It's Almost Tax Time - Turn Your Tax Refund Into A Down Payment
Wednesday Oct 18th, 2017Share
I spoke with 2 clients this week and another 2 or so in the week past. They all had the desire to purchase homes in the immediate future. All were otherwise qualified, but lacked the funds for a down payment. They did not meet the criteria to obtain down payment assistance. Obtaining the funds from their 401K, borrowing against the cash value on an insurance policy, or obtaining a gift from a family member were also not options.
During these conversations the potential buyers became distraught because they just did not have enough funds saved. On all occasions I said to them well January is just 2 months away. Not one client understood what I was suggesting until I asked the question - Do you expect a tax refund? At that point, the light bulb usually came on, and they realized that they could use the lump sum they receive as a tax refund as a downpayment for their new home.
How Will You Use Your Tax Refund
What will you do with your tax refund? Many people use it as mad money and spend it senselessly on items that have no long term appreciable value, others save it. How about using it for a down payment on your first home. If you are a first time buyer, then you could get an even larger refund next year because you can write off the interest you pay on your mortgage, all while building equity.
According to the IRS the average refund for 2016 tax returns was $2860. A tax refund of $2860 can go a long way towards a down payment on a home, especially in places like Atlanta, Las Vegas, and Texas. In places like Los Angeles it’s a good start. Besides $2860 is the average some of your refunds are over and beyond that amount.
With virtually every state or county offering some type of Down Payment Assistance programs for buyers who earn up to $50,000, $70,000 and even up to $100K in some parts of California . You could combine your tax return with down payment assistance and still have money left over.
Even if your refund isn’t quite large enough to cover the down payment it’s a great start and there may be other source available to secure the balance or you could put it away in a special account as the beginning of your home fund!
There are low down payment home loan options available for as little as 1% down. Of course the more you put down the less your mortgage will be. However, rents in many parts of the country are equal to or topping mortgages. It seems renters pay more for another person’s mortgage than if they had a mortgage of their own.
There are also options for buying a home with bad credit. At Blisss Life our mortgage expert can access your credit and put together a personalized game plan to turn you into a credit ready home buyer.
Blisss Life Realty partners with professional tax experts who can assist you with preparing your taxes this upcoming tax season. The cost of your tax return preparation is free with a Blisss Life tax preparation partner should you decide to use your refund as a down payment to buy your home.
Get Started Now or text “TAX” to 678-820-6642 for more information.
Over the next few weeks read our blog on Mortgage Mondays, Real Estate Wednesdays or Financial Fridays to discover the cost of renting vs. buying as well as other great financial articles.
Tonya Brown-Copyright © 2017