5 Ways to Use Your Tax Refund to Purchase a Home

Most people get very excited to receive their tax refund, only to use it to purchase depreciating assets, like tv’s, clothes or cars. But, what if you were able to put your refund towards purchasing a home?

Here are 5 ways you can use your tax refund towards the purchase of a home:

  1. Pay the Down Payment. Contrary to popular belief, you do not need 20% down to purchase. In fact, there are down payment programs as little as 3%. If you qualify, there are also down payment assistance programs.
  2. Pay Your Closing Costs. Closing costs are typically 2-5% of the total purchase price of the home.
  3. Pay off Debts. Before doing this, I would suggest consulting with your real estate professional and your mortgage lender to make sure you are paying off the right debts.
  4. Pay Down Credit Cards. Doing this will increase your credit score and lower your debts. In turn, you may qualify for a larger purchase price and get a better interest rate. This may also be the deciding factor in qualifying you for a new home loan if you were not pre-approved already.
  5. Save it! The refund can always be used to cover moving expenses, purchase new furniture, or just to save for rainy days. Buying the home is one thing, you will also need money to maintain, upkeep, and make any desired or required upgrades to the home in the future.

I hope these tips are useful. Please feel free to contact me if you would like to use your tax refund towards the purchase of your home!