Living in or around Myrtle Beach is a dream to many. Yet, a lot of renters think that owning a home on the coast is out of reach. Actually, during tax refund season, more buyers qualify over any other time of the year! There are several ways that tax refunds create more approved Horry County homebuyers. Let’s discuss these refund benefits as well as the home loans available for Myrtle Beach area buyers.
Using Tax Refund for Down Payment
Buying a home may come with hurdles for some and down payment is usually a primary roadblock. Although, tax refund season provides a solution for this potential issue. Even though the funds may not be in the bank account yet or has just been deposited, they are considered the buyer’s own funds. Plus, as soon as they are in the bank account, lenders consider the funds as usable immediately. If a buyer has not received the refund yet, just provide the filed tax return as proof!
First time buyers that are maybe just starting out on their own or have a new job, are often short on down payment. But, there are some great low down payment mortgage options where tax refunds may actually cover the full amount needed to buy. Home loan programs include FHA, VA, USDA, Conventional, and SC down payment assistance. Down payment requirement for these programs vary from 3.5% to zero down.
No Down Payment Loans Assisted by Tax Refunds Too
As mentioned above, there are no down payment loans as well. So, how do buyers using a no down payment loan benefit from tax refunds? Just because there is no down payment doesn’t mean these funds can’t be helpful. Keep in mind that there are closing costs on buying a home. Plus, buyers must pay the first year of insurance plus taxes and insurance escrow set up (if applicable). Therefore, a refund could cover part or all of these costs for a buyer.
Keep in mind that there is an additional way to cover these closing costs. The costs could be included in the price and home loan! In order to finance these costs, a purchase contract could include seller paid closing costs. Each loan type has certain limits to this assistance, although usually the limits will cover most or all costs.
Tax Refund Helps Buyers Qualify Easier
What if a buyer has a lower credit score, high debt to income ratio, or other issues which cause qualification problems? A refund could be used to pay off debts, pay down a credit card for increasing credit scores, or just used to increase the assets for a buyer’s qualification. These additional assets could take a buyer from a denial to a purchase loan approval. While determining an approval, mortgage underwriters and automated systems weigh positives and negatives of a file. Receiving a tax refund could bolster the buyer’s profile and could make a huge difference in qualification.
An important consumer message is not to withdraw a tax refund from a bank account and convert it to cash. Lenders will not allow cash funds towards buying a home. So rather than converting the refund to cash, keep the funds in the bank account.
Other Uses for Tax Refunds
Not only do refunds help in qualifying, but they also help in life. After buying a home, the buyer could use a refund to set up an emergency savings account. Things happen and having a savings cushion really helps in these areas. Plus, after buying a home, there are usually items to buy. These could include curtains, furniture, paint or buying a home warranty. You may even choose to buy a really cool beach picture for your new coastal home!
So if you are have a tax refund coming your way in the next few weeks, feel free to reach out & get the home search process started. You may be surprised what type of home you could afford in the Myrtle Beach market today! You can either call Jeremy at 843-222-9402 or contact him here.