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Stimulus checks were initially intended to stimulate the economy in a time when, because of COVID-19, many people had lost their jobs, small businesses were barely hanging on, and even large industries like travel, hospitality and entertainment were forced to close, at least temporarily.


However, data shows that consumer spending has not been the primary use of stimulus payments. In the first round, 35% of survey respondents saved, rather than spent, their stimulus check. Even people receiving unemployment benefits saved 23%, used 48% for debt repayment and only spent 29% on purchases that would boost the economy.


When the Fed asked how recipients in general planned to spend a second check, results showed:

  • Saving = 45%
  • Consumption = 24%
  • Debt Repayment = 31%


This is good news for the housing industry and for you, because it means you probably could be using at least part of your first 2 stimulus checks and the one that is predicted to come early in the Biden administration to help you qualify for a new home mortgage, a home renovation loan, or even to lower your current payments by refinancing, while interest rates are so low.


And don’t forget! It won’t be long before you’ll be getting an income tax refund.


Here are 7 tips for how you can get the most out of your stimulus or tax refund checks to help you buy, renovate or refinance a home sooner:

  • Put the money in a down-payment, high-yield savings account; your money will earn more there than in a standard checking account, while remaining safe and accessible.

·       Save it for closing costs; even though with some types of loans they can be rolled into the loan total, your payments will be lower and you won’t have to pay interest on those costs for 30 years.

  • Use the money to pay down debt; reducing your debt-to-income ratio may have a larger impact on your ability to buy a home than adding the money to your down payment savings. It could increase your pre-approval spending limit and give you more options when looking for a home.
    • Pay off credit cards with the highest interest rates first.
    • Pay off small debts that report to the credit bureaus.

·       Boost your credit score; a higher credit score will get you a lower interest rate, which can make a big difference when borrowing money. Use at least a small portion of your stimulus check on a credit-building loan.

·       Add it to a home savings account; even though you’ll need more than your stimulus check to cover a down payment, putting it directly into your home savings account can help you cover a long list of homeowner expenses, like repairs.  Experts recommend that homeowners have $10 – $15K saved.

·       Use it for major home-owner purchases; you may need appliances, furniture, carpet, light fixtures or either a new home or a renovation.

·       Save it for property taxes, if money for them is not being put in escrow account as a part of the loan terms.


While you’re building up your down-payment fund, don’t completely neglect your other savings goals, such as money to replace a car, necessary home improvements, unexpected expenses and your kids’ education. While a 20% down payment is ideal, for many it is simply not practical under their current circumstances. According to the National Association of Realtors, 71% of first-time homebuyers and 52% of all buyers put 10% or less down. Imagine the impact to our economy had those people been unable to buy a home. Delaying your home purchase until you have 20% may cost you in the long run. Call Citywide Home Loans for advice on what makes the most sense for you and your home-buying, renovation or refinancing needs.