Use Your Tax Refund to Cover the Down Payment on Your First Home
Are you a first-time home buyer looking for a house in Florida? One of the biggest obstacles to homeownership is the down payment that needs to be made on the purchase.
The down payment on a new home can be as low as 3.5 percent. What’s the easiest way to cover the down payment?
Your income tax refund, of course!
The new tax season has only just started, and it’s that time of the year when a lot of people are flush with cash, because of tax refunds.
As a first-time home owner, you will have the option of using your tax refunds for the down payment, and why not! We are not talking about a huge amount here.
Say you want to buy a home is in the range of $100,000 to $150,000. You can get a mortgage for it with just 3.5 percent down. That’s between $3,500 and $5,250. Most tax refunds fall in this range.
Actually, the average tax refund during the 2015 tax season was $2,800. So even if your tax refund doesn’t cover the entire amount, anything between $2,500 and $3,000 is nothing to be scoffed at. It can get you the first home you’ve always wanted.
Does it make financial sense to spend your tax refund in this manner, to buy a home? Oh yes, it does, buying a home is the right thing to do, especially with mortgage rates as low as they are currently. The housing market in Florida has only recently recovered from the recession caused by the subprime mortgage crisis of 2007.
Not only have home prices recovered lost ground after years of decline, they are on the ascendency and set for a sharp increase in 2017 and beyond. So buying a home right now would be a smart thing to do from the investment point of view.
Now, you might be tempted to continue living in your rented apartment as opposed to buying a home, and use the tax refund to cover for the down payment a car instead.
That’s not smart because rents have been rising across Florida for years now, and your rent would eat up a good chunk of your income.
Also, homeownership means equity – when you rent a house, you will get a place to stay, but you’re not building any equity. When you own a home you can sell that later for good money. You will get nothing for moving out of your rented apartment.
Thirdly, as a homeowner, you will get to benefit from a number of tax benefits. You can get your mortgage interest payments and property taxes deducted from your income tax. Why would you want to miss out on that? When you buy your first home, you’re at peace. You will be able to settle down and no one can force you out of your house – provided you make your mortgage payments on time. You will be a part of a community, you will make new friends, and it’s good for your family – especially if you have small children.
So did you just get your income tax refund? Talk to a mortgage loan officer in Florida before withdrawing the refund. Find out how you can use it to cover the down payment on your new home.