If this year is anything like the last, almost 7.2 million Americans will get a tax refund this spring averaging around $3,000. If you're a homeowner getting this refund, you're fortunate because you've got more creative ways to invest it for a profit. Doesn't matter if you're selling, staying put, or stuck in the middle. Here are three homeowner-only options to grow that refund:
1. If You're Early Into Your Mortgage
It may not be as instantly gratifying as a treehouse vacation in Costa Rica, but spending your tax refund to pay down your mortgage principal could save you enough funds to take a splurge-loaded vacation a bit later.
Let's assume you have a 30-year-loan at the average loan amount of $292,000, a 4.5% interest rate, and you're getting that average refund of about $3,000. If you apply that "found" money to your principal each year, CPA Micah Fraim of Roanoke, Va., says you can shave years off your mortgage -- in this case, nearly four. That's about 95 mortgage payments you won't need to make! Even better is the more than $70,000 that you'll save in interest payments over the life of the loan.
If you don't want to make an annual commitment, think about this: Make that payment just once and you'll cut seven months off your payments and save more than $8,000 in interest. And when you decide to sell, you'll have more equity.
2. If You're Planning to Sell
Invest it in staging, and you may be surprised by how quickly your home gets plucked from the market.
"Staging lets prospective buyers see the space as their own, instead of as belonging to the people who currently live there," said Ashley Lewkowicz, owner of Ashley Kay Design in Bucks County, Pa.
"A home that's not staged can sit on the market for six months or more," she added. "A home I recently staged sold in less than two."
Not only is a faster sale better for your bank account in terms of saved mortgage payments...