Posted by val189 on April 9, 2007, 9:15 am
I had some fun playing with this site of AG Edwards.
www.nesteggscore.com
I was surprised, tho, that on the home equity question,
the possible answers were
1. don't own
2. under 30% etc..
The highest credit was for 50% and above.
What? No extra points for owning outright?
I'm sure that having your house paid for
puts you in a much better standing that
just owning 50%.
No?
Posted by Ron Peterson on April 9, 2007, 10:21 am
> I had some fun playing with this site of AG Edwards.
> www.nesteggscore.com
> I was surprised, tho, that on the home equity question,
> the possible answers were
> 1. don't own
> 2. under 30% etc..
> The highest credit was for 50% and above.
> What? No extra points for owning outright?
> I'm sure that having your house paid for
> puts you in a much better standing that
> just owning 50%.
> No?
You're right. Paying off a mortgage is a risk free investment.
--
Ron
Posted by Chloe on April 9, 2007, 10:40 am
>> I had some fun playing with this site of AG Edwards.
>> www.nesteggscore.com
>> I was surprised, tho, that on the home equity question,
>> the possible answers were
>> 1. don't own
>> 2. under 30% etc..
>> The highest credit was for 50% and above.
>> What? No extra points for owning outright?
>> I'm sure that having your house paid for
>> puts you in a much better standing that
>> just owning 50%.
>> No?
> You're right. Paying off a mortgage is a risk free investment.
Not necessarily. If your home's absolute dollar value is declining--and it
happens all the time in many parts of the country--you might be better off
having less of your assets invested in your home equity and more of your
assets invested in something that truly *is* risk-free, like an insured
certificate of deposit.
In other words, a mortgage can be used as a vehicle to reduce risk.
As to the certainty that having your house paid off automatically in better
standing than having a mortgage, I have my doubts about the universal truth
of that, too. Again, a mortgage can be a matter of leverage, and owning half
value in a desirable, resaleable home might be more advantageous in the long
run than owning full value of one that's much less desirable.
Posted by Ron Peterson on April 9, 2007, 12:18 pm
> > You're right. Paying off a mortgage is a risk free investment.
> Not necessarily. If your home's absolute dollar value is declining--and it
> happens all the time in many parts of the country--you might be better off
> having less of your assets invested in your home equity and more of your
> assets invested in something that truly *is* risk-free, like an insured
> certificate of deposit.
You're always liable to pay your mortgage unless you declare
bankruptcy.
A certificate of deposit isn't totally risk free. You may have delays
in getting your funds back with a possible loss of interest.
> In other words, a mortgage can be used as a vehicle to reduce risk.
No. It only is a means to increase emergency funds availability.
> As to the certainty that having your house paid off automatically in better
> standing than having a mortgage, I have my doubts about the universal truth
> of that, too. Again, a mortgage can be a matter of leverage, and owning half
> value in a desirable, resaleable home might be more advantageous in the long
> run than owning full value of one that's much less desirable.
Real estate values can become depressed in an area resulting in a real
loss for those that have to sell.
There is an advantage in having a larger higher quality home in that
one will be able to live in it longer before needing to purchase
another home. Selling expenses can be a problem.
--
Ron
Posted by Chloe on April 9, 2007, 5:42 pm
><snip>
> A certificate of deposit isn't totally risk free. You may have delays
> in getting your funds back with a possible loss of interest.
<snip>
I won't bother arguing the other points in your post, but I admit I'm
curious about these "delays" you're talking about. Can you supply actual
examples where these delays you're alluding to have occurred? I guess
anything's possible, but I always thought when a CD came due, you just
either renew it or cash it. I suppose unless you've been a victim of fraud
or maybe insolvency of the financial institution. Is that what you mean?
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> www.nesteggscore.com
> I was surprised, tho, that on the home equity question,
> the possible answers were
> 1. don't own
> 2. under 30% etc..
> The highest credit was for 50% and above.
> What? No extra points for owning outright?
> I'm sure that having your house paid for
> puts you in a much better standing that
> just owning 50%.
> No?