March 2nd, 2018 8:00 AM by Jackie A. Graves
The IRS began accepting tax returns on January 29, and estimates
nearly 155 million individual tax returns will be filed in 2018.
If you're expecting a refund this year, here are three ways it
could bring you closer to homeownership:
Save for a down payment. Saving for a down payment can
be one of the biggest barriers to homeownership. But today's homebuyers
persistently overestimate the size of the down payment they need. Depending
on your credit history and other factors, many borrowers can make a down
payment of about 5 to 10% — not 20%, as a lot of
people falsely assume. With Freddie Mac's 3% down mortgage – Home Possible Advantage®–qualified
borrowers could make down payment of as little as $6,000 for a $200,000 home.
Down payment assistance programs can also help you bridge the cash gap. There
are thousands of programs across the country that can help you save on your
down payment and closing costs. A great place to start is right where you live.
Many state, county, and city governments provide financial assistance for
people in their communities who are well qualified and ready for homeownership.
Check out the programs
available in your market and see if your eligible.
Pay for closing costs. A homebuyer typically pays
between about 2% and 5% of the home purchase price in closing fees, but the
amount varies widely depending on where you live. See where
your state stacks up and understand your costs.
Lower your interest rate. You can pay discount points to
buy down your mortgage interest rate. A "point" equals one percent of
the loan. It's essentially an upfront interest payment to lock in a lower
interest rate on your fixed–rate mortgage. So, if you are borrowing $200,000,
paying one discount point would mean paying $2,000 upfront at closing — but it
may end up saving you more in interest payments over the life of the loan. See how
paying extra points might lower your rate.
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