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You know the story. You see it all the time on
TV. Homeowners refinancing to pull out
equity to remodel a kitchen, bathroom
or add on based on the hope that their house is
going up in value and will cover the costs of
the remodel. You know if you refinance in order
to remodel, you are effectively financing your
remodel over the life of the loan if you stay
in it, well past the “design life”
of your remodel.
The big risk is that the house may go down in
value. But there is even more risk.
The refinancing boom we have had in recent years
is actually the largest transfer of assets in
the history of the world.
What we have all been doing is selling our assets
to banks for loans that have high interest rates
based on equity that is a phantom…unrealized
by the sale of the property. This is one of the
reasons why many homeowners are now “under
water” where their home is worth less than
their mortgage.
We don’t actually have the real money…as
opposed to play money…until we sell.
Additionally fashion in decoration changes with
distressing regularity. The granite counter tops
you put in today could be passé in as little
as 5 years when people all MUST have something
else.
So what is the right strategy if you really need
to refurbish a bath or kitchen?
Do it for cash and do it as cheaply as possible.
It doesn’t have to look cheap.
It just needs to be cheap.
An interior designer I know told me, “You
know all the cheap ways to decorate.”
Well, you know what?
It’s true.
I look for used furniture, rejected paints, good
used bath and kitchen fixtures, architectural
salvage and anything that can make my houses look
the way I want them to look.
I also look for good classic design.
Does a chair need recovering? It’s not
hard. I do it all the time. Most of my chairs,
nice upholstered chairs, were purchased for $29.00
or LESS! I always shop garage sales with 30 dollars
in my pocket, all in ones.
Furniture tends to be a bad investment. You can
buy good furniture every day for 10 cents on the
dollar. If that’s all it’s worth,
that’s all I’m willing to pay.
The best part is that no bill will arrive in
my mailbox about the time I get buyer’s
remorse.
It always sets in when the bills arrive, doesn’t
it?
But it gets better.
Need new tile in a bath? Look for salvaged tile
or ceramic tile that looks like real stone.
Then do the work yourself. Make sure you do it
right. But, remember it’s not that hard
to do.
Make your house look good but don’t sell
your equity to get the look.
I once had a club meeting at one of my houses.
The ladies were going around lifting the cushions
on my chairs and opening the cabinets to see who
made my furniture, it looked so good.
No one realized it was mostly second hand stuff
and I’m keeping this to myself. You should
too. So, stop following the 'Jones' off a remodeling
cliff.
If we can be of assistance, our toll free number
is on our home page at sell
my note as well as our contact
and privacy page.
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