Mortgage Tips | Tax Refunds Can Achieve Mortgage Goals!
Everyone loves getting a tax return during tax season. But, did you know you can leverage this return to achieve mortgage goals? Keep reading to find out how both home buyers and homeowners can benefit from a tax return by investing or reinvesting in homeownership.
Purchasing a Home
It is no surprise that peak home-buying season in many areas coincides with tax season. There are few other times during the year when you will have extra money coming in on top of your income, and lots of prospective home buyers ramp up their savings and search for homes during this time. If you are planning to buy a home this year, keeping your credit score in good shape is one of, if not the most, important steps. Every lender will look at this number first when they go to evaluate your eligibility for a loan. Using your tax return to pay off debt, especially high-interest debt, is a great idea for getting a quick bump in your credit score.
A tax return can also be used to put a down payment on a home, which nearly every seller is going to require. If you can use your tax return to eclipse the 20% mark on your down payment you can avoid having to pay private mortgage insurance every month on top of the actual mortgage payment. At the very least, make an earnest deposit to show the seller you are completely committed to purchasing the home. Every city and state has its own laws defining how much an earnest payment should be, but most of the time it is 1-3% of the total sale.
Building Home Equity
If you already own a home, reinvesting in your home using your tax return is a great way to build wealth. One of those reinvestments is making repairs on your home. Maybe you need new shingles or windows, or maybe you wanna make an addition but need a little influx of cash to get it started. Either way, making necessary repairs or adding to your home will undoubtedly increase the value of the home. A complete remodel can also be something that becomes financially feasible when you get your tax return. Every home can benefit from a remodel, but the specific type of remodeling depends on the home. Some need new bathrooms, some a new kitchen, it completely depends on your individual home.
Refinancing your home can save you thousands every year. You can use your tax return to pay off high-interest debt, drop your mortgage insurance, lower your interest rate, or shorten the term on your home loan. Some people can even leverage more than one of these refinance options at a time. Either way, using your tax return to refinance is a great option.
At Equity Mortgage, we work with a variety of clients with varying degrees of mortgage needs. We offer our clients alternative options to their current loan programs with our wide range of mortgage products and flexible lending practices.
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* Specific loan program availability and requirements may vary. Please get in touch with the mortgage advisor for more information.