HOW TO SAVE MY TAX REFUND TO BUY A HOME?
If you are receiving a tax refund this year, you may want to invest it in buying your first home. Have you ever questioned where your tax refund dollars were spent? Or how did the money disappear so quickly? Maybe it is time to invest your tax refund into buying a home that will provide you more benefits this year.
Did you know that owning a home could allow you to save up to $2,000 a year as a special tax credit? Yes, the Mortgage Credit Certificate (MCC) will allow you to take a $2,000 credit each year as a first time home buyer. For example, if your mortgage is $150,000 and your interest rate is 3.80%, you will be responsible for paying interest for approximately $5,700. From that $5,700 you are entitled to save a max of $2,000, which you will now owe $3,700. With that being said, you will experience a larger return.
Visit TSAHC.org to learn more about the tax credit program.
|MCC Tax Credit Rate (40% of Mortgage Interest Paid)||40%|
|Tax Credit Amount||$2,280|
|Maximum Credit Amount||$2,000|
The first idea once your refund is returned is to go on a shopping spree, but one of the best things you can do with the funds is save it towards your down payment, or delegate it to paying off bills. A refund is simply returning the amount of taxes you overpaid throughout the year. According to CNBC in 2016, the average tax return was approximately $3,050. If you are thinking of purchasing a home, this will cover a large portion of your down payment. FHA’s minimum down payment is 3.5% of the purchase price. If the home you are interested in cost $100,000, then your down payment will be $3,500. There are other grant programs in which you may be eligible to receive, that will also contribute to the down payment or completely cover the down payment, allowing you to have available funds to contribute to purchasing a home.
With the new first time homebuyer programs as of late 2017, conventional loans are offered at 3% down. Your tax refund could go a long way if you implement the down payment assistance along with you tax refund. Grants are available in 3%, 4%, or 5% in the State of Texas. In Houston, TX you are eligible to receive up to $25,000 in grants towards purchasing a home depending on your income requirements. Visit houstontx.org to learn more.
So are you ready to stop moving every year due to increasing rents? Are you ready to take the next step to obtaining the American Dream?
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