The people who have paid off their homes and built massive equity are absolutely not interested in taking on debt and potentially risking their house as uncertain economic times are looming on the horizon. And that's a good thing... People using their homes as piggy banks is a quick way to cause a whole lot of mess.
Right. My mom keeps trying to get me to sell the house that we bought in 2020 at a ludicrously low price and with an interest rate that I I'm unlikely to ever get again in my entire life.
Sure, I would make some money on the value of my house as it's skyrocketed over the last few years, but I can't afford to buy anything without increasing my cost of living rather substantially. My house isn't the biggest house, but it is a house and it is worth a lot of money. And historically speaking that value doesn't really go down over the course of decades.
Long way of saying my mother's and idiot whos trying to talk me into financial ruin.
Exactly. She wants me to buy a bigger house. But even buying My same house today would give me a higher cost of living. A rather dramatically big jump.
So what am I supposed to do? Sell my house to get a bigger house with more things to clean and more things to keep up, more things to do, More things to spend money on, and pay a much higher mortgage?
It's ludicrous. The only time selling this house makes sense is if I'm downsizing to something smaller so that the house becomes an actual meaningful investment. Not a way to increase my cost of living.
Sounds like mom is suffering from the "That's just how it's supposed to be done" phenomenon. No actual grounding to the realities of the current paradigm.
Anywho, I applaud your financial responsibility. It'll serve you well in the coming years.
Have you met my mother? Because that is exactly who she is, lol.
Not to get too much into my personal life, but for the most part my life started improving rather dramatically when I stopped listening to my parents. Weird how that happens sometimes.
Never cave in! You’re doing the right thing. Taking on new debt and a higher COL will worsen your life, even if it’s a nicer and larger house. Financial stability = peace
I appreciate your words of encouragement, and yeah I will never give in on this.
This house is the only debt that we have. We lived like poppers and paid off of our student loans the year before buying it. We have no car payments. And not for nothing, I work in the Arts. I've been incredibly fortunate, and I've been able to work very regularly and make a decent amount of money. But it's the Arts, I've seen people significantly more talented than me struggle to get work and never find work again.
I would be insane to do my line of work and take on a higher risk than what I currently have. Right now with my current risk, I could fall out of my career and we'd still be fine. If I had to bump up our mortgage buy a couple hundred thousand dollars, and are interest rate by a few points, I'd be putting myself in a very scary territory.
Ugh this has got to be a Boomer mom. Same on my end. We bought a 1,500 sq ft house in 2020, 2.5% fixed interest. Have no kids; it’s just the two of us, and it’s plenty of space. We even finished the basement, making it a third bedroom/bath and expanding us to 2,300 sq ft.
And every visit the comments come out. Started as “cozy” and “charming” and now it’s flat out, “when do you think you’ll get something bigger?”
For who? The zero grandkids? Then it dawned on us when we started getting weekly picture texts of stuff they wanted to get rid of, but didn’t actually want to see go. We don’t want all your basement things…
Bingo. Lol. My wife is saying she had the exact same type of interaction with someone on Reddit. Complaining about our parents to another child of a boomer.
I really hope that we're not like that when we're older. That generation thinks they know everything. And they can't even keep up with how much the world's changed.
I feel a bit of the out-of-touch vibe coming on. It’s mostly when I show my nieces and nephew how CDs or tape decks work, or regale them with stories about the phone being attached to the wall, and also having no internet.
Pretty benign things I think…I’m definitely not going to be demanding to see financially reckless behavior from them anytime soon lol
Hahah, This is more cathartic than I pictured commenting this would be. I don't normally talk about this with literally anyone else. It's random mom bullshit. Tons of people have belligerent parents that think they know it all. I'm not special. So the only way this conversation ever goes is me telling my mother that she's insane and that this is my money and I'll do what I want with my money, while she makes up a laundry list of reasons to continue to criticize my decision to keep this house.
Seeing this many people come out and validate what I'm saying feels amazing. It shouldn't, but it does and I'm going to revel in it. I appreciate your contributions.
the hope would be that you have enough equity from increased valuation to be able to offset increased rates. and then when interest rates go down, you refi. I wouldn't be on that unless we have an AI induced depression.
