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For many, it’s a once a year windfall. Check out the best ways to make your tax refund work for you.
Tax season is right around the corner, and if you’re expecting a sizeable tax refund and want to invest in your homeownership future, here’s something you might not have considered: using your tax refund to buy your home. You’d be surprised at the creative ways you can utilize your tax refund for home buying success, so let’s review some options.
Your Down Payment
One of the first avenues you can funnel your tax refund to is towards your down payment. While it likely won’t be enough to cover the full down payment, you can combine it with CMG’s HomeFundIt™ program, a down payment gifting platform that allows you to raise funds from your community. HomeFundIt also guarantees a $2,000 matching grant to first-time home buyers.* If paired with your tax refund, you’ll have a healthy amount to put towards your home purchase.
Closing Costs
Various fees and expenses the borrower pays at closing can typically range from 2-5% of the total purchase price of the house. Some buyers forget that there is more to starting a mortgage than just covering the down payment. Closing costs are also split by both the buyer and seller, and your tax refund can significantly help cover those costs.
Emergency Funds
An emergency fund is an excellent option for your tax refund, especially if you’ve already covered the down payment and closing costs.
Unexpected expenses go hand-in-hand with being a homeowner, and if a plumbing issue or environmental damage happens to your home right off the bat, it will be a huge weight off your shoulders if that emergency money is ready to go.
Moving Costs
Whether it’s renting a U-Haul or hiring movers, there are extra fees to consider when making the big move once all loan documents have been signed off. Not only will you need to pay to move, but there could be deposits required for utilities, extra storage, or paying for new furniture and household items.
Next Steps
It can be tempting to use a cash windfall for a “treat” like vacations, travel expenditures, a shopping spree and the like. However, if you’re a hopeful homeowner, it may be a better idea to invest in your future and start building equity sooner rather than later. Whether you funnel your refund towards your down payment, closing costs, emergency funds, or other costs associated with moving into a new home, you won’t regret planning ahead and setting yourself up for success.
Reach out to our CMG financial advisors today for more tips on preparing yourself for homeownership.
*Grant is a $2-to-$1 match on regular down payment gifts received on HomeFundIt™, up to the lesser of $2,000 or 1% of purchase price for first-time buyers, as defined by Fannie Mae, who complete home buyer education prior to signing a purchase contract. Talk to your loan officer or visit your HomeFundIt dashboard for next steps, or you can also find a housing counselor near you by visiting https://www.hud.gov/counseling.
Grant funds are applied to nonrecurring closing costs. If closing costs are fully paid by seller or interested party, grant funds can be used to buy down the rate. Grant funds cannot be used towards a down payment. Visit https://www.homefundit.com/Grant for complete terms and conditions.
Brian W. Kempf
Senior Vice President, Branch Manager, NMLS ID# 483525
CMG Home Loans, NMLS ID# 1820
571-309-4911
Notice: This is an advertisement and is not a commitment to lend. Contact a loan officer today to explore the financing options specific to each borrower.
