Reinvest in the Mortgage or Home Improvements?

Jessica and her husband have $10,000 they put into a CD two years ago, and it’s due this summer. Should they pay down their mortgage with that or put it into their house in the form of improvements?

QUESTION: Jessica in South Dakota and her husband have $10,000 they put into a CD two years ago, and it’s due this summer. Should they pay down their mortgage with that or put it into their house in the form of improvements? Dave thinks they should make improvements on the house since they want to sell.

ANSWER: If we’re talking about moving, we paint it; don’t side it. You’re not going to increase your value an extra $10,000 by siding it. It sounds like you paint it. But you have to keep your home maintained. That’s part of life, and you’ve got the money to do that. That’s also investing. As long as you’ve got your emergency fund and you’re debt-free, I don’t mind if you do either one. But to me, I’m not going to spend the $20,000 on siding when I’m probably going to put the home on the market in the next couple of years, but we also can’t let the house sit there and rot either. We may need to do the paint job on the thing. It sounds like that money is spent.

If it’s not spent, then you come down to, “Do we invest it in mutual funds or pay down the mortgage?” Either one is okay. I tend to move toward the mortgage all the time because I want to get out of debt. That’s not going to matter much if you pay $10,000 down on the mortgage and then turn around and sell the house eight or 12 months from now. You’re just going to get your money right back out.

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