The tax refund is a known income booster. When you couple it with stimulus paychecks, you can be on the verge of becoming a bonafide homeowner.
If you’ve been planning for a long time to buy a home, why not let your tax refund and stimulus checks make that happen for you? And if you’re in Florida, you could easily take advantage of the low interest rates to kickstart your journey to homeownership.
This tax-filing season, combine your tax refunds and stimulus checks to make your dream of owning a house come true. Here are a few ideas on how to do that:
One of the challenges of buying a home is coming up with a downpayment. But most homebuyers don’t have an accurate approximation of how much downpayment they need. Your downpayment depends on the price of the home, your credit score and several other factors. Some borrowers can make a 5 to 10% downpayment, which is lower than what they may assume.
Some programs can help you in making a downpayment for a house. You can receive financial assistance from the state, county, and city governments to save on down payment and closing costs as long as you qualify for homeownership. Housing programs like the Federal Housing Authority, Freddie Mac, and Fannie Mae make it possible for first-time homebuyers to buy a house with as little as 3% downpayment. Veterans can even put 0% downpayment, thanks to the Veterans Affairs Loans.
To qualify for a home loan, a lender will require a minimum credit score. The higher your credit score is, the better loan terms you’ll receive. You can use your stimulus and tax refund to improve your credit score. Use the money to establish new credit tradelines. If you think your credit is low, you can set up new tradelines using a secured credit card, perfect for individuals who don’t qualify for a regular credit card.
If you have credit cards but no existing term loans, you can deposit into a savings account and apply for a secured loan off of it. That will fulfill your need for a term loan on your credit profile. Improving your credit score can come a long way, especially when you want better terms when you take out a home loan.
Your home loan application qualification includes a debt to income ratio. Paying off your existing debt can lower this ratio, which will enable you to apply for a home loan and be able to borrow a more considerable amount.
One way to lower your debt is to pay off your credit card debt using the funds you received. Depending on the amount of money you owe, you can start paying off all your credit card debt or pay at least half of what you owe. When you pay off a credit card’s whole debt, this will no longer affect your debt to income ratio since you won’t have any minimum monthly payments anymore.
You can put the funds you receive in a high-yield savings account if you’re planning on buying a house soon. The money you put in will have a higher increase than putting it in a standard checking account.
Some people may think of putting their combined tax refunds and stimulus money in the stock market. However, if you want to buy a house in a year or two, it’s better to keep your money out of the market. It’s not advisable to put the funds in the market for a short amount of time.
Finding ways to put the funds you receive to good use can pave the way for you to own your own home. These funds could be the answer so you can finally afford a big purchase like a house and celebrate that milestone in your life.
Need professional financial guidance for homeownership in Florida? Reach Home Loans is your trusted mortgage banker in Miami, Florida. Let us help you find the right home loan for you and get you set up to be a proud owner in this beautiful state. Call us now at 954-780-5565!
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