It's Tax Day!
Today is the last day to file for tax returns! Tax returns are a nice chunk of change to get back, and a great first step towards a down payment on a home! Have you ever considered using your tax refund for this? Tax refunds have become a popular tool for making the first down payment.
Why the Tax Refund?
According to the Internal Revenue Service, the average tax refund was found to be $3,120 in 2017. For first-time home buyers looking in the $100,000 price range houses, they could be expecting a 3.5% down payment on the home from the FHA, which would be around $6,000. Even if the tax refund doesn’t pay for all of it, paying for half of it is still good.
Not only that, using your tax refund for the down payment could lead to you qualifying for a bigger home and lower monthly payments down the road.
A Popular Method Among Millennials
A study done by the Sun Group in 2016 revealed that 76% of millennials want to purchase a home within the next ten years or so. Since interest rates are still pretty low right now (between 3.5% to 4.5%), it’s a great time to use that tax refund money to purchase a starter home.
The study further elaborated that a lot of millennials are at the stage where they are ready to begin buying homes. Once that influx begins, you might see an increase in price on houses in upcoming years.
Why does this matter? The number of millennials compared to the number of baby boomers is greater by about 7.7 million people. When baby boomers entered the market, they created trends through their sheer population numbers. With that in mind, just imagine how much power millennials will have once they get their hands on the housing market.
Other Areas to Use Your Refunds
If you are already secure with your home and aren’t planning on moving anytime soon, there are some other areas where you could use your tax refunds on your home. It’s more beneficial in the long run to use your money for paying off debts or renovations rather than just for personal pleasure.
Even if your interest doesn’t pay off your entire loan or debt, it will give you peace of mind down the road. You’ll save interest on your loan or credit card by doing so.
Renovations and repairs aren’t just additions to make your house look pretty, but to add value to your house down the road. If you ever plan on moving, putting tax money into fine tuning your home is crucial.
Make the most out of your tax refund, and you’ll be happy you did.