Approximately 20 million tax refunds worth nearly $13 billion have been issued this year, according to the IRS. The average refund is $2,050. Have you gotten your refund already or are you planning on filing soon?
Here are 3 ways your tax return could bring you closer to homeownership:
Save for a down payment. Saving for a down payment can be one of the biggest barriers to homeownership. But today's homebuyers persistently overestimate the size of the down payment they need. Depending on your credit history and other factors, many borrowers can make a down payment of about 5 to 10% — not 20%, as a lot of people falsely assume. With Freddie Mac's Home Possible Advantage® 3% down mortgage, qualified borrowers could make down payment of as little as $6,000 for a $200,000 home.
Down payment assistance programs can also help you bridge the cash gap — there are hundreds of millions of dollars available! There are nearly 2,500 homeownership programs across the country that can help you save on your down payment and closing costs. A great place to start is right where you live. Many state, county, and city governments provide financial assistance for people in their communities who are well qualified and ready for homeownership. Check out the programs available in your market and see if your eligible.
Lower your interest rate. You can pay discount points to buy down your mortgage interest rate. A "point" equals one percent of the loan. It's essentially an upfront interest payment to lock in a lower interest rate on your fixed–rate mortgage. So if you are borrowing $200,000, paying one discount point would mean paying $2,000 upfront at closing — but it may end up saving you more in interest payments over the life of the loan. See how paying extra points might lower your rate.
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