April Real Estate Roundup: Using Tax Refunds Toward Homeownership

Now that the April 15 tax deadline is behind us, some of your clients will receive refunds to give them extra cash to make homeownership a reality. Check out the tips below for how a tax refund can help your clients invest in their new home.  

• Use for/Add to a Down Payment: Putting a tax refund toward a down payment lowers the amount borrowed and lessens or eliminates mortgage insurance. 

• Cover Closing Costs: A tax refund can go toward the earnest money deposit, home inspection, appraisal or other out-of-pocket costs. (A closing cost worksheet is also helpful.) 

• Pay Down Debt: Paying off high interest loans like credit cards can help lower your clients’ debt-to-income ratio and improve credit scores.   

• Buy Discount Points: In the right market, your client can use a refund to buy down their rate for the life of the loan.  

• Cover Moving Costs: Box trucks and packing materials can add up; a refund can take care of them. 

• Build an Emergency Fund: A refund can help start an account to cover future home maintenance.   

Renovation Loans 

I’ve been getting more calls about renovation loans. Let’s say your buyer… 

• Can’t seem to find the existing home they want 

• Has found a home they love, but it needs updates for safety, codes, or comfort 

• Has a flexible timeline and is comfortable making some repairs after closing 

• Wants a more accessible home 

A renovation loan helps upgrade an existing property to accommodate new homeowners’ wants and needs. It transforms the not-so-perfect home into that just-right property your client can enjoy for years. 

Renovation loans come in Conventional, VA, FHA, and USDA options just like standard loans. We can also roll the costs into one loan (single-close) so buyers won’t face two separate debts! Ask me for more information about specific guidelines, but the general rules-of-thumb are as follows:  

• Depending on the loan program, buyers can enjoy single-close, 15- and 30-year, fixed-rate options. 

• They’re typically for primary residences only. 

• Updates must be performed by an approved and licensed contractor. 

• Loan amounts are based on the “as-completed” appraisal value.  

• Renovation loan interest rates can be a little higher – but your buyer is adding value, and they can refinance later. 

• Renovation loans begin at $5,000 and can be used for lesser repairs and updates up to around $35,000, or for larger renovations, up to the loan limits in your area.  

• VA Renovation Loans have some extra requirements, including: 

• Contractors must be registered with the VA (or are willing to do so). 

• Can only be used for minor repairs or upgrades  

• Loan limits have recently risen to $75,000 

How Does My Buyer Get Started? 

Once you help buyer find a home, they’ll prepare their list of repairs and apply with Atlantic Bay just like any other mortgage. An appraiser will provide the property value and an estimate of how much the total repairs will cost, and thus the total loan amount. After your buyer closes the loan, the repairs begin, and that value starts growing! 

I look forward to helping you and your clients with any questions you have. Just give me a call!