Tax season is over and soon tax returns will be issued. Kingston Mortgage professionals suggest putting that tax return towards a property regardless of what stage you are in your search for a home. Our experts go into further detail in this article.
A tax return can be added to a down payment totaling a larger down payment. A larger down payment gives you more equity in your home, which saves you money in the long run. By putting more money down, the borrower needs to request less money from the mortgage lender. This leads to a lower monthly mortgage payment, which will give the borrower more wiggle room to save money. The larger down payment will demonstrate more security and responsibility to the mortgage lender. This could lead to a lower interest rate which will save you money as well.
If the tax return is able to fill the gap the borrower needs to have a 20% down payment, the borrower should seriously consider using the tax return to have a 20% down payment. By putting a 20% down payment, the borrower will own 20% of the property at the time of purchase, which removes the necessity of paying private mortgage insurance from the beginning. By avoiding PMI payments, home-owners will be able to save money.
Pay off PMI
This option depends heavily on your situation because for it to be the most beneficial, your tax return needs to be able to cover what you owe in your private mortgage insurance, PMI. Those who pay private mortgage insurance will do so until they reach equity of 20%. By using your tax return to pay off your PMI, you will save money in the long run while simultaneously owning a greater percentage of your home. Therefore, if your tax return covers the difference you need to reach 20% equity in your home, you should seriously consider paying off your private mortgage insurance.
Remodel your home
Show you are house-proud by using your tax return to make renovations to your home. Renovating your home is beneficial because it will increase the value of your home, which in turn increases your wealth. Some examples of renovations that you can make include adding crown moldings, adding solar panels and upgrading to double paned windows. By renovating your home, you will have a more luxurious and comfortable home. These renovations are an investment in your property.