By

Sue Martin
Coldwell Banker Myers-Gallagher
361-758-7534

Some Americans will spend their tax refund checks this year to purchase the newest electronic gadgets, vacations, new clothes, and cars. But the wiser American will invest his or her money in the ultimate luxury item…a new home! It is hard to resist the temptation to spend that hard earned money on a vacation or big ticket item that either decreases in value or is only valuable in terms of memories. But why blow your money on a purchase that has zero, zip, nada return when you can purchase a home that will probably double in value over the course of about 10 to 15 years…sometimes less time than that!?

A recent survey shows that 51% of renters consider coming up with enough money to make a down payment the biggest hurdle to becoming a home owner. Yet, the American dream is to own a home and even when a nice chunk of money comes their way, we have a tendency to spend it without considering the value it holds for us.

Tax refund money can help homebuyers with the down payment on a home or as a contribution to closing costs. Most consumers don’t realize that they can now purchase a home for little or no money down and still have an historically low interest rate on their mortgage. The Fed dropped interest rates again January 30th by another ½ percent!

“Now is the time to purchase a home and make the most of the lower rates that allow the buyer to qualify for larger loan amounts,” says Linda Leighton Boethel of Gulf Shore Finance.

“100% financing is still available for buyers with 620+ FICO credit scores. First time home buyers should definitely take advantage of this program while it still lasts because you may utilize your tax refund for closing costs on your loan since no down payment would be required,” adds Boethel.

If you have served in the military, you may qualify for a loan that is backed by the Veterans Administration. Your service to your country in the Armed Forces, guarantees you a specific loan amount if you meet the standardized qualifications. Again your tax refund would certainly help with or, in some cases, completely pay for down payment or closing costs!
Home ownership is the number one wealth builder in the U.S. Yes, you do need to have a 401K (although lots of folks now consider them 201K’s because of the devaluation of stocks) or some kind of retirement fund, but you need a house more.

If you don’t own your home, you are paying rent. Rent goes up every year! And you have no tax credits. With a fixed rate mortgage, your payment stays the same for the length of the loan. So staying in the same home for some length of time without refinancing or taking equity out of your home means your payments will become much lower than for someone renting a comparable home.

Not only do your mortgage payments remain the same, your home is appreciating in value. The greatest return on any real estate investment is typically from appreciation, which is the continuous increase of value of a property each year. Consequently, you are building your wealth without doing anything except the up-keep on your house…and you get to live there to boot.

For example, if you buy a $100,000 dollar house with no money down and your house goes up in value by 5% (the average increase is usually 4% to 6% give or take in any given year) in the first year you live there, your investment of $0 dollars grew to $5,000 dollars. In other words your $100,000 dollar house is now worth $105,000 dollars!

Full time investors in real estate (those people who buy and sell real estate as a business) are jumping all over the low interest rates and favorable selling incentives. The amount of money they will earn in the form of appreciation is weighted heavily in their favor right now. They keep an eagle eye on what is happening in the market, and disregard all of the media hype and nay-sayers of the world. It isn’t any wonder that those individuals generally make 2-3 times as much as a corporate executive.

Step back and take an objective view of the market today. The conditions are also weighted heavily in favor of you purchasing a first home or second or third. So, the smart people are putting their tax refund money to work for themselves in the form of real estate. Real estate has been a time-tested way for building wealth and income that’s been around long before dot coms and tech stocks that can have widely varying increases and decreases in value from moment to moment.

So, first buy your house. Then buy the 401K’s, mutual funds, stocks, and other items you desire or go on vacation, but BUY THE HOUSE and start really building your wealth!

For more information about purchasing homes in the Coastal Bend, I invite you to talk to a local Realtor at Coldwell Banker Myers-Gallagher. Call 361-758-7534 or email info@texascoastproperty.com.