Buyer or Owner? How a Refund Can Help By Abe Gallagher

If you’re lucky, you might be expecting a hefty refund come tax season — but forget the shopping spree.

Instead, a tax refund can be an excellent tool for helping you improve your current home or even buying a new one.

Do you own a home you’d like to put money toward, or do you have your sights set on homeownership? Here are some ways you can use that tax windfall no matter which category you fall into.

Homeowners:

• Improve your house. Your tax refund could help you make necessary repairs, add landscaping to your property, or complete renovations to your kitchen or bathroom.
• Make an extra mortgage payment. Want to reduce long-term interest and pay off your loan sooner? Consider making a few additional payments a year.
• Beef up your emergency fund. Having an emergency fund is critical as a homeowner. You should have enough to cover at least six months of expenses.

Homebuyers:

• Use it toward your down payment. Your refund could make a sizable dent in the down payment. Remember: Some loans only require 3% down.
• Cover your closing costs. You’ll usually pay anywhere from 2% to 5% of your loan amount in closing costs. Chances are, your tax refund can cover a large portion of that. (This applies to refinancing for homeowners, too.)
• Pay for moving expenses. Once you buy a home, you’ll need money for packing supplies, movers or truck rental and all those other moving expenses.