The average estimated tax refund is expected to be $2,840 this year, down slightly from $2,895 the previous year. First-time home buyers, in particular, often say saving for a down payment is their biggest hurdle to homeownership. As such, the tax time may be the perfect moment to remind clients that their refund may come in handy ahead of the spring market.
Last year, the median down payment was 10 percent, according to the National Association of REALTORS®’ 2017 Profile of Home Buyers and Sellers. Depending on the average prices in an area, a couple thousand dollars could make a significant dent in that amount. However, many first-time home buyers don't realize they can buy a home with less than 20 percent down.
Twenty-five percent of first-time buyers said that saving for a down payment was the most difficult step in the buying process, according to NAR's report. Seven percent of first-time buyers say they plan to use their tax return to go toward their down payment.
Connecticut residents are expected to see the highest tax refunds this year at $3,126, while Vermont residents will likely have the lowest at $2,254. Visit NAR’s Economists’ Outlook blog to see a breakdown of the average tax refund by state.
Source: “Using Tax Refund for a Downpayment,” National Association of REALTORS® Economists’ Outlook blog (Feb. 22, 2018)