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Economic analysis reveals the primary uses of extracted home equity across consumer spending, debt repayment, and asset acquisition, highlighting the broader financial impacts of housing wealth.
In this paper, we present estimates of the disposition of the free cash generated by home equity extraction to finance consumer spending, outlays for home improvements, debt repayment, acquisition of assets, and other uses. We estimate free cash as cash available net of closing costs and repayment of other mortgage debt. We have also extended the quarterly data series for gross equity extraction, presented in our earlier paper
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Greenspan et al. (2008) studied this question.
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