My rate is decent (3.5%) but even with our house price doubling, we wouldn't have enough equity to purchase to offset the rate increase. Maybe if we bought in the burbs.
If you bought anytime from like 2010 through 2023, your monthly payment is so low that you literally can't even sell and rebuy your own house without doubling your payments. No one can afford to upgrade
That's exactly it. If I sold my exact house and rebought it, my cost of living would go up. Rather dramatically at that. I would be paying around $200,000 more total, and I would have an interest rate that's at least 3 percentage points higher if not more than what I already have.
Plus, I've already put a lot of work into this place to make it a place that I want to be in. And I did all that work myself. My own hands. It's not like I paid someone else to do it. Completely redid the kitchen. Put in butcher block countertops. Tore down the cabinets sanded and painted them all white. Did tons of work on this place.
So in addition to the unbelievable price and interest rate I got, I've put a lot of personal work into this place that I really like. With my own hands that I feel very proud of. Selling this place just to buy a newer bigger place would be the peak of materialism.
I bought a house January 2020 at 2.9% interest for 220,000 USD. It is now valued at 325,000 USD.
Someone suggested selling it and moving up to a larger house but that would cost a lot at today's prices; not to mention that increase of interest. No thanks. I will enjoy my tiny little house. It is literally the only debt I have.
Yeah. You can never bank on getting an interest rate that low again. With barring specific situational exceptions, I can't imagine selling a house with that low of an interest rate and not regretting it near immediately and probably for most of the rest of your life.
This is the same lady, that sold a shore house she bought for like 100K in a really amazing Shore town in the year 2000. A year later it jumped up like $200,000 in price today it's worth way more. And she's kicking herself constantly.
And here she is asking me to make the same mistake she did, lol
You're not too far off from the truth. Without going into a ton of details, at this stage of life she had only owned a house for a short period of time, was only able to buy it because she married my father. She had no major life accomplishments aside from having children and being a mother, And her and my dad did not exactly have the happiest marriage in the universe.
Here I am buying a house when I was younger than her, having kids younger than her, getting married to my best friend of the last 22 years,
And she's sitting here bitching like it could be better, like I didn't grow up in that house lol.
Do not buy a bigger house just because you’re supposed to! (Sounds like you’re already thinking that way). Guy I work with just retired at 53 partially because he and his wife stayed in their starter home.
Yep. Unless I'm forced to under some crazy circumstances, I have no intent of ever getting rid of this house until I retire. I was insanely lucky with this purchase.
My wife and I were looking for houses but we still had our student loans. I talked to her into waiting a year. Kill off our student loans, recoup that money and then try again in the next year.
We did that and we ended up finding a house that was about the size that we wanted, and it was $20,000 under asking price because it had on the market for a few months. Then I was able to negotiate another 10 off. And then we got an interest rate at 2.7%
Even if I suddenly became incredibly lucrative, I would be an idiot to sell this house and not at least rent it. I'll be shocked if I ever get an interest rate that low ever again
And even if the value of your house sharply declined, with a good interest rate, you have a place to live that you can afford and presumably will continue to be able to afford. Stability is valuable. A house is much more than a financial asset.
This is why housing is a bad investment. It's a better investment than no investment, but it's a bad one. The gain in value is lower than market equities over decades and home equity is not very useful in most mid-life scenarios unless you take on more debt/risk. And taking on risk with a primary residence will just increase stress.
Exactly. The situation that we got using a house as investment is incredibly rare.
I forget who it was but it was someone on YouTube I was watching, and he validated that POV for me. I used to argue with my mom about that all the time. That for the most part houses are not an investment. And this guy who's a financial advisor backed that up by saying, houses are a lifestyle choice. They are constantly trying to return to dust, and you are spending a fortune trying to keep them up.
The only time real estate is an investment is if you're doing it to make money. Not to also live in it. If you're treating it like a business. Great. If you're not? That's not an investment.
You know, I have considered that. But I think the circumstances would need to demand it.
I work in entertainment, but I don't live in California. But, my wife and I have decided that if for some reason my career ever forces me out there, we will not sell this house. We will rent it out. Simply because I know I can rent it for more than our mortgage is.
