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Are you using your house as a piggy bank?

Well, I think you should use your house as a piggy bank. Experts say pay off your mortgage before you retire.

So why are so many "tapping" into their home equity? While some are doing it to pay for living expenses, others are going on vacations, buying lake houses, etc...

This is risky behavior as this could lead to a lifetime of debt, so find another way to pay for your living expenses, vacations, and lake houses. Don't tap into your equity.

Remember, even after you have your house paid off, their are always ongoing expenses.

For a clearer picture of just what kind of expenses and how much you should save for these expenses click here. It has a free feature that allows you download a spreadsheet called Replacement Budgeting & Reserves, which will list the homes items you will need to replace, and estimated replacement costs of these items.

Are you prepared for the future?

If you are thinking of selling your house, email me for your free over the net market analysis.

View homes for sale in Oak Ridge, Tennessee

Posted by Anona Large-Oak Ridge, TN Real Estate on 02/15/2008 12:38 PM

Comments (9)

9 Comments on Are you using your house as a piggy bank?

Anona - That is a lovely name ... I've never heard it before. I agree to you that home equity should most often be left alone, especially right now. I am not one to advocate paying a home off, unless the owner(s) are nearing retirement. The reason, especially in a market like this, if you can invest the money into a vehicle that returns say 8%, and you are paying 6% interest (PLUS THE TAX BENEFIT, which takes it down to around 4.5% interest I believe), in the end you are best-served to invest that money elsewhere rather then pay down your mortgage. You just nearly doubled your money, in-fact. There are a couple trains of thought here, but that is just my humble opinion. Good post!

02/15/2008 12:46 PM

by Derek Bauer, Associate Broker - Door To Dreams Team www.DoorToDreams.com (Real Estate One, Inc.)

We are one of the few people in this area that has their house paid for. Good post!

02/15/2008 12:55 PM

by Michael Thornton - Nashville, TN area Home Inspector (Complete Home Inspections, Inc.)

Derek--Good point, but aren't we all nearing retirement? Housing is the biggest expense for the average American. About 33% of their income. If that expense is taken care of, that leaves approx $13,000 free for them to invest... after they have their house paid off. Of course, my opinion is humble also. lol.

02/15/2008 01:17 PM

by Anona Large-Oak Ridge, TN Real Estate (Realty Executives Associates)

Michael -- What an accomplishment. Did you have a last mortgage payment party?

02/15/2008 01:18 PM

by Anona Large-Oak Ridge, TN Real Estate (Realty Executives Associates)

Yes, I suppose in theory we are all nearing retirement. As a mid-30s individual, I am more apt to invest money in other vehicles ... commodities, investment properties, etc. then on my primary residence. That, in time, will change...

02/15/2008 01:51 PM

by Derek Bauer, Associate Broker - Door To Dreams Team www.DoorToDreams.com (Real Estate One, Inc.)

Good Post! I suspect that the 'house as an ATM' has been a contributing factor in our current market where so many sellers are upside-down.

02/17/2008 08:18 AM

by Eric Webster Grand Rapids, MI, Five Star Realty (Five Star Real Estate)

Eric -- "House as an ATM". Good title for another post.

02/17/2008 12:22 PM

by Anona Large-Oak Ridge, TN Real Estate (Realty Executives Associates)

Good to hear someone in the business suggesting this. It IS a dangerous game, unless you are young and plan on using property as an investment by improving it and moving on to another. IF you are planning on keeping your home, taking an equity line on it is such a bad idea. Keep the good suggestions flowing.

02/17/2008 09:06 PM

by Alex Mordas - Tallahassee EcoBroker® (Keller Williams)

Alex - Thank you. Advise is just that, advise. I do know that any retired person I know who seems to have financial freedom, has their house paid off.

Anona

02/18/2008 12:16 PM

by Anona Large-Oak Ridge, TN Real Estate (Realty Executives Associates)

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