Should you be using your Tax Refund for your Down Payment on a new Home?
In preparation for purchasing a home saving for the down payment can be the most challenging piece to the puzzle. Typically there is some sort of down payment or out of pocket expense for the home buyer. The average down payment is 3.5% – 5% of the purchase price of the home. This makes tax time the perfect opportunity to maximize available funds for the down payment on a new home.
An IRS tax refund is a great, acceptable source for a down payment on a new home. Even a small refund may be enough to provide you with an ideal amount toward a down payment. The first step would be to begin the mortgage pre-approval process by either applying online, downloading our phone app to apply or simply give us a call: (616) 918-6564. You can begin with the pre-approval right away, even before your tax return has been filed.
Being pre-approved will give you the insight to how much home you can afford as well as how much of a down payment will be required based on the best mortgage product for you. There is not a “one-size fits all” solution, your personal situation must be taken in to account to be provided with the most suitable options.
Yes, NOW is the best time to use your Tax Refund towards a Down Payment.
Monthly mortgage payments can cost less than renting an apartment or house and your payments, as well as any improvements to the home, are building your equity, not your landlord’s. More importantly, it is ideal to purchase a home now because there is less competition, sellers are motivated to sell, interest rates are still low (though interest rates are projected to increase throughout the year) and you can close quickly, before the spring market.
What Low Down Payment Mortgage Loans Are Available?
- USDA Rural Development Loans- No Money Down Mortgage
- VA (Vetran’s) Mortgage Loans- No Down Payment for Veterans
- FHA Home Loans- 3.5% Down Payment Loan
- MSHDA Mortgage Loans- Down Payment Assistance up to $7,500