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re: Never pay off your house?
Posted on 3/10/09 at 11:19 am to Powerman
Posted on 3/10/09 at 11:19 am to Powerman
I'll add that another reason could be if your house gets Katrina'd.
Example A: You live in a $500k house in Lakeview that is paid off. Your house got totalled, you got $250k in flood money, and you sold your lot for $50k. $200k of your "equity" is gone...poof. You are left with $300k.
Example B: You live in a $500k house in Lakeview that you owe $500k on, but you have $500k in the bank. Your house got totalled, you got $250k in flood money, you sold your lot for $50k. You have $800k and owe $500k. But you are holding $800k. You are in a much better position to deal with a bank, run away with the cash, put it in protected assets, etc.
Example A: You live in a $500k house in Lakeview that is paid off. Your house got totalled, you got $250k in flood money, and you sold your lot for $50k. $200k of your "equity" is gone...poof. You are left with $300k.
Example B: You live in a $500k house in Lakeview that you owe $500k on, but you have $500k in the bank. Your house got totalled, you got $250k in flood money, you sold your lot for $50k. You have $800k and owe $500k. But you are holding $800k. You are in a much better position to deal with a bank, run away with the cash, put it in protected assets, etc.
1
Posted on 3/10/09 at 11:55 am to Putty
quote:
Example B: You live in a $500k house in Lakeview that you owe $500k on, but you have $500k in the bank. Your house got totalled, you got $250k in flood money, you sold your lot for $50k. You have $800k and owe $500k. But you are holding $800k. You are in a much better position to deal with a bank, run away with the cash, put it in protected assets, etc.
you wouldnt get the 250,000 insurance money nor be able to sell your lot for 50,000. the insurance money would go to the mortgage holder.
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