Every year, tax season rolls around much to the annoyance of taxpayers everywhere. But if you are expecting a tax refund this year, you may be looking forward to a small windfall. If you have dreams of owning your own home, have you ever considered using that tax refund to better position yourself for home ownership? Check out these tips for how your tax refund could help you buy a house sooner than you ever thought possible.
Boost Your Down Payment
One of the biggest hurdles to a home purchase is pulling together a down payment. While different loans require different down payment amounts, it is recommended that you put down 20% of the loan amount to avoid paying private mortgage insurance. Whether you are expecting a few dollars in your refund or a few thousand, using unexpected income like a tax refund is a great way to boost your down payment. When you receive your refund, make a point to save most—if not all—into a savings account until you are ready to make a purchase.
Pay Down Debt
Is debt keeping you from having the credit score or the capital you need to purchase a home in the near future? Paying down your accumulated debt with your tax refund is a great way to not only afford a home now, but to ensure that you will be able to afford your home for the entire life of your loan. With less debt to manage, you will be able to focus on mortgage payments and other living expenses, and your finances will be within your control.
Save for Unexpected Costs
Do you already have your down payment, and very little debt? Your tax refund can still help you achieve home ownership! When you purchase a home, prepare yourself for extra expenses—including closing costs, inspections, needed repairs and even moving costs. Having a little extra set aside will keep you from getting overwhelmed and will allow you to be prepared when these expenses pop up.
Pad Your Emergency Fund
If your finances are already in good shape, and you are prepared for the unexpected costs of home ownership, consider using your tax return to add a few extra dollars to your emergency fund so that you will be prepared for unexpected emergencies that may pop up once you buy a home, like a new heater in the middle of winter, or insect control for a pest infestation. With extra money socked away for emergencies, you will have peace of mind knowing that you have a little wiggle room in your finances should needs arise.
If you’re ready to buy a home using your tax refund, why not give your down payment a boost with the NC Home Advantage Mortgage? Combined with the great rates and down payment assistance available with the NC Home Advantage Mortgage™, home ownership might be more affordable than you thought.
Learn more about our mortgage products today!