But it would need to be a situation like that. Doing it any other way would be a huge risk or disruption to our life as parents as well. Just don't have the bandwidth to have a job and manage places.
You don't live in a stock. When you sell a stock, you have to find another one to live in. In terms of assets, a primary residence is less like a stock than almost anything else I can think of.
This guys strategy only works if you sell in a HCOL area and move to a LCOL area. Some people are willing to do that for purely financial reasons. Most aren't.
Where? If their house went up so did all the houses in the area. You want them to uproot their life and move to a bad area so they can “lock in” their house gains earlier than if they waited? What is the point of life if you make yourself miserable chasing money?
Yeah, unless you’re cashing out to buy something less expensive or to fund an ex-pat retirement I think you’re being super smart. Keep your low rate and house you can affordably enjoy.
Exactly. And that's exactly why retirement is the only time I'm willing to sell this. I've got kids right now, I can't afford a downsize. God willing, I'll live to be old enough to retire and I'll sell this at a profit and buy a much smaller place that will be easier and cheaper to maintain than a full house.
When I was younger I knew people who bought bigger houses for the sake of having a bigger house, and it didn't always work out very well for them. One of them now has two mortgages taking it out on it, the house is in disrepair because it was too much work for them, and with how bad it is, they'll never sell it for enough money to be able to pay off the mortgages.
All residences rise with the tide though so when you sell high you're buying high for your next place. The only way out of that is to move to a lower COL area.
Bingo. It will be a very bad sign when folks start tapping into the equity to pay the bills given current rates vs rates over the past 20 years. That will be a sign that they have no other choice.
I've started getting ads on my podcast downloads recently from Rocket Mortgage, right? A cheery, pleasant woman's voice suggesting homeowners tap into existing home equity through Rocket Mortgage to pay down high-interest credit card debt with a loan financed by leveraging their house.
My fucking jaw dropped. I can't imagine paying off credit cards (which is an unsecured form of debt, thus the interest rates in the first place) by risking a wholly owned piece of real estate.
(For the record I have zero credit card debt, no idea why I get these ads)
That's me. Paid off house #1 right before the financial collapse in 2008, moved a few years after that and then paid off my current house right before COVID hit. Didn't plan the timing on either of these situations, but let me tell you how much peace of mind it gives someone to have their house free and clear during uneasy economic times like those.
This is why we should not be beholden to current homeowners for housing. We need to build more housing in America's most in-demand and opportunity filled areas so people can get a home without being at the mercy of existing homeowners.
The money that homeowners are able to ask for are only as high as the lack of other options allows.
The main problem I've noticed in my city is that the only apartments being built are "luxury apartments" that all come with high rent. They never seem to build affordable apartments.
Also the people building new complexes are the worst of the worst corporate landlords that push rents higher because they also need infinite growth to make their stock value grow. They're also the people that use apartment data brokers who make sure that they always rent at the highest possible rent. The people like Real Page, that know all the rates of every other complex in the area so there's no real elasticity in rent.
Also, only new renters get deals, which turn out to not be deals because the rent was artificially higher anyway. And moving costs thousands of dollars, so you get huge "market adjustment" increases for staying in one apartment on a new lease, even when the other apartments dropped to much lower prices.
i think it was 2021 or 22 the japanese developers built over 200,000 units in tokyo. If they can figure it out then our strip mall parking lot cities can figure it out.
We do know that and believe it or not there are places where building those is legal, or where the proper zoning could be acquired if developers sought it (greenfield developments etc.)
When? Not sure on that one. The why is much easier...
Ai is overhyped and it's a bubble.
Gold prices, oil prices, every fucking commodity you can name prices..
Are all unsustainable.
But honestly... I've always had a gut for these.
My wife actually has asked me to stop predicting things because I get them right so often that she basically thinks I'm jinxing us...
Any housing "crash" will likely be modest at best. A "crash" might mean a drop in 10, or even 20 percent very quickly. But not much more.
The likely scenario is a modest price fall, and long term stagnation in housing prices. When you look at housing "crashes" through history this is the pattern.
