What should a smart home buyer do with that fat federal tax rebate check? Well, it is not that fat, but it could come in handy for buyers before, during and after the home buying transaction. The Economic Stimulus Act of 2008 includes, among other provisions, tax rebates, bureaucratically dubbed "economic stimulus payments." Starting in Spring, the U.S. Treasury Department began sending rebates to taxpayers, who had $3,000 of income and filed a 2007 tax return and have a valid Social Security number. Here are a few things you ought to consider with that unexpected windfall, if you are a home buyer - before, during and after your home purchase.
Save it! If you do not have that three to six months worth of income emergency saving fund, now is a good time to begin. Stuff happens around around the home when you least expect it and you will need some pocket money for incidentals during your home purchase. Look for a savings account that offers the best return. Online bankers generally offer the best interest rates, but shop around for other liquid savings, checking or investment accounts that you can start up for the amount of your rebate.
Rent a safe deposit box. After you buy a home, you will need somewhere to securely stash all those important documents, including your mortgage note, title and escrow papers, insurance policies, home improvement contracts, tax returns and estate documents. In many cases, the rebate will give you enough cash to rent a safe deposit box for decades. The boxes cost from $10 to $100 a year, plus a key deposit. If you sock the cash in an interest-bearing account and let the bank automatically withdraw the fee each year (or do it yourself), you will earn a small return in the process.
Buy a home inspection. Even if the seller offers his or her own inspection, you want your eyes on the prize as well. Home inspections are a good deal for resale, as-is (so that you know what "as-is" is), listings and new home purchases as well, giving the possibility of new home defects.
Buy enough homeowners insurance. For small homes, condos and townhomes, the largest rebates available will cover many policies for a year. That does not mean only buy what your rebate can afford. Make sure you buy enough replacement value coverage. If you work at home, use the rebate to buy extra business coverage as well as special liability coverage for your business.
Complete deferred "green" maintenance. Caulk the windows and doors. Add insulation. Have your furnace or HVAC (heating-ventilation-air conditioning), system inspected and cleaned. Swap out incandescent bulbs for CFLs (compact fluorescent lamps), and otherwise make your home more energy efficient and you will get your money back from savings on utility costs.
Splurge, but shop around. The real purpose of the tax rebate is to get you to spend money on stuff in the retail sector that will help kick-start the economy. If, after buying a home, you have your financial basics covered, shop around for the best deals at the lowest cost on goods and services for your home. For example, for around $1,000 Consumer Reports found Panasonis, Samsung and Sony offering the best 32 inch LCD TVs, and LG, Samsung and Hitachi offering the best 42 inch plasma models. The key is to get the most "stuff" for your money
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