Are you getting a tax refund this year? According to the IRS, the average U.S. tax refund is nearly $3,000, with some families getting thousands more. A large refund could be a nice addition to a downpayment savings fund. If you haven’t started saving for a home yet, it’s a great way to get started.
How much do you need to save to buy a home? Surveys show that many first-time home buyers overestimate the amount of money they need to be able to buy a home. The average downpayment for first-time home buyers nationwide is about 6% of the purchase price, according to the National Association of Realtors. There are a variety of low-downpayment and even some no-downpayment home loan programs available that can help reduce the amount of money you’ll need to bring to the closing table. There are FHA mortgages, designed for first-time home buyers and families with moderate incomes and the VA home loan program, an incredible financing option for active-duty military personnel and veterans.
Don’t just assume you can’t afford to purchase a home; visit a reputable lender and get the facts about your unique situation. A lender will take a look at how much you’ve saved, your credit score, your debt level and other information to determine if you qualify to finance the purchase a home. If you don’t qualify, you’ll know which areas of your finances you need to work on and improve. Consider it the start of your homeownership journey, not the end!
Today’s low mortgage rates are a big bonus to home buyers. Rates remain near historic lows, which can help keep your monthly mortgage payment low. If you plan on staying put for a while and your employment situation is stable, it could be a great time to buy a home and lock in a low rate for years to come.