Buying

Ways to use your tax refund if you want to buy a home

April 15, 2024

Have you been saving up to buy a home this year? If so, you know there are some expenses involved—from your down payment to closing costs. But did you also know your tax refund can help you pay for some of these expenses? As Credit Karma explains:

“If one of your goals is to stop renting and buy a home, you’ll need to save up for closing costs and a down payment on the mortgage. A tax refund can give you a start on the road to homeownership. If you’ve already started to save, your tax refund could move you down the road faster.”

While how much money you may get in a tax refund is going to vary, it can be encouraging to have a general idea of what’s possible. Here’s what CNET has to say about the average increase people are seeing this year:

“The average refund size is up by 6.1%, from $2,903 for 2023’s tax season through March 24, to $3,081 for this season through March 22.”

Sounds great, right? Remember, your mileage may vary. But if you do receive a refund, here are a few examples of how you can use it when buying a home. According to Freddie Mac:

  • Saving for a down payment: One of the biggest barriers to homeownership is setting aside enough money for a down payment. You could reach your savings goal even faster by using your tax refund to help.
  • Paying for closing costs: Closing costs cover some of the money you’ll pay at closing. They’re generally between 2% and 5% of the total purchase price of the home. You could direct your tax refund toward these closing costs.
  • Lowering your mortgage rate: Your local lender might give you the option to “buy down” your mortgage rate. If affordability is tight for you at today’s rates and home prices, this option may be worth exploring. If you qualify for this option, you could pay upfront “points” to have a lower rate on your mortgage. Have your lender give you a calculation showing both scenarios to see if buying down the rate makes the most sense for your situation. If you’re not planning to stay very long, paying a higher interest rate over time might be smarter, and then use that extra money toward other closing costs instead.

The best way to get ready to buy a home is to work with a team of trusted local real estate professionals who understand the process and what you’ll need to do to be ready to buy.

front cover of the first-time-homebuyer's guide showing a woman opening a packing boxBottom Line

Your tax refund can help you reach your savings goal for buying a home. Let’s talk about what you’re looking for, because your home may be more within reach than you think! Call/text 405-585-6580 or email Hello@SoldonShawnee.com.

Download Our Free First-Time Homebuyer’s Guide

Our free guide A Guide to Buying Your First Home will answer many of your questions and help you avoid common pitfalls so you make informed decisions that will save you time and money.