Smart Choices with Your Tax Refund & Stimulus Check Amidst An Economy of Uncertainty

As these unprecedented times related to the COVID-19 unfold, you may be wondering how to financially navigate the next few months. The economy is experiencing a significant correction that may ultimately lead to a recession, and you may have some looming questions about what exactly you should do. Should you save as much as you can and hold onto it? Should you invest- and if so, where? How should you spend your government stimulus check or your tax refund? We’ve got some insight to help you make smart financial decisions during this tumultuous time.

Let’s start with the facts:

1. The stock market is down.
2. Interest rates are down.
3. There are 100% financing programs available for potential home buyers who make under $58K annually. These programs mean buyers would put $0 down on the purchase of a home.
4. Most U.S. citizens who make under $99,000 annually will receive a stimulus check from the government for anywhere from $1200 and up, depending on how you filed your taxes in 2018 (single individual, joint, head of household, etc.).
5. A good percentage of working Americans will also receive a tax refund after filing their 2019 federal and state taxes. The average IRS refund in 2019 (for the 2018 tax year) was almost $3,000.

Right now, financial experts are advising the public to do a few things to help protect their money. Of course, saving money and cutting unnecessary costs where you can is a great idea. But with near an average of $4,000 coming your way in a lump sum soon, it is a great time to consider investing that money in real estate.

Here’s why:

1. It could be a low-cost upfront investment. Several thousand dollars is a significant chunk of money, and if you can combine these government checks with any additional savings you have, you may already have enough for a down payment on a house. While most people spend months to years saving for a down payment, you’ll have a nice sum of money already ready to put toward your home.
2. There are programs available that require NO DOWN PAYMENT. If you make under $58K per year in Arizona and have above a 620 credit score, you may qualify for 100% financing, which would mean you would put ZERO money down. Then, you can use your tax refund and stimulus check toward closing costs. It could end up costing you $0 up-front, which is perfect way to invest during weary economic times.
3. You don’t have to pay to use a realtor. It’s so important to use a reputable realtor in the home-buying process. The great news is that realtor fees are typically paid for by the seller, which means as the buyer of a home, you aren’t responsible for paying your realtor. Yet another reason to buy now.
4. Interest rates are historically low, which means you’re paying significantly less every month on interest for your mortgage. Low interest rates won’t last forever, so it’s a great time to take advantage of the lower interest rates. If possible, try to raise your credit score to above a 700 so you can get the lowest possible rate on your mortgage.
5. You’re purchasing an appreciating asset that will grow equity over time. Real estate is a long-term investment, meaning that it’ll grow equity over the course of 3-10+ years. If you plan on living in your home for more than 3 years, historically, you have a good chance of walking away with some cash in your pocket when you decide to sell.
6. You’re purchasing an asset you can live in and use daily. Here’s one of the BEST benefits of buying a home right now. Everyone needs a place to live, whether you rent or buy. However, buying a home is a smart financial move right now because it’s a lower risk investment with low up-front costs and low interest rates. In many cases, you get more square footage with a lower monthly payment when you buy a home as opposed to renting. If you’re going to spend money every month, it’s wise to spend it on a house you own.
7. You can spend time during quarantine doing home projects to add value to your house. Many homeowners are making use of their time in quarantine by doing home improvement projects. This is yet another advantage for homeowners because although tenants may make improvements to their living spaces, they will never see any of the return on investment for those improvements. Whereas homeowners will reap the benefits of upgrading their homes.

Buying a home may be the perfect financial move for you right now. We’d love to help.

If you have questions about the home-buying process, the current state of the real estate market, or about the amazing mortgage programs we mentioned above, please call us at 623 404 0035 or email [email protected]! We’d love to help you get started.