Purchasing your first home is an exciting milestone, but saving for a down payment can feel like a daunting task. Luckily, your tax refund can be a powerful tool to help you reach your goal faster.
With some smart strategies, you can maximize your refund and use it toward securing your dream home.
Determine If You’re Ready for Homeownership
Before jumping into the homebuying process, you should determine if you are financially ready to become a homeowner. Are you caught up on bills? Do you have debt? Is your credit score in good standing? Figure out if your tax refund should go toward your current financial needs. This will help you in the long run and especially when you are ready to start the homebuying process.
Explore Down Payment Assistance Programs
Some tax refunds may provide an extra boost if you qualify for down payment assistance programs. At HOC, our Down Payment Assistance Program has helped many first-time homebuyers reach the dream of homeownership.
We pair this program with a local lender, and depending on your credit score, we can lend up to $20,000 in closing costs or the down payment of a home.
You can learn more about this program here.
Don’t Forget Closing Costs & Other Homeownership Costs
When saving for a home, most people focus on the down payment, but it’s important to remember that there are other costs associated with buying a home. Closing costs can include appraisal fees, title insurance, and attorney fees, and they can add up to 3-5% of the home’s price. If your tax refund is large enough, consider setting aside a portion to cover these costs.
It’s also important to know that homeownership does come with extra costs as opposed to renting. As a homeowner, you’ll be required to pay for any home updates, maintenance and other projects that need tended to. Any money left over from your refund should go in an emergency savings fund for inconveniences and mishaps.
Track Your Progress
Staying disciplined with your refund is key. Set a target amount and commit to saving until you reach that goal. Keeping track of your progress will help you stay motivated and on the course toward homeownership. Consider scheduling an appointment with our Home Ownership Advisor Jami Carpenter. Jami can help determine your mortgage-readiness, create a sustainable budget and teach you money management skills for strategizing future tax refunds.
Call 304-636-9115 for more information on our financial education services and loan options.