Here’s How Your Tax Refund Can Help You Buy Your First Home. Easy as 1-2-3!
The IRS began accepting tax returns on January 29, and estimates nearly 155 million individual tax returns will be filed in 2018. If you're expecting a refund this year, here are three ways your tax refund could bring you closer to homeownership:
1. Save for a down payment. Saving for a down payment can be one of the biggest barriers to homeownership. But today's homebuyers persistently overestimate the size of the down payment they need. Depending on your credit history and other factors, many borrowers can make a down payment of about 5 to 10% — not 20%, as a lot of people falsely assume.
Down payment assistance programs can also help you bridge the cash gap. There are many programs across Miami-Dade County that can help you save on your down payment and closing costs. A great place to start is right where you live. Many state, county, and city government agencies provide financial assistance for people in their communities who are well qualified and ready for homeownership. Check with your loan officer to see if you are eligible.
2. Pay for closing costs. A homebuyer typically pays between about 2% and 5% of the home purchase price in closing fees, but the amount varies widely depending on where you live. Your Realtor and loan officer will be able to inform you about this.
3. Lower your interest rate. You can pay discount points to buy down your mortgage interest rate. A "point" equals one percent of the loan. It's essentially an upfront interest payment to lock in a lower interest rate on your fixed–rate mortgage. So, if you are borrowing $200,000, paying one discount point would mean paying $2,000 upfront at closing — and it may end up saving you more in interest payments over the life of the loan.
Take a HUD approved 8-hour online homebuyer education course to learn more about costs associated with buying your first home. We offer the course via our website, www.hfamiami.com and you may pay the $30 fee via credit or debit card. Upon completion, you will receive a certificate to provide to your loan officer.
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