Using Your Tax Return to Fund A Down Payment

Tax season is upon us, which means many people will shortly be receiving their tax returns. This is an exciting time for many, the much-needed extra money after the holidays or a chance to boost your savings. If you are looking to buy a house this year, take this opportunity to help you get closer to achieving your home ownership dreams.

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! If your tax refund is large enough, it may cover the entire 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 the refund directly into savings you will have that down payment before you know it!

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 own a home?

Way to go! Don’t let this opportunity pass you by either. Take the extra money, if you do not have plans to use it on anything else, and make an extra payment or two on your mortgage. This will help you pay down the interest so you can start paying on the principle part of your mortgage. If you do not have much remaining interest, use it as a way to get one step closer to full ownership of your home.

Contact our office today to get started on the home buying process 888-818-1850!