) allow many veterans to purchase a home with 0% down.
4 Ways To Use A Tax Refund To Help Buy A Home
- Down Payment: apply your tax refund towards a down payment. For some home buyers who qualify, combine the down payment from your tax refund with an approved down payment assistance program and you get even great purchasing power.
- Closing Costs: apply your tax refund to help cover closing costs and other expenses associated with purchasing a home (surveys, inspections, apparaisals, etc.).
- Buy Down The Interest Rate. Even though interest rates remain lower than a year ago, buying down your interest rate with your tax refund could save you a lot of money over the course of a mortgage loan's life.
- Pay Down Existing Debt. If your debt to income ratios are a bit high to get qualified for a mortgage loan even though you have cash for a down payment and closing costs, paying down some existing debt with your tax refund could decrease your debt to income ratio and maybe even increase your credit score. Don't forget that your credit score also influences the interest rate you pay on a mortgage.
What Percentage Of A 3% Down Payment Is Covered By The Average Tax Refund?
In North Carolina, the average tax refund can cover up to 52% of a down payment. In South Carolina, it can cover up to 56% of a 3% down payment (based on the median price of homes sold in these two states).
You've heard it before -- homeownership builds net worth and wealth. There are plenty of reasons to buy a home this spring. With low interest rates, now is the perfect time to buy a home. This tax season, your tax refund could just be your key to homeownership!
If you're thinking of using your tax refund to buy a home this spring season, check out our FREE
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