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What to Do With a Tax Refund: 3 Ideas That’ll Practically Double Your Money If You’re a Homeowner

What to Do With a Tax Refund: 3 Ideas That’ll Practically Double Your Money If You’re a Homeowner

If this year is anything like the last, almost 7.2 million Americans will get a tax refund this spring averaging around $3,000. If you’re a homeowner getting this refund, you’re fortunate because you’ve got more creative ways to invest it for a profit. Doesn’t matter if you’re selling, staying put, or stuck in the middle. Here are three homeowner-only options to grow that refund:

1. If You’re Early Into Your Mortgage

It may not be as instantly gratifying as a treehouse vacation in Costa Rica, but spending your tax refund to pay down your mortgage principal could save you enough funds to take a splurge-loaded vacation a bit later.

Let’s assume you have a 30-year-loan at the average loan amount of $292,000, a 4.5% interest rate, and you’re getting that average refund of about $3,000. If you apply that “found” money to your principal each year, CPA Micah Fraim of Roanoke, Va., says you can shave years off your mortgage — in this case, nearly four. That’s about 95 mortgage payments you won’t need to make! Even better is the more than $70,000 that you’ll save in interest payments over the life of the loan.

If you don’t want to make an annual commitment, think about this: Make that payment just once and you’ll cut seven months off your payments and save more than $8,000 in interest. And when you decide to sell, you’ll have more equity.

2. If You’re Planning to Sell

Invest it in staging, and you may be surprised by how quickly your home gets plucked from the market.

“Staging lets prospective buyers see the space as their own, instead of as belonging to the people who currently live there,” said Ashley Lewkowicz, owner of Ashley Kay Design in Bucks County, Pa.

“A home that’s not staged can sit on the market for six months or more,” she added. “A home I recently staged sold in less than two.”

Not only is a faster sale better for your bank account in terms of saved mortgage payments and utility bills, but a drawn-out listing can cause a home’s price to wilt. That makes those throw pillows, decorative bath salts, and rented furniture way worth the investment.

For a large, suburban home in a major metro area, staging can cost about $2,000 upfront, and then about $500 per month for furniture and accessory rentals, according to Lewkowicz. But a faster sale at a higher price can definitely more than double your money over the course of the sales process.

And most staging can be accomplished with simple little touches.

Related: Best Tips for Staging Any Room in Your House

3. If You’re a Home Improvement DIYer

Who knew your home could be your own personal ATM? For many DIYers, putting that $3,000 tax return into small home improvements can result in getting far more than their investment out of the house later.

  • A new steel front door costs about $250, but can add about $1,500 when you sell.
  • New wood flooring costs about $1,770, but is worth $5,000 when you sell.
  • Even new insulation, which costs about $700, can recoup about $2,000 at sale.

If you’re willing to scope materials yourself and put in a little elbow grease, your tax return can fund a renovation for you to enjoy now and reap the financial benefits later.

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Wayne

Equal parts dog lover, real estate aficionado, social butterfly and music enthusiast. My idea of a good day is putting the pups in the car, turning up the tunes, sharing funny stories and looking at some houses. If this sounds like fun, let's start a journey that ends with a lifetime friendship and a new home for you. My love of all things houses started by driving around Central Ohio with my mom and admiring the fabulous neighborhoods our area offers. The radio was always on and my eyes were wide open. I loved the variety of designs and imagining what life was like in those places we saw. Perhaps that's the best thing about being a Realtor is knowing that a house is so much more than the wood, stone and concrete of which it is made. It's a place for birthday parties, movie nights, sleepovers, graduation celebrations and creating memorable moments with loved ones. There's few greater joys than watching buyer's faces light up when they imagine these things during a showing and knowing I am the one that has been invited to be part of the process of making the place where this will all happen theirs. I could tell you how I've been a part of hundreds of real estate transactions, that my experience will provide lasting financial value, and that my area knowledge will help you achieve your goals, whatever they may be. And all of these things would, of course, be true. I'd rather, though, share that I made real estate my life passion in 2007 and have since created countless meaningful relationships along the way. Ultimately, for all the things I've done, getting to be even just a small part of such an important stage of so many people's lives gives me more pride than anything else I could imagine.

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