What will mortgage interest rates be in April 2027 please? I am pulling a house I have FSBO now as the discounting I would have to do to sell to understandably stressed buyers is larger than I want to cut. No mortgage and I do not have to sell now but I would if I did not have to cut due the high rates now.
So please predict how rates will react via T bill adjustments once the Iran war stabilizes? Also can you guess my generation?
Whatever helps you.
I've been wrong, its not like im a fortune teller. Zero powers. And no i don't do what you stated. I usually go "called that wrong" or "shit"
Cut to my parents selling their almost paid off house, bumming it with my grandpa til he died, and then bought his house in their mid 60s. My parents will never be able to retire.
Yeah there was a time when people's house value would double and then they would pay for Renos and new vehicles using their increased equity as collateral increasing their monthly payments when their income hadn't increased, or refinancing their mortgage extending the term they're paying and effectively increasing interest they pay on their debt. This was generally a stupid financial decision and if housing crashed and then they couldn't make payments because their construction job slowed down they went bankrupt. Most people with a lot of equity in their homes view the home as their primary investment to sell and downsize to fund their retirement or sell and pay for assisted living facilities. Taking on more debt because they have more equity is risky unless they're looking to become a landlord and have a positive outlook on the housing market and a long enough time horizon that it actually makes sense. People being smart with their money should be a good thing for the economy.
Because there isn't any good way to extract equity from a home besides selling. Interest rates are so high that HELOC doesn't make sense. Same with mortgage rates. Unless you have enough equity to buy outright, you really can't do anything with it.
I have a rock bottom mortgage rate from a few years ago. I would like to move to a smaller place now that my kid’s grown but I’m probably gonna die in this home, unless there’s a housing construction boom. Why would I risk moving? I can deal with the commute. I’m not gonna get these rates again, but trumpflation is making everything else cost more so that dries up my incentive to move.
Most homeowners either own outright, or have a low rate. With rates being relatively high, you can make more by renting and just waiting for rates to drop and prices to increase again.
Also the article itself says that the increase in equity is due to market appreciation. It's not like people are paying their mortgages off faster. there's not guarantee the market doesn't crash and you're left holding the bag. To me, a HELOC seems riskier than ever before (besides maybe in 2007), and yet they're portraying people not doing this like some kind huge issue.
Refinanced to a 15 year mortgage at 2.375% and also cashed out $20,000
Since then, we’ve used that to pay for all hardwood flooring, then pay it back to myself, then a new back deck, then paid it back to myself, then a new roof, roof and gutters … which I’m now paying back to myself
2020: refi and took $20,000 from my mortgage equity. Put that into a savings account
2021: paid $11,000 for a new deck
2021-2025: made monthly payments to myself till that was paid and my savings account balance was back at $20,000
2026: Paid $14,000 for a new roof using money from that same account
My only financial regret is I wish I was you. I refied to that same rate in 2021 and was just happy to get a low % and wanted to pay my house off asap and didn't want to take on any more debt. I've learned more since then about debt and man I wish I'd done a cash out refi. We're doing fine, I just wish I had more project money lol
Let me make mu comment linger by regailing you with a poem. There once was a guy who had equity in his home. At home he was left alone. So he lived out his days never dealing with landlord ways, reading articles that hurt his dome.
I might be conservative about this, but it was always a bad idea to use home equity for most things people were using it for. Obviously frivolous purchases were the worst, but I know a lot of people who were using their equity to finance additional properties.
The financial advice world is full of advice to use home equity loans to finance other properties to build wealth. Books from decades ago say this frequently and now the Internet is full of people saying the same.
I do think in certain circumstances it can work well and actually build wealth, but I think a lot of these people don't understand the risk they're taking.
It makes sense when the rate is low and rate of return relative to price (cap rate) is greater than the interest rate. Very, very few single family properties pencil out nowadays.
It worked great for people that were already in the 60's with full retirement accounts or substantial assets / almost paid off houses when rates were in the 2.0's. You just need the property's value to increase at a rate higher than the interest on the loan to make money. Now that rates are in the 7's, its much harder to make that math work.
