Tax Day is just a few days away and like most Americans, you’re likely expecting a tax refund soon. While splurging on a dream trip or putting it in a savings account are both worthy of your refund, there are other things you could do that would make more financial sense.
Check out these home-related ideas for using your tax refund.
Where to Use Your Tax Refund in Your Home
1. Pay More Towards Your Principal Balance
Making an extra mortgage payment directly to your principal can add up to significant savings over the years. If you were to make one or two additional payments with your yearly refund, you might be able to shave a year or so off the life of your loan. At the very least, making an extra mortgage payment would save you on interest charge.
2. Use it for as Part of Your Down Payment
If you're a first time home buyer or are looking to buy a larger property, you can use your tax refund as part of your down payment! Saving for a down payment can take a while, especially if you don't have extra income to do it with. But, with your tax refund, you'll have a large chunk you can add to the down payment.
3. Pay Down or Pay Off Some Debt
Your credit score and debt-to-income ratio play a significant part in your qualification as well as the rate you get in your mortgage. If you have quite a bit of debt, you could us your refund to pay some or all of it down.
Additionally, if there are some credit cards where you fell behind on the payments, set aside 6 months’ worth of higher-than-minimum payments and set it to pay automatically. Making on-time payments for a few months can help your credit recover while the extra amount will help to pay it down sooner.
4. Upgrade Your Appliances
How old is your refrigerator? When did you last purchase a new washer and dryer? If you're having trouble remembering when, or it's been more than 8 years, you may want to consider upgrading your appliances.
Even if they are in working order, your old appliances probably use a lot more energy than today's models. Plus, energy inefficiency means an additional expense to you.
Another reason you may want to purchase new appliances is as a perk for selling your home. Include the new appliances in the sale of your home and not only could it help to sell your home more quickly, but you'll also could recoup your investment and then some.
5. Invest in Home Improvements
Similar to the above idea, you can use your tax refund to add more value to your home through a DIY project or two --or three! Check out these affordable DIY projects: