If you’ve been thinking about buying a home, consider using your tax return towards this purchase- it’s not every day you get a large sum of money!
Here are a few ways you can use your tax refund towards purchasing a home:
1. Saving for a down payment.
Saving for a down payment can be one of the largest barriers to homeownership. However, don’t fall into a common trap and overestimate the size of the down payment you need. Some mortgage programs require only a 3% down payment and Sierra Pacific is also able to offer some down payment assistance programs that can also help bridge the cash gap.
2. Use the money for closing costs.
Typically, a certain percentage of the home’s purchase price includes closing costs. Closing costs vary widely based on where you live, but by putting your tax refund towards your closing costs, you can check off one more financial obligation on your path to homeownership!
3. Lower your interest rate.
You can also use your refund by purchasing what’s called “discount points.” This effectively means you can make an upfront interest payment to lock in a lower interest rate on a fixed-rate mortgage.
4. Pay down debt to improve your credit score and debt-to-income ratio
You can also use your refund by purchasing what’s called “discount points.” This effectively means you can make an upfront interest payment to lock in a lower interest rate on a fixed-rate mortgage. Using your tax refund to pay discount points can help lower the amount of your monthly mortgage payments.
As you can see, there are many ways to use your tax return. If you’ve been thinking about purchasing a home, consider the above options and contact a local SPM Loan Officer so you can get started.