I agree it can be a smart play for the right people, but I worry it creates a larger issue where the government is less likely to let those homeowners fail for fear of another 2008 situation. Maybe I'm not thinking of this correctly.
See, it was ideal for people with home equity (and stable employment) AFTER 2008. You could leverage your equity, to get rock bottom rates and buy houses at rock bottom prices.
Today you would be using equity to get the highest rate loan you’ve ever had to purchase a house at its all time highest price, wild idea.
I feel the worst is the people who used home equity to pay of credit cards. Mathematically it makes sense because interest rate is lower, but often times that just treats the symptom not the illness. After a few years many of those same people run the credit cards back up and repeat the process over and over.
I understand the concept, but right now the interest rates just seem too right now for the math & risk profile to make sense. If I got my mortgage during the prime sub 3% years, why would I take out a loan now when it's above 7%? It seems like the ship sailed after rates went higher than 5% for me to personally consider doing something like this as that's just too much risk for me.
Why do I need to "use" it? The common premise that equity in a home is 'locked' unless tapped, is just flat wrong.
My paid-for house acts as an internal annuity, the only difference being that the cash flow I get from it is in the form of reduced expenses (no monthly mortgage or rent payment) as opposed to increased income. Net cash-flow wise, it is identical.
Exactly.. I am another homeowner with a boatload of equity in a paid off house, but I refuse to tap into the equity for frivolous reasons. Banks want homeowners to continue to borrow on their homes for any and all needs, as the interest paid on that borrowed equity is income for them. For me, Id rather cash flow improvements or save up for them instead of paying obscene interest at these rates.
My home is my castle and refuge, first and foremost... not a piggy bank. Last time I checked, 100% of foreclosures happen on houses with mortgages that can't be paid back.
Oh on second thought, I'm going to drain my equity, buy a Lambo, and then YOLO the remainder with margin into AI stocks... What could possibly go wrong! Thanks! /s
Why should they? With mortgage rates as is, “tapping” equity (I dislike that characterization) doesn’t make any sense unless you need the cash. I’d rather maintain that equity as I work towards either paying off my house or roll it into a bigger down payment if I ever upgrade.
Rolling it into a down payment is the only thing that really makes sense right now, and even then...the math doesn't really math for a lot of people between house pricing, interest rates, and COL going through the roof.
This is the boat I'm in. We need to upgrade as we need more space, but even with ~150k in equity and ~75k liquid available, in order to stay in the same general area we are, we're looking at having to roughly quadruple/quintuple our current mortgage. It's a tough pill to swallow. (Admittedly, our current mortgage is peanuts because it was a small house we bought in '17...but still. )
For the purposes of owning my home and not being able to be kicked out onto the streets to be homeless the next time the economy shits the bed like it does cyclically.
"Banks mad that homeowners are making financially sound decisions instead of taking increasingly unsustainable risk to artificially create more bubbles."
With rates where they are why would you tap it? Most people with substantial equity have the means to cover most of their expenses and plan ahead for larger one time purchases.
Yeah put of curiosity i went to see what my rate would be, it was higher than a personal loan would be at 10.49% and that was before interest rates jumped
If the bond market really is signalling a depression level event then this is the perfect time to borrow at a variable rate because the rate will go down.
If you have a paid off house and no debt, taking out a heloc in uncertain times is pretty stupid as there is no gurantee the economy will be stable and you wont be out of a job.
The world is signaling they are going to decouple.
We dont know whats going to happen as globalization ends.
If consumers are sitting on massive equity just sitting there waiting for rates to come down, you can be quite certain that the future holds very little uncertainty.
Not all that long ago a lot of people got burned during the housing mortgage crisis due to using equity in house. Now with rates going up again and so many having employment issues makes sense not to gamble with equity.
I’ve never understood the push to “use your home’s equity.” I honestly think it’s just a scam by the mortgage industry. Once my home is paid off, I’m done forever.
For what purpose would I strip equity from my home? I'm not selling or refinancing (my mortgage is 3.25%, I'm not losing out on that kind of rate), leaving a HELOC as my primary way to tap equity.
