If you could have access to the equity in your home, regardless of whether or not you EVER tapped it, why would you not want it?
I’ve had this discussion with literally thousands of homeowners over the past 10 years and will continue to shout it from the mountain top!
The objections I hear are always the same: “I want to pay OFF my mortgage so why would I want another mortgage?” and “what on earth would I do with it?”. There are obvious disadvantages to the abuse of debt but the concept that most people continue to miss is that debt is a part of our financial life and managed wisely is GOOD.
Let’s look at the ADVANTAGES of just being able to access your equity, but first some basic assumptions:
1. Home Equity, in and of itself, earns 0% rate of return. The proof: property appreciation is based on the physical value alone (regardless of any underlying liens).
2. Home Equity, in and of itself, is NOT safe. The proof: look at the declining property values in California, Florida and Nevada.
3. Home Equity, in and of itself, is NOT accessible: The proof: try to take out a new loan after you lose your job or have a financial crisis. read more
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