Manufactured Housing News

Saving money for a down payment on a house is one of the greatest obstacles to homeownership. While many people resort to less advantageous financing options to come up with the cash they need for down payments, an often-overlooked source of funds is the income tax return. In fact, the possibility of using the tax refund as a down payment to buy a home comes as a surprise to many taxpayers.

The Wisdom of Using Your Tax Refund for a Down Payment

Depending on your tax refund amount and the region you live in, your tax return might be large enough to cover the entire down payment on a house or to supplement money that you already have. This is particularly true if you consider buying a home under $100,000.

If you intend to purchase a manufactured home, for example, the down payment required could be as low as 5%. On average, new single-wide manufactured homes without land sell for $52,000, while double-wide homes sell for $99,300. Based on these figures, a down payment of 5% would range from approximately $2,500 to $5000. In 2018, the average income tax return was $2,899, according to the IRS. This means that the average tax refund could cover at least half of the down payment typically required on a manufactured home under $100,000.

But what if your tax refund doesn’t provide the cash you need to make a down payment on a manufactured home? In this case, you might be able to use it as a down payment to buy a piece of land. Then, you could opt for a specialized financing program, such as the LandHome program. This program allows borrowers to use their land as collateral in order to qualify for a manufactured home loan.  

Using Your Tax Refund to Build Up Your Savings Account

If you’re contemplating buying a manufactured home, but your refund is only several hundred dollars, a good idea would be to deposit it into an account dedicated to your down payment fund.

Furthermore, you can use your annual tax returns as a forced savings plan. For most people, income taxes are automatically deducted from their paychecks for anticipated tax liability. If you’re like 73% of taxpayers, who overpay their taxes, you can expect to get an income tax return.

Depositing your tax return, bonuses, and any money left over after covering your financial obligations into your account can help you save enough to make a down payment on a manufactured home. Thus, even if your tax refund isn’t large enough for a down payment this year, it can definitely help you get closer to achieving your homeownership goals in the future.

Using Your Tax Refund for Other Purposes Related to Homeownership

The minimum down payment amount is just one of the requirements you need to meet in order to qualify for a manufactured home loan. If you have enough money for the down payment, you can use your tax refund to:

• Improve your credit score by paying off debt. Besides maximizing your chances of obtaining the loan amount you need to buy a manufactured home, a good credit score may bring you better terms and conditions, such as a lower interest rate, a longer repayment period, and even a lower down payment amount.

• Purchase buy-down points, also known as discount points. These points allow you to benefit from a lower interest rate over the life of the loan, which will translate into lower monthly payments.

• Purchase homeowners insurance. This type of insurance protects your home and your personal belongings against accidental damage or loss, as well as yourself from liability should someone get injured while on your property. You can consult with an insurance specialist to determine which insurance plan is right for you.

• Cover closing costs, property taxes, and additional expenses, which may include furniture, carpeting, window treatments, and other things that can help you turn your house into a home.

Because of the high cost of living combined with low pay increases makes it very difficult to save money for a down payment, it’s recommended that you match your savings plan with an important goal, such as buying a manufactured home. If you’re looking for a manufactured home loan, finding some advantageous financing alternatives, like manufactured home loans with land, is absolutely possible. The key is to select the right manufactured home lender that can help you choose the right type of loan for your financial situation.