How to Use Your Tax Refund to Buy a Home
Updated: May 18
Today is tax day! Have you thought about what you will do with your refund? How about using it to buy a home?
The upfront costs of homebuying can be significant, but your tax refund can be helpful to your homebuying budget.
No matter the amount of the refund, there are ways you can use those funds to bring yourself closer to homeownership.
1. Save for a Down Payment – saving for a down payment can be one of the largest barriers to homeownership. Typical homebuyers make a down payment between 3% and 20%. Using your tax return to help with a down payment may help you reach your goal more quickly than you imagined.
2. Pay for Closing Costs - before you officially take ownership of your home, you are required to pay fees to your lender, real estate agent, and other third parties involved in the home-buying transaction. This is another area where you could direct your tax return.
3. Lower Your Interest Rate with Discount Points - During the homebuying process, your lender may present you with the option to pay discount points to buy down your mortgage interest rate. A "point" equals 1% of the loan. Discount points are essentially an upfront interest payment to lock in a lower interest rate on your fixed-rate mortgage, ultimately saving you money over the life of your loan.
If you have questions about the home-buying process, contact us today!