Who doesn’t love getting a tax refund? You worked all year paying into the system every paycheck. It is exciting to know that your bank balance will be getting a boost. It’s your hard earned money and you should make the most of it. If you’re considering buying a home this year—whether it’s your first home or one you plan to retire in—financial planning is critical. Make a big impact on your home purchase with these tips:
- Lower Your Mortgage Rate: Did you know you can pay “points” up front to lower the interest rate of your mortgage? If you plan on staying in your home a long time, this could result in significant savings over the life of your loan.
- Pay Closing Costs: Closing costs average between 2-5% of the purchase price. Many buyers roll those costs into their mortgage and pay it off over the life of the loan. You could use your refund to pay those closing cost upfront and avoid paying the extra interest.
- Save for a Down Payment: Some home loans only require 3.5% down payment. Your refund could realistically cover this entire cost.
- Boost Your Credit Score: Paying down debt or repairing damaged credit can have a significant impact on your credit score and the mortgage rates for which you will qualify.
- Renovate or Update Appliances: Buyers are tempted to open a line of credit to pay for household purchases, but that could negatively impact your mortgage loan. Using your refund is a smarter move.
Remember, a tax refund is only one factor to consider in your home buying budget. Get in touch with me today for a referral to a mortgage lender if you need help preparing your budget. Let’s work together to plan your path to homeownership.