The national average for a HELOC is 7.25% APR right now. The average annual return for the S&P 500 is ~8% if you don't reinvest the dividends. So I'm gaining, what, a 0.75% annual return on my HELOC, but with the risk of taking a bath if the S&P experiences a downturn while my loan terms are still in place?
Let's be generous and call it a 1% return. I have ~$240k of equity in my home currently. Should I should take out a $200k HELOC with the hope of netting a $2k annual profit on it, with a risk of actually losing money? What's the point in that?
Only reason I'd tap my equity is to make improvements or repairs to my property. At the moment I don't have any improvements or repairs to make. Sure I'd like to pave my roof with solar panels, but not with this administration in office.
So no thanks, I'll just leave that equity in place just in case I need it in the future. Not every penny of my net worth needs to be constantly working. It's OK to have some of it at rest in a secure investment earning a lower rate of return.
My home is the last place I'd freely let capitalism "tap" into... We all know private equity wants us begging for basic needs like water, air, food and healthcare.
Translation.... cmon, more debt to stimulate the economy is a great idea. This will guarentee property prices have to remain high. The equity and pension funds remain happy. Fk the rest of you.
Also, most banks want you to take out a equity line loan, which has a much greater interest rate than say a small second mortgage using the equity in your property as a 100% down payment on the loan. As equality lines make them a great deal more money and they also don't count the same when it comes to tax breaks, although I am not sure of that.
Why would anyone willfully “use” their equity to do anything in these times? Political uncertainty and economic uncertainty…wish a dash of extremely unattractive interest rates…don’t exactly create an environment that’s favorable for borrowing against the most valuable asset (for most folks) people own.
As benign as the headline reads, I hate how low-key suggestive of negativity it is.
“and not using it” I would argue that having it sit in reserve as an emergency, last ditch resort that you will hopefully never have to access is using it very appropriately.
I have bought and sold houses during declining markets. No fun for the sellers.
High interest rates? I bought a house in 1981 and assumed a first mortgage at about 9% and took on a second mortgage at 17%, for a blended rate of about 14%.
People complain today about high interest rates, but it's only "high" in combination with property prices that were established during a period of very low interest rates.
When interest rates are high, property prices have to decline.
I guess I'm one of those. But I'm hesitant to take out a 100K HELOC at 6%, instantly lose money on closing costs, and then invest to maybe earn higher than 8%. I have an opportunity to do just that right now on a multifamily investment, but the risk just isn't worth it at this point.
If you don’t have to, why would you risk your home?
During times of turmoil, people look to security. Few things are more secure than owning your home and property, particularly with no HOA. It’s easier for a bank to take it from you than the county.
Home equity is a lie. It’s a fictitious amount of cash that you can’t use.
Consider:
It’s not really yours. You can’t spend it. If you borrow against it you have to pay it back now, not when you sell the house.
So say you have a ton of equity and decide to sell. You’re going to have to take all your cashed-in equity and give it to the guy you’re buying your next house from, to cover his built up equity.
And taxes. I’m paying taxes on what city assessors say my house is worth, so I’m being taxed on equity I can’t really use for anything.
And when I sell, I’ll pay taxes on the equity I’ve been paying taxes on, with money that’s already been taxed.
This will be the next domino to fall. At some point the rising mortgage rates will put dramatic downward pressure on home values, chipping away at all that equity.
For those who don’t plan to move or got a good rate a few years ago this won’t matter to them. I have almost 200K of equity in my home. If the market tanked back to where I bought my home I’d be ok.
I know people who have used them to buy cars because the interest on it is cheaper than a car loan or stocks because the interest on it is cheaper than margin from their brokerage
I'm all for financial responsibility and not deploying home equity without a tangible plan, but this is a very narrow take. HELOCs absolutely have their place in one's overall financial mosaic.
1 - no one wants to pay 8% interest to borrow their equity.
2 - for being with rates under 4%, it doesn't make sense to sell and buy at 7.5% unless they have absolutely no room. For most people, low rates make it easier to rent it out if they can save a down payment for a new house. If they cannot afford that, they probably don't have enough of a safety net to be risking a high rate on a new house.
What was meant to say is that Banks are upset that they cant get anyone who paid off their house a shitty loan product using thier house as calladeral.
