If you’re getting a tax refund this year, here’s something worth thinking about. That money could actually help you get closer to buying a home.
It may not be something you’ve factored into your plan yet, but it can give your savings a nice boost right when you need it most. And whether your refund is a few thousand dollars or more, there are some smart ways to put that money to work 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 more money back in their refunds than they did last year. The visual below uses data from the Internal Revenue Service (IRS) to show the average individual’s refund is 11.1% higher this year:
Of course, your exact refund will vary. But any extra money you get is a good thing, especially when affordability is still tight.
How You Can Use Your Tax Refund
So, how can you put that money to work? Here are a few smart ways to use your refund when buying a home, according to Freddie Mac:
- Put it toward your down payment. Data shows saving for a down payment is one of the biggest hurdles for first-time homebuyers. Using your refund can help you build that up faster. And the good news? You may not need to put as much down as you think.
- Use it for your closing costs. Closing costs usually range from about 2% to 5% of the home’s purchase price. Using your refund here can make things feel a lot more manageable on closing day.
- Lower your mortgage rate. You may have the option to buy down your mortgage rate. That means paying a little more upfront to get a lower monthly payment. If you’re looking for ways to make the numbers work a little better, this is something that could be worth asking about.
You Don’t Have To Figure This Out Alone
If you have a tax refund coming, it’s a great time to take another look at your homebuying savings. Maybe you’re almost at your goal and you can buy sooner than you expected.
A trusted real estate agent and lender can help you map out what you need, what your options are, and how to make the most of what you already have, including your tax refund.
