About Mortgages

Home Buying and Your Stimulus Payment

The federal government has already given or will soon give an economic stimulus check to millions of households in America. This article answers a few questions related to the stimulus payment and suggests ways for the homebuyer to use this income 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 the suggestions on using the stimulus rebate as you purchase a home. You could:

1. Use the stimulus payment to increase the size of your down payment. By paying cash for your home, your mortgage debt will be smaller and you could potentially lower your monthly loan payments and your 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 for closing costs. Many mortgages have closing costs associated with them, and while your stimulus check probably won’t cover all the costs, it can sure help [it sure can help].

4. Use the rebate for furnishing your home. When buying a home, especially for the first time, you may need new furniture such as a couch, bed, or kitchen table. Furniture from a nice store can be expensive, so you may want to find your furniture at thrift stores and garage sales.

5. Use the money for gas. You’ll probably be doing a bit of driving trying to find your dream home, and with gas prices the way they are, the stimulus payment will come in handy.

Using the stimulus check for buying or furnishing a new home can ease your financial burden a little. And the great thing is, you just had to file a tax return to get it.

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