So, you’ve closed on a home and that federal first-time homebuyer’s tax credit should be coming your way soon. Now what?
First of all, realize it might take several weeks for the tax-credit form to get processed. Even then, some homeowners will only see the credit as savings on their taxes, so don’t necessarily expect a check in the mail. Also, remember that the first-time buyer credit’s maximum is $8,000 -- it is equal to 10 percent of the purchase price of the house. With this is mind, there are still many smart ways to spend or save the government’s gift. Here are some expert tips to get you thinking in the right direction.
Improve, improve, improve
- Improve the heating, ventilation and air-conditioning system “[You]
can replace an old 10 SEER HVAC system with a higher performance unit,”
says Paul Zuch, president-elect of the National Association of the
Remodeling Industry, Des Plaines, Ill.1
- Replace old, drafty windows This will save you hundreds of dollars a year in lower utility bills. Plus, in 2010 you can receive a tax credit for 30 percent of the cost of qualified energy-efficient windows and doors, up to $1,500. According to Remodeling magazine’s “2009 Cost vs. Value Report,” window-replacement projects recouped approximately 75 percent of their cost at resale.
- Turn off wasteful water heating “Tank-type water heaters maintain a constant hot water temperature 24/7, 365 days a year,” Zuch says. “They can be replaced with a tankless water heater that only heats water as it is being used and provides an endless supply of hot water.”
- Add better attic insulation This also is a great way to lower the cost of utilities.
- Upgrade to green, water-conserving fixtures “Reduce water consumption by hundreds of gallons a month with dual-flush toilets, water-saver shower heads and rain-sensor-equipped lawn irrigation systems,” Zuch says.
Save it safe
- Put it in the bank “I think saving the money is a fabulous alternative, especially for buyers who have exhausted all their savings just to scrape up the down payment or closing costs,” says Tara-Nicholle Nelson, a real estate broker and attorney in Oakland, Calif.
- Pay down credit card debt This will “[free] up so much money on a monthly basis, allowing buyers to make their mortgage payments with more ease,” Nelson says.
Splurge on small luxuries
- Make your bathroom a spa paradise “You could paint it a bright color, buy a new lighting fixture or a new faucet or even invest in gorgeous towels or other small bathroom luxuries,” says interior designer Jill Vegas, the author of Speed Decorating (Taunton Press, 2009).
- Invest in a new kitchen countertop “This is a great alternative if you don’t have the cash to gut the kitchen,” Vegas says.
- Facelift your home’s facade “Paint the front door, get some new building numbers, a new doorknob or knocker or light fixture,” Vegas says. “That would be a really quick thing to make your new place a home.”
- Splurge on top-quality linens “Buyers should look for the small luxuries that will make their everyday life just a little better, a little nicer,” Vegas says.
- Go for the big screen If you’re going to spend your time lounging on a new sofa in a new living room, why not make the most of it by mounting a new HDTV on the wall?