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Are you saving up to to buy a home this year? If so, you’re probably aware of the key expenses involved—mainly closing costs and a down payment. But did you know your tax refund could help cover some of these costs? As Credit Karma explains:
“If one of your goals is to stop renting and buy a home, you’ll need to save up for closing costs and a down payment on the mortgage. A tax refund can give you a start on the road to homeownership. If you’ve already started to save, your tax refund could move you down the road faster.”
While tax refunds vary, it’s helpful to know what’s possible. According to CNET the national average refund this year is up by 6.1%, rising from $2,903 in 2023 to $3,081 this year.
“The average refund size is up by 6.1%, from $2,903 for 2023’s tax season through March 24, to $3,081 for this season through March 22.”
Your refund may differ, but if you’re receiving one, here’s how it could help with buying a home. Freddie Mac suggests three ways to use it:
- Saving for a down payment – One of the biggest barriers to homeownership is setting aside enough money for a down payment. Your tax refund could act as a booster.
- Paying for closing costs – Closing costs cover some of the payments you’ll make at closing. They’re generally between 2% and 5% of the total purchase price of the home. You could direct your tax refund toward these closing costs.
- Lowering your mortgage rate – Your lender might give you the option to “buy down” your mortgage rate. If affordability is a challenge for you at today’s rates and home prices, this option may be worth exploring. If you qualify for this option, you could pay some money, upfront, to reduce your mortgage rate, thus having a smaller monthly loan payment.
The best way to get ready to be a home buyer is to work with a team of trusted real estate professionals who understand the process and can guide you through it.
Bottom Line
Your tax refund can help you reach your savings goal for buying a home. Let’s talk about what you’re looking for. Becoming a home owner might be more within reach than you think.
