The average tax refund for the 2014 filing season was nearly $3,000 and the IRS doles out about 100 million of them every year, according to IRS data.
If you’ll be getting a refund this year, instead of spending it on more stuff you don’t need, why not invest in your future and use your refund to help you make that first-time home purchase you’ve been dreaming about?
Check out 5 ways you can use your tax return for your home!
1. Put It Toward A Deposit
The more of a deposit you put toward a new home, the less you will have to borrow and pay in interest.
When you get your tax refund, you can put it in a savings account at your bank to 1) keep you from spending it and 2) help build up the amount you will be able to put down for a deposit on a home.
2. Apply It To Closing Costs
If you choose to finance your home purchase, closing costs like attorney’s fees, appraisal and inspection fees, title insurance, and escrow costs are typically charged and are not always permitted to be rolled into your monthly mortgage payment depending on what lender you choose.
Financing costs can be quite expensive and are required in addition to the deposit on the home, and you may need to pay these costs in cash. Your tax refund can be a great way to help pay for closing costs!
3. Put It Toward Taxes And Insurance
Once you own a house, you’ll need to pay property taxes on it and insure it. You can also put your tax refund toward paying these costs.
Or, if your taxes and insurance are paid through your mortgage, use your tax refund to purchase additional insurance — and greater security — such as an umbrella policy. Consult your insurance agent to determine whether purchasing additional insurance coverage is right for you.
4. Use It To Cover Moving Costs
Even if your entire home buying process goes smoothly and you’ve done a great job of saving money and managing your finances, you’ll still face expenses associated with moving into your new home.
Your tax refund can help cover the cost of renting a moving truck, purchasing packaging material, paying deposits to start utilities service and more.
5. Use It To Build Your Emergency Fund
Every homeowner should have an emergency fund — a savings account with a balance sufficient to cover several months’ of expenses, including your mortgage payment. An emergency fund can help protect you from financial issues if you lose your job or experience an unexpected expense, such as a major car repair.
These are just a few ways you can use your tax refund to help you move a few steps closer to homeownership.
Visit your closest Clayton home center to explore some manufactured and modular homes and start dreaming about your future home!