Wise Homeowner (or Homebuyer) Investments for Your Tax Refund

Tax season is on its way. Hopefully, you’re looking forward to a fat refund check. Before you spend it on a fun vacation or some new clothes, consider these wise homeowner investments for your tax refund this year.

If buying a house is in your 2022 plans, your refund could help you make it a reality.

Pay Down Credit Cards

Maxed out credit cards can decrease your credit score, which may affect your ability to qualify for a mortgage loan. Plus, it’s a real drag on your budget to pay those expensive interest rates every month. Take a chunk of your tax refund and wipe out some, or all, of your credit card debt.

Start an Emergency Fund

You should have three to six months of living expenses saved. When you’re a homeowner, you need to make certain you never miss a mortgage payment. Take part, or all, of your tax refund and open a savings account for a rainy day when you’re short on cash.

Save It for a Down Payment

Most mortgage loans require a down payment that can be up to 20% of the home’s price. Instead of spending your tax windfall, keep it to use as part of your down payment once you find a home you want to buy. Doing this gives you a big head start on the money you’re going to need to get your house.

Squirrel It Away to Use As Earnest Money

When you put an offer in on a house, you’re usually required to include earnest money. Adding a larger-than-average earnest money check along with your offer shows the seller you’re serious. Sock your tax refund away, so you’ll have enough earnest money to stand apart from the other buyers wanting the same property.

Stash It for Moving Expenses

It can cost several hundred dollars or more to hire professional movers. Earmarking some of your refund for your impending move takes this expense off your plate when the time comes. Just remember to get at least three quotes and references before choosing your moving company.

If you already own a home, it’s smart to use your tax refund to improve or update it.

Invest in New Windows

Your old windows are probably leaking hot and cool air all the time, which is sucking money out of your monthly budget. Windows are expensive to replace, which is why tax refund time is the perfect time to do it. If you can’t replace them all at once, do the front of the house this year and the back of the house next year.

Get a New Roof

Old roofs can leak, leading to costly damage in your house. If your roof is damaged and old, use your tax refund to replace it. If it can be repaired, hire professionals to do that instead. This will give it some more life for a few more years.

Make Needed Repairs

Do you have torn-up ceiling fans, a leaky toilet, loose porch railing, or broken window blinds? Now’s the time to get everything in your house back in working order. Hire a handyman and foot the bill with your tax refund. Put a priority on repairs for dangerous issues. You’ll be more comfortable living in a house that’s fully functioning.

Update the Kitchen

When it comes to home upgrades, one of the best ones for return on investment, and one of the most enjoyable, is a kitchen remodel. Use your tax refund to redo or replace your cabinets, floors, lighting, faucets, and countertops. Be careful not to over-do it and spend more than your refund!

Purchase Energy-Efficient Appliances

Chances are good a high percentage of your electric bill comes from your old appliances. Shop for Energy Star appliances. Start with your clothes dryer, which is the biggest energy-eater. If you have enough funds, replace your fridge, stove, and dishwasher, too.

Install New Toilets

Old toilets are prone to leaks that can damage your floors, and they use lots of water, too. Invest in new, water-efficient toilets, so you save money with every flush.

It can be tempting to go out and spend a tax refund frivolously. The smart thing to do, however, is to invest it in your home plans, so it works for you. Make a wise decision this year with your tax refund money. You’ll be glad you did.