According to the IRS, in Fiscal Year 2016, the average individual income tax refund was about $3,050. Suggestions of what to do with this chunk of change are endless but certainly, amongst those ideas, must be homeownership. After all, purchasing a home is a great investment. Unfortunately the big picture of the situation isn’t whether you can come up with a few thousand bucks, but are you ready to buy a home.
So how can you use that tax refund to help you achieve the goal of homeownership? While it does depend upon your particular situation, the first thing that most people should do is tuck away all or most of that money into a savings account and start building a regular pattern of savings. Think of this; you may pay $700 a month for rent right now and on paper have calculated that you can afford $1,000 a month for a mortgage, but where is that $300 monthly difference going now? If you can truly afford $1,000/month then you should be depositing at least $300/month into a savings account. Lenders won’t take your word for it; they will want some verification that you can afford a higher monthly payment.
Homeownership is a huge commitment, and not just financially. You still have to plan and pay for repairs – some that could be quite costly. If, for example, your furnace kicks the bucket, you’re looking at over a $5,000 expense to get a new one.
Call one of our Realtors today 603.726.4580
If you don’t have a habit of savings or if you aren’t currently saving an amount above and beyond your rent to become comfortable with a mortgage payment, this is the perfect time to put a plan into action to achieve that goal. Having a chunk of change all at once, such as a tax refund, creates a multitude of opportunities; you owe it to yourself to take advantage of them.