Maximize Your Tax Refund: Invest in Your Future Through Real Estate

Tax season often brings a pleasant surprise – a refund. As of February 7, 2025, the IRS reported an average refund amount of $2,065. That is an 18.6% increase from the previous year. Check out the details here.

If you’re contemplating how to make the most of this windfall, consider channeling it into real estate. Continue reading to discover several ways you can maximize your tax refund by investing in real estate.

Building Wealth Through Homeownership

Homeownership is a proven strategy for building wealth. Consider this, median sales price for all the Northwest MLS Housing Market (Washington State), rose to $640,000 in 2024. This is up 6.7% from the year prior. This positive increase reflects steady appreciation over the years.

By investing in property, you not only secure a place to call home but also position yourself to benefit from potential market gains.

Smart Ways to Utilize Your Tax Refund in Real Estate

Boost Your Down Payment

Saving for a down payment is often a significant hurdle for prospective homeowners. While the traditional 20% down payment offers benefits like avoiding private mortgage insurance, it’s not a strict requirement. If 20% seems unattainable you’re not alone. NerdWallet exposed that in 2023, first-time buyers typically put down 8% of the home’s purchase price.

Whether your goal is 20 or 8% your tax refund can bring you closer to this goal. The closer you are to your goal makes homeownership more attainable.

Cover Closing Costs

Closing costs encompass various fees, including loan origination, appraisal, and title insurance, typically ranging from 2% to 5% of the loan amount. For example, you would pay between $10,000 to $25,000 in closing costs in addition to the down payment on a $500,000 home loan.

Allocating your tax refund toward these expenses can ease the financial load at closing, allowing you to preserve other savings.

Purchase Mortgage Points

If current interest rates are a concern, consider using your refund to buy mortgage points. Each point, costing 1% of your loan amount, can reduce your interest rate, leading to substantial savings over time.

This upfront investment can lower your monthly payments and decrease the total interest paid over the life of the loan.

Make Extra Principal Payments

Applying additional funds directly to your mortgage principal can shorten your loan term and reduce the total interest paid. Even small extra payments can have a significant impact over time. Always consult with your lender to ensure there are no prepayment penalties.

Hot tip: Consider making an extra payment every year (perhaps your tax refund) and you could save thousands in interest over the course of the loan. For example, if your monthly mortgage payment is $3,000 and you making one extra payment a year it has the potential to save you $100,000 in interest and could cut 6 years off your mortgage.

Just imagine your future self, lounging in your dream home, sipping a cup of coffee, and thinking, “I’m glad I invested that tax refund wisely!” By making strategic decisions today, you can pave the way for a comfortable and secure tomorrow.

Partner with a Real Estate Professional

Embarking on the real estate journey can be complex. You don’t have to navigate it alone. A knowledgeable real estate agent can provide personalized advice, helping you make informed decisions that align with your financial goals. If you’re ready to explore your options, connect with me today.  Let’s turn your tax refund into a steppingstone toward your dream home.

Homeowner’s insurance is a must-have to protect what’s probably your biggest investment – your home. And while you never want to think about worst-case scenarios, the right coverage is basically your safety net if something goes wrong. Here’s how it helps you.

• Covers Repairs and Rebuilding Costs: If your home is damaged by fire, storms, or other covered events, your policy helps pay for repairs or even a full rebuild.
• Protects Your Belongings: Many policies can also cover personal items like furniture, electronics, and clothing if they’re stolen or damaged.
• Provides Liability Coverage: If someone gets injured on your property, homeowner’s insurance can help cover medical bills or legal expenses.

In the simplest sense, it gives you peace of mind. Knowing you have protection against unexpected events helps you worry less. And with such a big purchase, having that reassurance is a big deal.

And while your first insurance payment will be wrapped into your closing costs, you’ll want this to be a part of your budget beyond closing day too. That’s because it’s a recurring expense you’ll have once you get the keys to your home.

Here’s what you need to know to help you budget for this important part of homeownership today.

Costs and Claims Are Rising

In recent years, insurance costs have been climbing. According to Insurance.com, there are four big reasons behind the jump in premiums:

• More severe weather events and wildfires are leading to higher claims.
• Insurance companies are pulling out of high-risk areas, reducing options for homeowners in some states.
• Past rate increases haven’t kept up with the rise in claims.
• The cost to rebuild or repair homes has gone up due to higher material and labor costs.

Basically, disasters are happening more often, repairs cost more, and insurers have to adjust their rates to keep up. Data from ICE Mortgage Technology helps paint the picture of how the average yearly premium has climbed over the last decade (see graph below):

What You Can Do About It

Homeowner’s insurance is a must to protect your home and your investment. But with costs rising, you’ll want to do your homework to balance the best coverage you can get at the best price possible.

Homeowner’s insurance rates vary widely based on location, provider, and coverage. Shop around and compare quotes before settling on a policy. And don’t forget to ask about discounts. Things like security systems or bundling with auto insurance could help lower your insurance costs.

Bottom Line

When you’re planning to buy a home, it’s important to look beyond just your mortgage payment. You’ll also want to budget for your homeowner’s insurance policy. It gives you a lot of protection against the unexpected. And while it’s true those costs are rising, there are things you can do to try to get the best price possible.

Helping my clients connect with trusted insurance providers—if they don’t already have one—is just one of the many full-service benefits I offer.

Washington State Home Inspection Rules—Did You Know?

Home inspections can be nerve-wracking for both buyers and sellers, but Washington State’s laws might surprise you!

🔹 Buyers usually want to share what they found in an inspection—whether to justify a request or out of a sense of fairness. But here’s the catch: they can’t!

🔹 Why? If a seller receives an inspection report, they are legally required to disclose that information to future buyers. To avoid this, Washington’s contracts require written permission from the seller before any details can be shared. Otherwise, the buyer waives their contingency with no explanation.

🔹 This is why many buyers simply ask for a closing credit without specifying why—it’s not a trick, just how the law works! For sellers, this can be frustrating, but a skilled agent can help navigate these negotiations so everyone feels confident in the process.

🔹 The exception? If a buyer requests a specific repair, they can name the item, but they can’t provide photos or inspection details unless the seller gives permission.

One of my fellow Windermere colleagues, Heather Maddox, shared this in a recent post, and the topic sparked so much interest that I wanted to keep the conversation going!

What are your thoughts? Drop them below!