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Tax Refund Down Payment
If you've dreamed of buying a home but the down payment is a financial obstacle, now is a good time to take a second look. It's 2018 tax refund time and the average refund this year is approximately $3,000. That could be enough money to help you fulfill your homeownership dream.

Our REALTORS® understand that a down payment can be one of your biggest obstacles to buying a home in North Carolina. It's difficult to meet day-to-day living expenses and save money too. Your income tax refund can give you a reprieve from all that scrimping and saving. Here are a few tips to make it work for you.

Hands off the money!

If you intend to use your tax refund to qualify for a home loan, take the auto-deposit option. From the moment the money hits your account, forget that it's there.

When you're using your tax refund to qualify for a mortgage, your loan officer will want to confirm the dollar amount and that it's actually available. If you withdraw it for whatever reason, the mortgage company won't be able to verify your financial information. 

Non-traditional Financing Options

Your tax refund might not cover the down payment required for a traditional mortgage. But it's enough to give you access to several non-traditional financing options. Ask your lender about these home mortgage programs with low to no down payment requirements and reduced credit and income qualifications.

  • VA - If you're a veteran, active military, or an eligible surviving military spouse, you may qualify for a VA-backed loan with 0% payment.
  • USDA - The USDA offers no down payment, low-interest loans for rural homes in eligible areas.
  • Federal Housing Authority - The FHA loan program has mortgages with down payments as low as 3.5%.
  • Equity Boost Loans - Ask your lender about a conventional loan with an Equity Boost option. You may qualify for a 1% down payment that instantly gives you a boost to 3% home equity.
  • Fannie Mae - The Fannie Mae home loan program offers mortgage rates as low as 3%
  • Freddie Mac - A down payment for a Freddie Mac Home Possible® mortgage can range from 3% to 5% of your home purchase price.

Down Payment Grants

If your tax refund isn't high enough for an adequate down payment, you may qualify for a down payment grant. Search for down payment assistance programs in your city or state.

If you qualify for a no money down loan

If you receive a down payment grant or qualify for a no down payment loan, you should still think carefully before cashing out your tax refund. It can serve several useful purposes.

  • Pay down your debts - If you eliminate some of your existing debt, it can improve your credit score and possibly qualify you for a lower interest rate.
  • Build up your assets - If you leave it in the bank, your tax refund can become an asset that also improves your financial profile.
  • Budget for homeownership expenses - You'll need a cash cushion for moving, higher utility bills, home furnishings, and more.

If you want to know more about meeting the challenges of buying a home, we can help. Contact Margaret Rudd & Associates, Inc. if you're buying or selling a home in the North Carolina communities we serve.