Ways To Use Your Tax Refund If You Want To Buy a Home
Have you been saving up to buy a home this year? If so, you know there are a number of expenses involved – from your down payment to closing costs. But did you also know your tax refund can help you pay for some of these expenses? As Credit Karma explains: “If one of your goals is to stop renting and buy a home, you’ll need to save up for closing costs and a down payment on the mortgage. A tax refund can give you a start on the road to homeownership. If you’ve already started to save, your tax refund could move you down the road faster.” While how much money you may get in a tax refund is going to vary, it can be encouraging to have a general idea of what’s possible. Here’s what CNET has to say about the average increase people are seeing this year: “The average refund size is up by 6.1%, from $2,903 for 2023's tax season through March 24, to $3,081 for this season through March 22.” Sounds great, right? Remember, your number is going to be different. But if you do get a refund, here are a few examples of how you can use it when buying a home. According to Freddie Mac: Saving for a down payment – One of the biggest barriers to homeownership is setting aside enough money for a down payment. You could reach your savings goal even faster by using your tax refund to help. Paying for closing costs – Closing costs cover some of the payments you’ll make at closing. They’re generally between 2% and 5% of the total purchase price of the home. You could direct your tax refund toward these closing costs. Lowering your mortgage rate – Your lender might give you the option to buy down your mortgage rate. If affordability is tight for you at today’s rates and home prices, this option may be worth exploring. If you qualify for this option, you could pay upfront to have a lower rate on your mortgage. The best way to get ready to buy a home in Oklahoma is to work with a team of trusted real estate professionals who understand the process and what you’ll need to do to be ready to buy. Bottom Line Your tax refund can help you reach your savings goal for buying a home. Connect with a local real estate professional about what you’re looking for, because your home may be more within reach than you think.
What Every Homebuyer Should Know About Closing Costs
Before making the decision to buy a home in Oklahoma, it's important to plan for all the costs you’ll be responsible for. While you're busy saving for the down payment, don't forget you’ll want to prep for closing costs too. Here’s some helpful information on what those costs are and how much you should budget for them. What Are Closing Costs? A recent article from Bankrate explains: “Closing costs are the fees and expenses you must pay before becoming the legal owner of a house, condo or townhome . . . Closing costs vary depending on the purchase price of the home and how it’s being financed . . .” Simply put, your closing costs are the additional fees and payments you have to make at closing. According to Freddie Mac, while they can vary by location and situation, closing costs typically include: Government recording costs Appraisal fees Credit report fees Lender origination fees Title services Tax service fees Survey fees Attorney fees Underwriting Fees How Much Are Closing Costs? According to the same Freddie Mac article mentioned above, they’re typically between 2% and 5% of the total purchase price of your home. With that in mind, here’s how you can get an idea of what you’ll need to budget. Let’s say you find a home you want to purchase at today’s median price of $384,500. Based on the 2-5% Freddie Mac estimate, your closing fees could be between roughly $7,690 and $19,225. But keep in mind, if you’re in the market for a home above or below this price range, your closing costs will be higher or lower. Make Sure You’re Prepared To Close Freddie Mac provides great advice for homebuyers, saying: “As you start your homebuying journey, take the time to get a sense of all costs involved – from your down payment to closing costs.” The best way to do that is by partnering with a team of trusted real estate professionals. That gives you a group of experts to help you understand how much you’ll need to save and what you’ll want to be prepped for. It also means you have go-to resources for any questions that pop up along the way. Bottom Line Planning for the fees and payments you'll need to cover when you're closing on your home is important. Partnering with a local real estate professional can give you the guidance and confidence you need throughout the process.
The Truth About Down Payments
If you’re planning to buy your first home in Oklahoma, saving up for all the costs involved can feel daunting, especially when it comes to the down payment. That might be because you’ve heard you need to save 20% of the home’s price to put down. Well, that isn’t necessarily the case. Unless specified by your loan type or lender, it’s typically not required to put 20% down. That means you could be closer to your homebuying dream than you realize. As The Mortgage Reports says: “Although putting down 20% to avoid mortgage insurance is wise if affordable, it’s a myth that this is always necessary. In fact, most people opt for a much lower down payment.” According to the National Association of Realtors (NAR), the median down payment hasn’t been over 20% since 2005. In fact, for all homebuyers today it’s only 15%. And it’s even lower for first-time homebuyers at just 8% (see graph below): The big takeaway? You may not need to save as much as you originally thought. Learn About Resources That Can Help You Toward Your Goal According to Down Payment Resource, there are also over 2,000 homebuyer assistance programs in the U.S., and many of them are intended to help with down payments. Plus, there are loan options that can help too. For example, FHA loans offer down payments as low as 3.5%, while VA and USDA loans have no down payment requirements for qualified applicants. With so many resources available to help with your down payment, the best way to find what you qualify for is by consulting with your loan officer or broker. They know about local grants and loan programs that may help you out. Don’t let the misconception that you have to have 20% saved up hold you back. If you’re ready to become a homeowner in Oklahoma, lean on the professionals to find resources that can help you make your dreams a reality. If you put your plans on hold until you’ve saved up 20%, it may actually cost you in the long run. According to U.S. Bank: “. . . there are plenty of reasons why it might not be possible. For some, waiting to save up 20% for a down payment may “cost” too much time. While you’re saving for your down payment and paying rent, the price of your future home may go up.” Home prices are expected to keep appreciating over the next 5 years – meaning your future home will likely go up in price the longer you wait. If you’re able to use these resources to buy now, that future price growth will help you build equity, rather than cost you more. Bottom Line Keep in mind that you don't always need a 20% down payment to buy a home. If you're looking to make a move this year, reach out to a trusted real estate professional to start the conversation about your homebuying goals.
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