The taxes have been filed, now if you are getting a refund all you have to do is wait for it to appear. What will you do with your refund? Many people use it as mad money and spend it somewhat senselessly, others save it, but how about using it for a down payment on your first home? If you are a first time home buyer, remember you will get an even bigger refund next year because you can write off the interest you pay on your mortgage, and you are building equity in your own home!
Financial people will tell you the ideal situation is to not owe taxes and not get a refund, but many people like to get that refund. According to the IRS, the average refund for 2013 tax returns was $3,013 as of March 24, slightly higher than the average for 2012 tax returns. A tax refund of $3,000 can go a long way towards a down payment on a home, especially with an FHA-insured loan as you need just 3.5% of the home price for the down payment.
Even if your refund is not large enough for an entire down payment, put it away in a special account as the start to your home fund! The more money you can put down on your home, the less your mortgage payment will be and if you can put down 20% you won’t need to pay mortgage insurance.
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Other ways to use your refund is to pay down your debt, the less debt you have when you apply for the mortgage, the better, or keep it in savings so you are prepared if something comes up and you need money fast. Emergencies happen and it is a good feeling to be prepared.
