Would you store 53% of your life savings under a mattress? How about in a coffee can? Would you go to the bank a put in a safe deposit box? Of course not! You probably want as much of your money working for you as possible at any given time.
We've heard time and time again that your home is your biggest investment. We've also been told that the best mortgage is no mortgage but let me ask you a question. Does your home appreciate faster or slower based on how much equity you've accumulated? That's right. It makes no difference how much or how little you owe on your mortgage. The value of your home is what it is.
Many equity harvesting gurus will recommend that you continue to refinance every five years or so to continuously tap the equity in your home for other investments. Your parents and grandparents keep saying to pay off your home as quickly as possible. I said "They're both right!" That is you can do both.
In the first quarter of 2007, we Americans owned $20.8 trillion dollars worth of residential real estate on which we owed only $9.8 trillion dollars. That's an average of 53% equity in our homes. Let me just add right here that the sub-prime mortgages that are causing such a commotion and turmoil in the market represent less than 20% of all outstanding mortgages. You've heard the saying that the squeaky wheel gets the most grease. Well, This quarter 1 2007 balance sheet shows that while consumer debt is growing, overall we still have a positive net worth. $65.6 trillion in assets-$12.5 trillion in liabilities equals a positive $53.1 trillion in collective net worth!
I agree with Marian Snow when she suggests that we stop sitting on our assets, but beware that an interest only loan or a series of them will leave you with a big mortgage during retirement that will eventually need to be repaid. The Home Ownership Accelerator offers an extremely efficient platform for equity repositioning along with the ability to retire mortgage free.
By combining this powerful tool and safe money savings vehicles, you could call it "no-sweat equity"
