Tax season is officially in full swing. This means that many local Omahans will be receiving a tax refund of varying amounts. And while we think the best way to utilize that tax refund is to save for a down payment, we don’t think everyone agrees with us.
In fact, we looked it up and a lot of Americans are on the same page of how they’ll utilize the money. Check out the statistics below provided by the National Association of Realtors:
- 41% plan to save their refund (for a down payment, perhaps?)
- 38% will utilize the extra money to pay down debt
- 11% plan to set it aside for a future vacation
- 5% will use it for a major purchase like a car or appliance
- 5% plan to splurge it
Keep reading to find out why we think using your tax return to save for a down payment is your best bet.
Why save for a down payment?
We’ve found that in our experience, the down payment is one of the biggest obstacles standing between renters and homeownership. Part of this is due to the fact that nearly 40% of non-homeowners believe they need a 20% down payment. [bctt tweet=”Nearly 40% of non-homeowners believe they need a 20% down payment.” username=”MTGSpecialists”]
The myth that you need a 20% down payment is just that, a myth. In fact, there are a multitude of ways to buy a home with less than 20% down. One of the ways we recommend for some clients is a conventional loan. Did you know you can qualify for a conventional loan with as little as 3% down?
Now, let’s think this through. Say you receive a tax refund of $2,534 – the average tax refund in Nebraska. Many first-time homebuyers look for homes in the $125,000-$150,000 range. Let’s say you find a home on the lower end, for $125,000. A 5% down payment would only be $3,750. That means by saving one year’s tax return, you’re only about $1,000 away from having enough money for a down payment!
If you’re considering buying a home in 2018, we urge you to get in touch with a lender. We would love to meet with you and walk you through all of the loan options available to you. Give us a call at (402) 991-5153 any time, even on the weekends! We look forward to working with you and helping you find a loan that fits your financial future.