How your tax refund can help you purchase a home

Laura Johnson.

Benjamin Franklin once said that nothing can be certain, except death and taxes. Well, I am not a funeral director, but I am a mortgage lender and know how you can utilize your tax refund in a home purchase.

Saving for a down payment can be a challenging task, with many unexpected expenses occurring along the way. Utilizing your tax return, however, can make that effort much less daunting. You may be able to fund most if not all your down payment depending on the total purchase price of a home and other factors.

Here is an example of a down payment needed on a purchase price of $300,000. On a Conventional loan a first-time home buyer can use as little as 3% for their down payment which equals $9,000. If you are looking to move into a larger or smaller home, you can put down as little as 5% which equals $15,000. An FHA loan requires a 3.5% down payment, which equals $10,500 and a USDA Rural Housing loan or VA loan do not require a down payment. Each loan program does have certain guidelines that must be met for you to qualify.

If you have already saved the majority of your down payment, but it isn't quite enough, there are down payment assistant programs that may be able to help you. CalHFA and Golden State Finance Authority are two programs that offer down payment or closing cost assistance for homebuyers. Each program offers assistance ranging from 3% to 5.5% of the first mortgage loan amount. Both CalHFA and GSFA programs do have specific eligibility requirements in order to qualify. There are many assistance programs throughout the state that may be area and income specific to help home buyers.

If you already have set aside the funds required for the purchase but found a home that needs a little TLC, your tax refund can fund those improvements. Not only can this increase your new home's comfort and aesthetic appeal, but strategic upgrades can also boost its value, enhancing your investment.

Another way to use your tax refund is to set up a savings account for unforeseen expenses, from repairs to maintenance. Using part of your tax refund to establish an emergency fund can provide a financial cushion, ensuring you are prepared for any unexpected costs without derailing your mortgage payments. Using your tax return is a strategic financial decision that can bring you one step closer to owning a home. As you prepare for homeownership, consider consulting with a local mortgage professional to make the most of your tax refund and other financial resources. Remember, every step toward saving for a down payment brings you closer to the keys to your own home.

Laura Johnson has lived in Tehachapi for 49 years and her family's history in Tehachapi spans over 150 years. Laura has been in lending for 14 years and the real estate industry for 24 years. You can reach Laura at Nations Lending 1054-B Valley Blvd. Tehachapi, (661) 303-7853.