Home Improvement Illusion in Boca Raton, FL
Boca Raton Real Estate
The biggest beneficiary to the cash-out boom has been the home improvement industry. According to a study by Economy.com, 42 percent of borrowers said they were using the cash for home improvements; 30 percent said they would pay down other debt; 28 percent said they would buy appliances, furniture or cars.
Many in the home improvement crowd would like to think that they're not actually losing any equity in their homes. But experts warn that dollar-in does not usually equal dollar-out.
Craig Jarrell, president of Dallas' Pulaski Mortgage, says he plays the role of the bad guy when he has to tell someone they've lost a large chunk of the money they poured into home improvements.
"They just don't understand that the 50 grand they've added is worth only $10,000 -- they haven't moved the house itself," he said.
"Did you get a new roof or a new fence? Well, great, so did your neighbor. Were you going to go without a roof on your house?" Jarrell asked. "You're just keeping up with the maintenance on the house. They're things you need and you are going to get a very low return on your investment."
The exception, he says, is an upgraded kitchen or bathroom.
They hold the greatest residual value when the time comes to refinance or sell your home, according to the National Association of Realtors.
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