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Then you must not have lived here in MA during the 1990's when the market tanked, people were being laid off left and right and couldn't find new jobs, and real estate prices dropped like a stone. My next door neighbors both got laid off from two different companies in the same week. They had plenty of investments, but those tanked as well, and they had to sell lots of stuff at a loss to pay the mortgage. That only lasted so long til the husband finally had to take a job, any job, and it turned out to be in CA. The wife stayed here with the kids to sell the house, which they finally did at a $100k+ loss, and they just barely squeaked by not having to declare bankruptcy. Here we are 13 years later, and I think they have finally purchased another house out in CA where they still are.

You are correct. If you owe on your house and the economy turns on you, you could lose it. However, even if you own the house and times get tough, you won't have access to the equity in your house unless you sell it. No banker will give you a home equity loan if you have lost your job. And, if the housing market has tumbled, you might have to sell your house for much less than it is worth.

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