Use a Cash-Out Refinance to Remodel My Home?

Use a Cash-Out Refinance to Remodel My Home?

Eric is in charlotte north carolina hey eric welcome to the ramsay show hi thanks for taking my call sure man what’s up um so i’ll just get right down to the question um the question is instead of selling our home and taking the equity and buying an upgrading at home um is there any reason we shouldn’t do a cash out refinance and remodel our current home to

Basically be the home we would have purchased otherwise uh well i don’t teach people to do to borrow money or to borrow more money if you do sell and you go buy a different mortgage i guess that has the same exact effect to your point um exactly but uh the problem on a refi on a remodel is people have a tendency to overbuild the neighborhood yes so what’s your

Home worth today um today probably 100 what would it be worth after the remodel maybe 120. and what would the remodel cost i’m estimating on the high end here we’re probably 40. okay so you’re going to lose half of the money oh yeah i understand that right you’re going to spend 40 and you’re going to increase your value 20. that that would increase i mean that

Would include um repairing a three-car port garage in the back and turning one of those carports into a small apartment which still makes your property worth 120 probably yeah so you still lost 20 grand yeah that makes sense missing something no i think the math on this doesn’t add up it doesn’t sound like it’s worth renovating here if he wants to upgrade and

Sell the house that’s fine but it doesn’t seem like it’s worth doing this cash out refi and doing all these renovations to only get that much extra yeah if you could increase the value at least exactly what your cost was then we’d have an argument to have and the next question would be uh if you have a hundred and forty thousand dollar home what is the average

Are you in a neighborhood or in a rural setting it’s a very small town in north carolina okay when people are looking for one hundred and fifty thousand dollar houses do they drive down your street or do they drive down your street looking for hundred thousand dollar houses hundred thousand dollars yeah yeah probably a hundred yeah so my other point is you’re

About to overbuild the neighborhood so i think your actual analysis at the beginning was very good and very correct eric in that um i i think you’re right i think you’re only going to increase it to 120 and it’s still going to make you one of the most expensive houses on your street and that’s the very end of the piece of real estate you don’t want to be you

Want to be one of the least expensive homes in your area because you’re going to get the most increase in value and have the highest probability of selling it when you get ready to turn it over and so george overbuilding the neighborhood is the swimming pool edition uh these year these days it’s the water park in the backyard when when i was growing up um

On the other side of the tracks a swimming pool was actually a swimming pool today when people don’t talk about a swimming pool it costs more than a house well there’s landscaping there’s a slide and so he’s not doing that that’s not what he’s doing but sure that’s the kind of stuff that sets you up for spending four times as much as you’re going to increase

The value and you talk about that in the financial peace university lesson on real estate making sure you’re not over building go don’t get the most expensive house in the neighborhood and if he does this that’s what’s going to happen and no one’s going to want to buy the most expensive house in the neighborhood yeah i actually just sold my personal home and

I had violated that you over built one of the reasons that uh was you know it’s a big stinking house but uh one of the reasons i sold it was this hot real estate market was a good time to undo that mistake and get out with my skin intact yeah but uh it was not the main driving reason the main driving reason was sharon says time to move and we operate around

Our house on swi sharon once it’s my favorite rule and so uh you’ve got whitney wants it wwe oh yeah we’re feeling that yeah and that’s pretty much what you do if you’re smart man yes it all comes down to patience

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Use a Cash-Out Refinance to Remodel My Home? By The Ramsey Show – Highlights