You have to relocate to a cheaper market to get any real benefit from equity. There is a reason that other market is cheaper than the one you are currently in. It sucks
Many of those with high home equity will soon be using that to pay for the health issues and elder care as they age. The transfer of wealth will not be to their descendants, but to nursing homes.
This is America, anyone without enough assets late in life is SOL. But, assuming renters have equity elsewhere, they’ll (in general) use that I assume.
Hot take - Home equity is a dumb way to look at net worth. Unless you are tapping it which for most people makes 0 financial sense then it is random numbers that have little impact. Contributes to the wealth effect too where people increase consumption. Similarly if rates go even higher it should push down home prices.
Oh god when this bubble pops and the debt load that comes with it either money will flow like a river from the Fed or the Feds will TARP the hell out of it. Or both.
We desperately need to get people in office who will let these massive corporations collapse not bail them out.
I bought a house this month. I'm already unhappy with the interest rates, why would someone with a rate 4% lower than mine want to sign up for this willingly?
I bought a house in 1990 to live in. Was it also an investment, sure. But I’m now retired and don’t need or want to move. It’s paid off and I have zero debt.
I can't go get a bigger house, I don't want to surrender <3% rates for >7% rates.
I don't want to downgrade, and even if I did it would have to be so much I have no mortgage or I'd just be paying more interest on a tiny mortgage than I pay for my current decent sized home and mortgage.
Wealth in land is useless mostly unless you retire and spend it by moving from HCOL to LCOL, or is used by your estate (but even then probably is used to buy land for the next generation... so you gained potentially no net from the growth).
Considering younger homeowners have sacrificed a lot of long-term savings to afford a home, if you pay it off early you’re much better off rebuilding your newfound chunk of savings rather than pretending your house is a piggy bank.
My family has outgrown our house, and our equity is about 150% of our original purchase price in 2015. The only thing holding us back is the rates. Even going to a house of similar value to our current one would raise our mortgage payment significantly.
They will once they have to live in an elderly care facility and they will get milked for it. Hence the ever increasing care cost. They won’t leave that kinda cash on the table. I wonder what that tsunami of houses on the market will do
I mean, they probably have indifferent outlook than us. Their economy was blooming/all roses for them with a multitude of opportunities and tons of safety. Obviously its different now. I have a hard time chastising parents who simply just can't know or understand-attiude makes the difference I guess.
House prices skyrocket, and cnbc is freaking out that people aren't taking out loans against the equity in their homes and risking being underwater if the market corrects? The article itself says this is due to appreciation, not like people are paying off their mortgages fasters. Not taking loans against equity in your house that wasn't there 5 years ago is the smartest thing you can do.
So typical. God forbid the middle class not indenture themselves in more debt then they portray it as some kind of systemic problem.
I was saving my equity to buy a bigger home, but I'm buying into the same crazy ass market I'd be selling in and the interest rates make it an insane idea
Most people I know don't have pressing issues. If rates were lower I might take out a HELOC and do something like upgrade the master bath, but it's not a priority.
It's almost like the system should be designed to favor those in it, as opposed to those in it designed to prop up the system. This is the politest "go fuck yourself" I could muster.
As a normal human being: why would I care about the equity in my house and whether I’m “using” it? I’m a working dude trying to raise a family in a home that I own, I’m not trying to min/max my debt to income ratio and use my house like a fucking investment portfolio. Fucks sake man, this is madness
These threads are so depressing… it’s either people who can’t buy a home or people with incredible asset or cheap mortgage. I feel more and more screwed since I bought in 2025 at near ATH. I think I’m gonna have to be a NIMBY or something because I certainly am not going to advocate for it to be cheaper lol
As a former mortgage loan officer, its worth noting that while helocs are a bad idea for most people, cash out refinances are also a bad idea for most people. A loan officer will try to sell you on using your equity by stressing a low monthly rate, but that ignores the substantial fees rolled in, along with the new interest rate. We'd often offer 30 year to get the lowest monthly payment, which, is stupid and a part of why I left the industry. They'd push people to do debt consolidation since so many Americans have substantial credit card debt, but moving that debt to a lower interest rate always came with those thousands+ of fees, a new interest rate (which now can't beat the old ones), and new loan term. It's far costlier to access the equity in your home than they'd lead you to believe. Avoid at all costs unless you're one of the unicorns where these costs could make sense.
