Use your tax Refund to Purchase/Finance a Home
It is tax season which also means refund season! Tax refunds help people either become homeowners or make an extra mortgage payment or two. For first time homeowners, one of the biggest obstacles is coming up with the down payment. So, there is no better time to qualify for a new home than now if you save your tax refund! Sometime a tax refund may actually cover the whole down payment on a home purchase. If your tax refund does not cover your down payment, you will be in better shape financially than you were before you got the refund. If you put it straight into savings, you will have that down payment before you know it! Tax returns may be used as assets so down payment right away.
If you are applying for a loan that does not require a down payment (click here to learn about those loan types) it is still smart to save your tax refund. You could use the tax refund for any of the following:
- Pay closing costs
- Pay off debts to help you qualify
- Keep the refund in the bank as reserves. The more reserves equal better chance of approval
- Pay down credit card balances to raise credit scores
- Have money for furniture and emergency funds as a homeowner
It is perfectly fine to apply for a mortgage loan when you have not yet received your refund yet. When you are filling out the application, we can just assume the amount that you will be receiving. As long as we can prove that the funds are in your account prior to the final underwriting approval.
Do you already have a mortgage loan on your home?
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