According to data released by the Internal Revenue Service (IRS), Americans can expect an estimated average refund of $2,840 this year when filing their taxes. This is down slightly from the average refund of $2,895, last year.
Tax refunds are often thought of as ‘extra money’ that can be used toward larger goals; for anyone looking to buy a home in 2018, this can be a great jump start toward a down payment!
The map below shows the average tax refund Americans received last year by state. (The refunds received for the 2017 tax year should continue to reflect these numbers as the new tax code will go into effect for 2018 tax filings.)
Many first-time buyers believe that a 20% down payment is required to qualify for a mortgage. Programs from the Federal Housing Authority, Freddie Mac, and Fannie Mae all allow for down payments as low as 3%, with Veterans Affairs Loans allowing many veterans to purchase a home with 0% down.
If you started your down payment savings with your tax refund check this year, how close would you be to a 3% down payment?
The map below shows what percentage of a 3% down payment is covered by the average tax refund by taking into account the median price of homes sold by state.
The darker the blue, the closer your tax refund gets you to homeownership! For those in Alabama looking to purchase their first homes, their tax refund could potentially get them 69% closer to that dream!
Saving for a down payment can seem like a daunting task. But the more you know about what’s required, the more prepared you can be to make the best decision for you and your family! This tax season, your refund could be your key to homeownership!
Tag: home ownership
According to ATTOM Data Solutions’ 2018 Rental Affordability Report, “buying a median-priced home is more affordable than renting a three-bedroom property in 240 of 447 [or 54% of] U.S. counties analyzed for the report.”
For the report, ATTOM Data Solutions compared recently released fair market rent data from the Department of Housing and Urban Development with reported income amounts from the Department of Labor and Statistics to determine the percentage of income that a family would have to spend on their monthly housing cost (rent or mortgage payments).
Daren Blomquist, Senior Vice President of ATTOM Data Solutions had this to say:
However, the report also shows that the average fair market rent rose faster than average weekly wages in 60% of the countiesanalyzed in the report (266 of 447 counties). With rents rising, many renters should consider buying a home soon.
Rents will continue to rise, and mortgage interest rates are still at historic lows. Before you sign or renew your next lease, meet with a local professional who can help you determine if you are able to buy a home of your own and lock in your monthly housing expense.
Your down payment was far from the last expense you’ll pay as a homeowner.
Shelling out the dough for your house’s down payment was probably the biggest hit your bank account has ever taken, and the account depletion can leave you a little shaken — not to mention ready to start saving again. But your down payment was far from the last expense you’ll pay as a homeowner. Although the next couple of payments may not be as massive as the down payment, homeownership comes at a price — both on closing day and every month after that.
To keep you sane as you embrace your new life as a homeowner (and safe from buyer’s remorse), here are 10 potential expenses new homeowners should put on their radar.
1. Monthly mortgage
Of course, it’s pretty clear from the start that this is the big payment you will need to make on a monthly basis. You can certainly count on paying off your mortgage every month for the next 15 to 30 years, depending on the terms.
2. Property taxes
These are usually paid twice a year, but property tax laws vary state by state (and even by county). The great unknown here is that in some states, property taxes fluctuate year to year. Sometimes they can be reassessed at a lower rate, but realistically, if your tax payments change, you’ll likely be paying more, not less.
3. Homeowners’ insurance
This also varies by state and region and is influenced by other variables such as whether you have a home security feature or a certain number of smoke detectors. Depending on where you live and what kind of coverage you buy, insurance can run you anywhere between $500 and $1,500 or more a year. It helps to bundle your homeowners’ insurance with other types of insurance, such as auto and life. Insurers even offer you discounts for doing so!
4. Hazard insurance
This includes coverage for many types of natural disasters — earthquakes, floods, tornadoes, or hurricanes, depending on location. For example, if you’re looking for homes for sale in San Francisco, earthquake insurance may be more relevant to research than hurricane insurance.
Pro tip: Don’t wait until bad weather is looming to look into this: It’s important to be prepared early. Flood insurance, for instance, has a 30-day waiting period from the date of purchase before your policy goes into effect.
5. Condo, co-op, or homeowners’ association fees — and assessments
If you own a condo, co-op, or townhouse, you’ll pay an annual or monthly fee to maintain the building and grounds. Single-family homes can also have assessments if they are located in a particular area or subdivision with common property. This is routine in gated communities with security guards, a swimming pool, tennis courts, clubhouse, playground, or any common amenity that will need eventual repairs and replacements.
If you’re renting, you’re probably used to paying monthly utilities. But as a homeowner, chances are, you may be paying a bit more now that you have a home (and maybe more square footage). Think about gas, electric, water, and a couple you probably didn’t deal with as a renter: sewer and trash removal.
Pro tip: Make sure you’re not throwing money away by leaving lights on or overheating or cooling your home. Research how to make your home the most energy-efficient to save money on utilities.
7. Big-ticket renovations and repairs
At some point in your life, you’ve probably been advised to put away money for a rainy day. That’s because a new roof can be very expensive! Upgrading the electrical or plumbing, or something icky such as sewage line issues, are all major costs. Then there are also the renovations you may someday want to make to turn your place into a dream home. Updating the kitchen or the master bath can completely drain your savings. Plan accordingly.
8. Routine maintenance
Things break; appliances wear out, faucets drip, screen doors get walked through. It happens. You’ll want to keep some emergency money handy for a clogged kitchen sink or rusted water heater. You’ll probably average a couple of hundred bucks a month in these “unexpected” costs, so build them into your budget now!
9. Pool and yard care
Depending on how much outdoor space you have to maintain, you’ll need to have money to cover routine expenses. Even if you decide to take the DIY route on some tasks, you’ll still need to hire professionals for occasional work, such as heavy-duty tree trimming or fixing a problem with your pool’s heating system when it breaks down.
10. Moving expenses and new furnishings
These may not be an ongoing expense, but are still a major one after you close on the house. You’re going to need a place to sit and sleep in that shiny new house of yours. Been furniture-shopping lately? It can get expensive, so leave room in your house-buying budget to turn the inside of the home into your own personal paradise!
Pro tip: Invest in some long-term, classically styled furniture so this expense isn’t as massive the next time you move.