Have you been saving up to buy a home this year? If so, you know there are a variety of expenses involved – from your down payment to closing costs. But there’s good news – your tax refund can help you achieve your Homeownership goals by paying for some of these expenses.
SmartAsset estimates the average American will receive a $1,798 tax refund this year. The map below provides a more detailed estimate by state:
How Buyers Can Use Their Tax Refund
According to Freddie Mac, your refund check can help you as a homebuyer in multiple ways. If you’re getting a refund this year and thinking about buying a home, here are a few tips to keep:
- Saving for a down payment – One of the most significant barriers to homeownership is saving for a down payment. You could reach your savings goal faster than expected by using your tax refund to help with your down payment.
- Paying for closing costs – You must pay fees to your lender, real estate agent, and other parties involved in the homebuying transaction before officially taking ownership of your home. You could direct your tax refund toward these closing costs.
- Lowering your interest rate – Your lender might allow you to buy down your mortgage interest rate during home buying. That means you could pay a lower interest rate on your fixed-rate mortgage upfront.
This list is a great start, but it isn’t exhaustive of all the costs you may encounter as you embark on your homebuying journey. The best way to prepare is to work with a trusted real estate professional to ensure you understand what’s coming.
How Sellers Can Use Their Tax Refund
- Buying your next home: Whether selling to move up or downsize, you can use your tax refund to help pay for any purchasing costs. If you own a home and plan to sell it this spring, your tax refund can help ensure it is ready to list. Here are a few ways current homeowners can put their tax refund to good use:
- Making minor upgrades – Tackling small projects or boosting your curb appeal to help your home stand out.
- Making repairs – If anything in your house needs to be fixed, completing repairs is another great use of that money.
The best way to prepare to buy a home is to work with a trusted real estate professional who understands the process. They’ll help you navigate the costs you may encounter as you begin your homebuying journey.
Your tax refund can help you reach your goals of homeownership. Let’s connect to discuss how you can start your journey today.
