You have been working all year. You paid Uncle Sam his cut, and now, you will get some money back (hopefully!) Here are 8 ways to use your funds wisely towards buying a home or property, or building your financial stamina so you can buy a home in the future.
1. Use your Tax refund as the down payment on your new home.
Do you have money set aside for your down payment? Do you know how much you need? Start saving for your new home with your refund from Federal and State taxes.
2. Use your refund towards closing costs on your new home.
You may be responsible for the closing costs when you purchase your new home. It is best to plan to cover the expense. If you end up not needing to cover it, you can utilize the funds a different way.
3. Use your refund to buy down your interest rate and lower your monthly payment.
Chances are you do not have the lowest interest rate. Many don’t consider this as an option in their day to day budgeting and planning. Remember, a lower interest rate is always better!
4. Use it to pay off your credit cards and increase your credit score.
Many financial gurus suggest you clear out the cards and other revolving debt, targeting the smallest debt with the highest interest rate first. A good credit score helps when purchasing a home.
5. No Credit? Use your refund to get a “secured credit card” to start building a credit history.
There is more than one way to start building good credit. A small, manageable credit card that you pay on time every month is one way. Getting a Secured Credit Card is different from a normal credit card in that you pay an initial security deposit which helps the lender understand that you have the ability to pay off the card. Call your bank or favorite FDIC member credit card company for more info.
6. Tackle your creditors. Ask them for a payoff amount, and move your debt towards “PAID.”
Many creditors will work with you to get your accounts paid off. You can pay one lump sum and could save even 50% of the cost . Ask. You do not know until you do.
7. Save it! Lenders look to see if you have any cash in your savings.
It can be hard to save. Start now. Use part or all of your tax refund to start saving.
8. Transfer it to a “Rainy Day” account to build a financial cushion of 3-6 months of expenses.
Budgets and needs fluctuate. Giving yourself and your family a financial cushion specifically for your current and unexpected expenses is a safe step to preserving your financial longevity.
These are all smart ways to build, save, and grow your finances and start preparing to purchase a home or property. Which is best for you? Speak with one of our expert RE/MAX VA, DC, & MD licensed Real Estate Agents by contacting us here or call us at 571-992-0700
