With mortgage rates at a record low, most homeowners think that refinancing is only about lowering your mortgage payment and keeping a few dollars in your pocket. What if I told you that refinancing could actually prove to be an awesome investment vehicle?!
Here are a few examples of what homeowners do not know about taking advantage of these low rates and leveraging current market conditions to reap the benefits:
Refinancing to pull equity out and remodel a bathroom or kitchen. The average kitchen remodel costs $18,950 and on average translates into $75,000 or more in value when it comes to selling your home.
Adding a bathroom. A homeowner in Los Angeles added 500 square feet to their home and included a new bathroom, which cost roughly $20,000. When the homeowner went to sell it helped add an additional $100,000 in value to their home!
You can make money outside of taking on a construction project in your home. How about investing in the market? Think about this example: Refinancing and pulling out $30,000 in equity on your home at 3.5% interest rate is going to cost you roughly $179.87 per month. That’s less than your cable bill! Last year the DOW Jones returned 7.52% with the NASDAQ performing even better at $13.4%. Imagine this scenario where on borrowed money you are earning a return just letting your money sit there! Now that is smart investing.
Innovation in remodeling. It cost my wife and I $35,000 to build a dream wine cellar in our home (pictured below), which amounts to $157.00 a month to our current mortgage. We just recently had our home appraised and this cool new feature added roughly $70,000 in value to it; Doubling our initial investment.