5 Ways to Spend Your Tax Refund on Your Home
Tax Day is in the rear-view mirror, but many people are waiting and deciding what to do with their refund check. Aside from using the money to pay down debt or monthly bills, homeowners may want to consider improving their housing situation.
The majority of Americans will receive a refund from Uncle Sam, with the average amount totaling nearly $3,000. Mint.com, a website that provides financial tools to consumers, has some easy-to-do ideas involving your home.
1. Build House Fund
Owning a house can be quite expensive at times. Appliances break down, plumbing issues arise without warning, and there is always something that needs replacing. Building a house emergency fund for these surprises can help reduce their financial impact. This is a step that many people need to take. According to Bankrate.com, 28 percent of Americans have no money placed aside for emergencies.
2. Pay Down Mortgage
If homeowners already have a significant emergency fund, they might want to make an extra payment towards the mortgage. This will reduce interest cost by reducing the loan amount faster. Even though mortgage rates are at historic lows, the feeling of paying off a mortgage sooner than expected is priceless to some. Most banks have early payment options that do not include a pre-payment penalty. Homeowners may also want to see if refinancing is worth the time and money.
3. Acquire Flood Insurance
Flood damage may not seem like a possibility for most homeowners, but Mint.com cites that around 20 percent of flood insurance claims occur in moderate-to-low-risk zones. “Anywhere it rains, it can flood, so it’s best to be prepared.” Most Americans know that the typical home insurance policy does not cover flooding, but only 13 percent of homeowners have flood insurance, according to Bankrate.com. More information on flood insurance can be found at FloodSmart.gov.
4. Replace Shower Heads
For taxpayers receiving a smaller-than-average refund, a low-flow shower head can reduce water usage by 25 to 60 percent, saving money on utilities. They are relatively affordable, but make sure to research the product to avoid ending up like Jerry or Kramer.
5. Add Storm Door
Another low-cost option for homeowners is installing a storm door, which provides an extra layer of insulation and another boost to a home’s energy efficiency. You may also be eligible for a tax credit. However, not every front door will benefit. Mint.com notes, “Storm doors are a great investment if you have an older front door that’s still in good condition, but homes with newer, better-insulated doors won’t see as much of a benefit.”
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