HEALS Act stimulus checks

How to Maximize Your Stimulus Check as a Current or Aspiring Homeowner

You’ve probably heard by now that the US government will be sending out more stimulus checks to Americans. Under the recently proposed Health, Economic Assistance, Liability Protection, and Schools (HEALS) Act, those who are eligible would receive a second direct payment. Stimulus amounts are expected to be similar to the initial round of checks sent out during the spring.

There are obviously a number of things you can do with these extra funds. Many Americans will end up putting their checks toward a vacation or fancy car. A better use of the money, however, may be to support your homeownership goals.

Here’s how aspiring homeowners can get the most out of their stimulus checks.

Establish a down payment fund

Looking to boost your down payment fund? Depending on your income level, you may be in line for up to $1,200 thanks to the HEALS Act. The stimulus amount increases to $2,400 for married couples filing jointly.

Remember to not get too caught up in what you have saved for a down payment. As long as you have steady employment, good credit, and a low debt-to-income ratio (DTI), you should qualify for a mortgage. There are loan programs available that can get you into a home even if you don’t have a sizable down payment.

Keep it for closing

Chances are you’ll have to come up with thousands of dollars for closing. Sure, you could choose to roll closing costs into your mortgage and simply pay more each month. An alternative, though, is to keep your stimulus check for when you close.

Complete major purchases

Say you’re comfortable with your down payment amount and what you’re bringing to the closing table. If that’s the case, why not use your funds from Uncle Sam for large purchases? This could be appliances, furniture, decor — you get the idea.

Set aside money for repairs

This is especially important for those moving into an older home. And unlike when you lived in an apartment, you will be on the hook for repairs. So do yourself a favor and create a “home repair” savings account using your check.

Account for escrow/property taxes

These days, most mortgage servicers have a separate escrow account for borrowers. A portion of your monthly payment goes into this account and is later used to account for property taxes. If your servicer doesn’t escrow taxes, you’ll need to make sure that you have sufficient funds to cover the expense yourself. 

Let’s switch gears for a moment. Consider the following ways to spend your stimulus check as a current homeowner.

Pay off credit cards and HELOCs

High credit card and home equity line of credit (HELOC) balances will prevent anyone from achieving their financial goals. Why not use your stimulus check to pay down a chunk of, if not all, this debt? You’ll then be able to free up more of your monthly budget for other things.

Beef up your savings account

It’s alarming how many Americans can’t afford an unexpected $1,000 expense. Whether it’s a car breakdown, hospital visit, or something else, you need to be prepared. That’s why we suggest transferring your check directly into a savings account.

Knock out those home improvement projects

Perhaps you have no debt besides a mortgage and you recently replenished your emergency savings account. Now you’re debating how to get the most out of your stimulus check. If we were in your shoes, we would probably complete home improvements that were on the backburner.

Not sure that what you receive from the government will cover the entire cost of the projects? Then spend some time exploring home improvement loans. Homeowners often find that such loans are a more cost-effective alternative compared to credit cards and personal loans.

Take advantage of record-low mortgage rates

Mortgage rates have never been this low! Even if you refinanced earlier this year or in the last few years, you could be up for additional monthly savings. Have a conversation with a trusted lender to see if a mortgage refinance makes sense and then put your check toward closing costs.

Make an extra mortgage payment

You can’t go wrong with this strategy. The sooner you pay off your mortgage, the sooner you own your home outright. One extra payment each year saves you thousands of dollars in interest while also reducing your loan term.

Talk to a Denver real estate agent

At American Home Agents, we’re all about helping our customers become homeowners. You could be next! Give us a call at (303) 695-5900.

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