I head that you should keep their equity of your house liquid ( in cash or portfolio investmnets ) ?

Question

I hear the phrase many time" it’s better to be cash Rich and equity poor then Cash poor and equity rich " Everyone recommends taking the equity out of your house and investing it because the market is slipping? They say if your house looses value 20K, you just lost that 20K because you did not pull the money out.....

But what is your "portfolio investment” don't yield as much as you interest on the Home Equity line of Credit? Also what if your house is work 200K, and then you pull that equity and the value drops, then what? Are you upside down?

I simple can't understand the urgency for people to do this unless then are paying down high interest credit cards?

What do you think?

Answer 1

i think you should leave the equity in you house alone. It is a loan against your house and if you have a lot of credit card debt you could end up loosing your house over it because you have a huge loan against your house and it is because of your out of control spending.

Answer 2

I disagree.

Equity in your house is never bad to have. I look forward to the day when I do not have a house payment.

One other issue is the person usually giving you the advice to cash out the equity and invest sometimes has a vested interest in you doing so.

Answer 3

You lost the $20K if the house market went down whether you had pulled it out or not - if you did pull it out, you now owe $20K more than the house is worth. So you've got the $20K you pulled out, but an additional debt of $20K that isn't matched by an asset, so you've only broken even.

So you're right, if your investment income is less than your HELOC interest, then you've lost by doing this.

Answer 4

That term is officially been outdated, at least for now. With the distressed, soft, and declining at risk markets in some parts of the United States. Taking a subordinate lien out on your home is harder than it has been in the recent past. A good IRA may behave better financial and be safer right now, but consult your financial adviser so your personal financial goals can be explored.
Hope this helps!

Answer 5

somebody is veryyyy puzzled . you do no longer in user-friendly terms get to 'take out fairness' . The lender enables you to've it as a private loan that incorporates % that's a lot larger than your customary own loan . appears like somebody from fantasy land thinks the economic business enterprise furnish you with fairness money for no longer something . Your 2nd paragraph nailed it , What if the HELOC fee is larger than the inventory industry return ? in no way do the HELOC till you pick for existence saving surgical operation and you have no longer have been given any coverage . >