If you’re getting a tax refund this year, consider using that money to help you move closer to buying a home.
It might not be something you’ve thought about yet, but it could give your savings a helpful boost right when you need it most. Whether your refund is a few thousand dollars or even more, there are some smart ways to make that money work for you as you get ready to buy.
Your Refund May Be Even Bigger This Year
Let’s start with the good news. People are getting even bigger refunds this year compared to last year. Based on data from the Internal Revenue Service, the average individual refund is up 11.1 percent.
Of course, your refund amount will depend on your personal situation. But any extra money you receive is a win, especially while affordability is still a challenge.
How You Can Use Your Tax Refund
So how can you make that money work for you? Here are a few smart ways to use your refund when you’re buying a home, according to Freddie Mac.
You could put it toward your down payment. Saving up for a down payment is one of the biggest challenges for first time buyers, and your refund can help you reach that goal faster. And remember, you may not need as much down as you think.
You could also use it to cover your closing costs. These typically run about 2 percent to 5 percent of the home’s purchase price. Putting your refund toward those expenses can make things feel a lot more manageable when it’s time to close.
Another option is buying down your mortgage rate. That means paying a little more upfront in exchange for a lower monthly payment. If you’re trying to improve your monthly numbers, this is definitely worth asking your lender about.
You Don’t Have To Figure This Out Alone
If you’re getting a tax refund, now’s a perfect moment to revisit your homebuying savings. You might be closer to your goal than you think and could be able to buy sooner than expected.
A trusted real estate agent and lender can walk you through what you’ll need, explain your options, and help you make the most of what you already have, including your tax refund.
Bottom Line
If buying a home is on your radar this year, don’t forget about your tax refund. It might be the extra boost you need to go from almost ready to actually ready.
Want to see how far your savings could go for you right now? Let’s talk and put together a plan that fits your situation.
