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| *Loan,banking and credit>>>mortgage insurance |
"Lost Fortune" suggests mortgaging your home to buy "investment grade insurance" Has anyone done this? |
The upside is described well. What is the down side? do not. i.e. don't. If you've been paying attention to the news, the housing market is starting to fall. Median home prices are declining which means people who have equity in their homes are losing equity or people who recently bought now have negative equity (meaning they owe more on the house than the house it worth). "Lost Fortune" is making an assumption that housing prices only go up. WRONG - housing prices are going down right now as we speak. If you mortgage your home to the hilt and prices continue to decline (and they will) and you need to sell your home, you'll never get the full price needed to retire all the debt on the home. I recently read a story of a man in Georgia that had a home that appraised for $108,000 in 2003. He refinanced on an ARM (why, I don't know) for the full $108,000. When the ARM readjusted, his payments were more than he could afford. The problem was, he couldn't sell because the values of his house fell and was only appraising at $88,000. He couldn't make the payments and if he sold he could only sell the house for $90k, thus being $20k short to payoff the existing loan. Housing prices can fall. Do you realize the during the great depression, homes lost 25% of their value? You can never assume that home prices will only rise. It is estimate that home prices would have to fall 20% to 40% to bring houses back into their normal appreciation and valuation ranges. |
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