I subscribe to a professional real estate blog and normally let most comments slip by, but this one got me riled up:
"Hindsight is great, and shows the error of such paths. We should have known better, but we didn’t want to miss what appeared the opportunity of a lifetime. Homes, however, are not a commodity to be traded like soybeans, pork bellies, or precious metals. Homes are just that, a place to live, raise a family, create memories, and find solace at the end of day."
I had to respond and this is what I said:
Hello! I hate being the contrarian, but a house is like all your other assets when you look at it from a financial perspective ... money tied up in your four walls earns you ZERO return. The smartest move is to take out as much equity as you're comfortable doing and INVEST IT (not consume it!!!) in a proven, safe instrument indexed for growth with no downside loss (they're out there - that's a whole different conversation).
I know people who did just this at the height of the market and now have THOUSANDS of extra dollars earning interest for them while their house value has slipped below their mortgage amount. Are they upside down? NO - the cash they invested has earned interest and now exceeds their house value. That fund will rise above their mortgage amount within the next 18 months.
Don't fall prey to the thinking that an asset paid in full is safe! I can introduce you to many couples who thought their house would be their retirement plan, only to be cash starved today. Money must MOVE to make more money and a mortgage is the way to leverage the money in your house.
Our parents and grandparents came out of the Depression paying off their houses to avoid the banks "calling the loan" - which no longer can occur. Now we're in financial bondage to the banks because we allow them to convince us the only way to own something is through their auspices - NOT SO! (and this is coming from a mortgage banker!!!) Take the final step and do what wealthy people have always known - leverage your money on safe plays and earn a "spread" that you can bank.
Just make sure you INVEST any money taken from your house, rather than consume it!
I had to try to set the record straight on the blog - the "group-think" expressed in that thread is unfortunate and reversible!
We need to beat the banks at their game and use the financial instruments at our disposal to tilt the playing field to our advantage! I can't believe so many people are willing to acquiesce to the institutions and their brand of marketing - it's time to control our own financial destiny!
Let me know if you're of a like-mind ... I'm looking for those independent souls who know they can do better than than living off the drivel we've been fed from the talking heads.
Here's to strength and independence!
