UnThreaded | Threaded | Whole Thread (28) | Ignore Thread Prev | Next
Author: yobria Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75539  
Subject: Do you have a rational home equity policy? Date: 1/26/2005 9:32 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
Assuming you have a mortgage, haven't refi-ed beyond the $100K limit for tax deductibility, and are an experienced investor (fee/tax minimized, diversified), do you have a well thought out amount of home equity vs financial investments?

I mean, is there a reason you have a $300K mortgage and $100K in a taxable account vs the other way around?

Increasing home equity is equal to investing at your mortgage rate, after all tax effects. After tax, your mortgage is probably only worth 3-4%, versus long term stock returns of twice that. But the mortgage prepay "return" is risk free.

So I guess if you have a long time horizon, you should have a bias toward less home equity and more in stocks. Does anyone have a rule or guideline for home equity % vs age?

There are other considerations as well- I have friends whose "earthquake insurance" is having only 10% equity in their properties.

I've refied to the 100K limit, so would have to buy a new place to reset the mortgage basis.

Nick
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (28) | Ignore Thread Prev | Next

Announcements

The Retire Early Home Page
Discussion on accelerating retirement day.
Post of the Day:
Value Hounds

Kate Spade's Wild Ride
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement