Stimulus Check and Buying a House

Posted by Brandan Hadlock, with Direct Mortgage

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, people with a social security number who earned at least $3,000 last year and who file a tax return, may be eligible for the stimulus payment. Payments began in late April and will continue through July. People who normally don’t file a return may still receive the payment if they file their tax return. The rebate does not affect the amount of your tax refund nor increase your taxable income.

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 the suggestions on using the stimulus rebate as you purchase a home. You could:

1. Use the stimulus check as part of the down payment on your home. A higher down payment means you’ll take out less debt, have potentially lower monthly payments, and maybe even get 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 pay closing costs. Many mortgages have fees associated with them, and your stimulus payment can help cover these costs. Possible fees might be charged for pulling a credit report, appraising the value of a home, and for title insurance.

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 amount of your stimulus payment may not be huge, but it can help you buy or furnish a home. And the great thing is that you didn’t have to do much to receive the money.

Tags: Mortgages

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