Millions of U.S. households have received or will soon receive an economic stimulus payment from the federal government. This article provides information about the stimulus payment and offers suggestions for the homebuyer on using this money to your benefit when buying a home.
According to the IRS, if you have a social security number, filed a 2007 tax return, and earned at least $3,000 last year, you may be eligible for a stimulus check. Payments began at the end of April and will be sent out through July. People must file a tax return to receive the payment, even if they are not otherwise required to file. The amount you receive will not change the amount of your tax refund and is not taxable.
You don't have to do anything more than file your tax return in order to receive your payment. If you provided direct deposit information on your tax return your stimulus payment will be deposited directly into your account. Otherwise, you will receive the payment by check.
Now for those ideas on using the stimulus rebate when you buy a home. You could:
1. Use the stimulus check to increase your down payment. By paying more upfront, you'll have less debt; could potentially have lower monthly mortgage payments, and might be able to obtain a lower interest rate.
2. Use the money to build the reserves required by some loans. Certain loan programs may require you to have sufficient money in savings to cover a month or two of home loan payments. The strength of your credit could play a role in determining whether or not reserves are required.
3. Use this windfall to help cover closing costs. Many home loans have closing costs, and your stimulus check can be used to pay for some of those. Closing costs might include fees for underwriting, an appraisal, title insurance, as well as other expenses.
4. Use the rebate to buy furniture. As a first time homebuyer, or when buying a larger home, you may need to purchase furnishings. Taking advantage of thrift and discount stores can help the money go farther.
5. Use the money to pay for the gas you'll use as you drive around searching for the right home to buy.
The stimulus payment can ease the financial burden of furnishing or buying a new home. And the wonderful thing is that all you had to do to receive it was file a tax return.
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