6 smart ways your tax refund can help you get into your first new home

(BPT) – Sponsored Advertising Content by Vanderbilt Mortgage and Finance, Inc.

The average tax refund for the 2014 filing season was nearly $3,000 and the IRS doles out about 100 million of them every year, according to IRS data. If you’ll be getting a refund this year, instead of spending it on more stuff you don’t need, why not invest in your future and use your refund to help you make that first-time home purchase you’ve been dreaming about?

“Your tax refund can be a great tool to help you progress toward homeownership,” says Eric Hamilton, president of Vanderbilt Mortgage and Finance, Inc. “You can use it in a number of ways to facilitate the home-buying process, from putting it toward a down payment on a new home to paying down high-interest credit card bills – a move that may help improve your credit score and borrowing power.”

Here are six ways first-time homebuyers can use their tax refund to help them get into their new home:

1. Put it toward a down payment.

The days of buying a house without any down payment are pretty much gone for most people. Depending upon the loan program, a down payment can be significant. The more you put down, the less you will have to borrow, and the less you’ll pay in interest over the life of your mortgage. You can open a separate savings account and use it to build your down payment fund and deposit your tax refund into it so you won’t spend it. Vanderbilt offers an online guide to down payments at www.vmfhomeloan.com.

2. Use it to improve your credit score.

A good credit score can help you get the best possible mortgage offer, so put your tax refund toward actions that may help improve your score. For example, paying down high-interest revolving debt can help improve your credit score, so use your refund to pay off credit cards and avoid accumulating any more credit card debt while you’re saving toward your first home purchase.

3. Apply it to closing costs.

When a home purchase is financed, closing costs like attorney’s fees, appraisal and inspection fees, title insurance, and escrow costs are typically charged and are not always permitted to be rolled into your monthly mortgage payment. Financing costs can be quite expensive and are required in addition to the down payment, and you may need to pay these costs in cash. Your tax refund can be a great way to help pay for closing costs.

4. Put it toward taxes and insurance.

Once you own a house, you’ll need to pay property taxes on it and insure it. You can also put your tax refund toward paying these costs. Or, if your taxes and insurance are paid through your mortgage, use your tax refund to purchase additional insurance – and greater security – such as an umbrella policy. Consult your insurance agent to determine whether purchasing additional insurance coverage is right for you.

5. Use it to cover moving costs.

Even if your entire home-buying process goes smoothly and you’ve done a great job of saving money and managing your finances, you’ll still face expenses associated with moving into your new home. Your tax refund can help cover the cost of renting a moving truck, purchasing packaging material, paying deposits to start utilities service and more.

6. Use it to build your emergency fund.

Every homeowner should have an emergency fund – a savings account with a balance sufficient to cover several months’ of expenses, including your mortgage payment. An emergency fund can help protect you from financial issues if you lose your job or experience an unexpected expense, such as a major car repair.


Source: http://www.brandpointcontent.com/printsite/real-estate/6-smart-ways-your-tax-refund-can-help-you-get-into-your-first-new-home,23047