MORTGAGE BLOGBlog posted On January 23, 2025
Tax season is right around the corner! If you’re expecting a sizeable tax refund on the horizon 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 ways you can utilize your tax refund for home buying success, so let’s tackle a few of those options right now.
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 our 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 sizeable 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 forget that there’s 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
Unexpected expenses go hand-in-hand with being a homeowner. If plumbing issues or environmental damage happens to your home right off the bat, it will be a huge weight off a new homeowner’s shoulders if that emergency money is ready to go. An emergency fund is an excellent option when trying to figure out how best to use your tax refund, especially if you’ve already covered the down payment and closing costs.
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 a deposit needed for utilities, extra storage you’ll want to pay for, or even paying for new furniture and household items.
Next Steps
With all that in mind, how do you want to best make use of your tax refund? Sure, we’re all tempted to use it for fun vacations, travel expenditures, 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.
Source: New Again Houses
*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.
