Hoosiers Should Consider Investing Their Tax Returns
Last week was the deadline to file your Federal and State tax returns. If you were lucky, you were able to put that dreaded tax deadline behind you without having to pay an exorbitant amount of money to old Uncle Sam. If you were even luckier, maybe you found out that you might even be getting a little money back from the government. For those of you new to this dinosaur theory, it is called a tax refund.
Now for those Hoosiers getting a tax refund, an important step is trying to determine what do with the extra money. Chicago’s BMO Harris Bank says one option is to invest your tax refund in your home.
“All of us have unique financial needs and should consider the best way to put our tax refund to work for our specific situation,” said Ken Hall, Senior Vice President, M&I, a part of BMO Financial Group. “Some people need to establish a savings account or pay down high interest credit card debt; however, interest rates and home prices continue to stay at historical lows creating a good opportunity to take advantage of the housing market.”
Before you invest you must first consider the best possible option to fit how to make your tax refund work for you in your current housing situation.
1. First Time Homebuyers – It may make a lot of sense to buy a home in today’s market. With historically low interest rates and depressed home values, buying a home right now using your tax refund can prove to be a great opportunity. The typical down payment is between 3 and 20 percent of the home’s selling price. There are a number of options available to the first time buyer. Contacting your local mortgage professional is the best way to find out if you’re approved.
2. Refinance Your Home – Refinancing your home can help you lower your interest rate or change the length of your loan term. This of course can allow you to pay off your loan quicker or save money on interest. You should consult with your mortgage professional to find out if this option makes sense for you.
3. Pay Down Your Mortgage – Another option is to pay down your mortgage with your tax refund. It is a great way to decrease your debt while increasing the equity in your home. If you planning on staying in your home for the next few years, you might want to consider investing your tax refund toward the principal of your mortgage.
For more information how to use your tax refund, contact a reputable financial consultant in your area.