Homeowner’s Guide to a Tax Refund
Tax season has come and gone, and for some of you, you may have received a refund check! Time for celebration, right? You could just put it into a savings account, use it for that vacation you’ve been dreaming about, or you can invest it into your home for profit. Whether you are buying or selling a home, or staying put, there are many smart ways to invest your refund into your home. Check out our Homeowner’s Guide to a Tax Refund.
Buying a Home
-Down Payment: A refund on your taxes could go a long way towards a down payment on the purchase of a new home. Depending on your credit history and other factors, borrowers can usually expect to make a down payment of about 5 to 10 percent of the purchase price of the home.
-Closing Costs: Save your tax refund for closing costs associated with the closing of your new home loan.
-Interest Rate: Save your tax refund to put towards a down payment or closing costs on the purchase of a new home. You could also use the cash to buy discount points to lower your mortgage interest rate-which can save thousands in the long run-resulting in a profit on your investment.
-Mortgage Principal: If you are early in your mortgage, consider applying your tax refund towards the principal on your mortgage. Making extra payments could save you thousands of dollars in interest payments over the life of the loan and shave years off your mortgage. And if you decide to sell, you will have more equity.
If you are further into your mortgage, tackling some of those home improvement projects may be a better way to invest in your home. Your tax return can fund a renovation for you to enjoy now and reap the financial benefits later.
-Insulation Upgrade: By adding or upgrading insulation, you can improve the energy efficiency in your home, saving you money on your utility bills. Upgrading your home insulation has a high rate of return when selling a home.
-Solar Screens: Summer is approaching and it will be HOT-investing in solar screens for your windows is a great way to beat the heat. Not only do they keep out bugs, they prevent heat transfer through your windows, saving you money on utilities.
-New Wood Flooring: Not only will you enjoy the new look, investing in wood flooring has a high rate of return when selling your home.
Selling a Home
-Staging: Consider using your tax refund for staging the home you are trying to sell. It will look appealing to buyers-letting them envision the space as their own. You may be surprised by how quickly your home gets snatched from the market. A faster sale will eliminate extra mortgage payments and extra utility bills, as well as eliminate the risk of a wilting sales price due to a prolonged time on the market.