I work in 2nd liens and there is a crazy amount of people taking out a 2nd mortgage. HELOCS and closed end seconds are among the popular products I see in the market.
Every responsible adult with home equity should apply for a HELOC now while they don’t need it. It’s like a credit card with a 6% interest rate. Use the tools at your disposal
Two positive points people don’t talk about in the past few years is how housing costs have fallen for 60+% of the population as a percentage of their income and how much net wealth has increased for median family households.
StretchedGary | 5 hours ago
The people who have paid off their homes and built massive equity are absolutely not interested in taking on debt and potentially risking their house as uncertain economic times are looming on the horizon. And that's a good thing... People using their homes as piggy banks is a quick way to cause a whole lot of mess.
BotherResponsible378 | 5 hours ago
Right. My mom keeps trying to get me to sell the house that we bought in 2020 at a ludicrously low price and with an interest rate that I I'm unlikely to ever get again in my entire life.
Sure, I would make some money on the value of my house as it's skyrocketed over the last few years, but I can't afford to buy anything without increasing my cost of living rather substantially. My house isn't the biggest house, but it is a house and it is worth a lot of money. And historically speaking that value doesn't really go down over the course of decades.
Long way of saying my mother's and idiot whos trying to talk me into financial ruin.
Ambitious_Flow_4499 | 4 hours ago
So, where are you supposed to live then? If you sell, you still need to pay to live somewhere. Your mother is giving you terrible advice.
BotherResponsible378 | 4 hours ago
Exactly. She wants me to buy a bigger house. But even buying My same house today would give me a higher cost of living. A rather dramatically big jump.
So what am I supposed to do? Sell my house to get a bigger house with more things to clean and more things to keep up, more things to do, More things to spend money on, and pay a much higher mortgage?
It's ludicrous. The only time selling this house makes sense is if I'm downsizing to something smaller so that the house becomes an actual meaningful investment. Not a way to increase my cost of living.
JustHugMeAndBeQuiet | 4 hours ago
Sounds like mom is suffering from the "That's just how it's supposed to be done" phenomenon. No actual grounding to the realities of the current paradigm.
Anywho, I applaud your financial responsibility. It'll serve you well in the coming years.
BotherResponsible378 | 3 hours ago
Have you met my mother? Because that is exactly who she is, lol.
Not to get too much into my personal life, but for the most part my life started improving rather dramatically when I stopped listening to my parents. Weird how that happens sometimes.
Sterncat23 | an hour ago
Never cave in! You’re doing the right thing. Taking on new debt and a higher COL will worsen your life, even if it’s a nicer and larger house. Financial stability = peace
BotherResponsible378 | 48 minutes ago
I appreciate your words of encouragement, and yeah I will never give in on this.
This house is the only debt that we have. We lived like poppers and paid off of our student loans the year before buying it. We have no car payments. And not for nothing, I work in the Arts. I've been incredibly fortunate, and I've been able to work very regularly and make a decent amount of money. But it's the Arts, I've seen people significantly more talented than me struggle to get work and never find work again.
I would be insane to do my line of work and take on a higher risk than what I currently have. Right now with my current risk, I could fall out of my career and we'd still be fine. If I had to bump up our mortgage buy a couple hundred thousand dollars, and are interest rate by a few points, I'd be putting myself in a very scary territory.
JustHugMeAndBeQuiet | 18 minutes ago
SAME, fam.
Turns out my parents were idiots. Really a liberating revelation.
InterviewLeather810 | 2 hours ago
She remembers the time when people upgraded their homes as their home comes went up. And until the Great Recession it worked.
chasingjulian | 3 hours ago
She wants you to buy a bigger house so she can visit more often. Also she might think bigger house means more success.
Starboard_Pete | 55 minutes ago
Ugh this has got to be a Boomer mom. Same on my end. We bought a 1,500 sq ft house in 2020, 2.5% fixed interest. Have no kids; it’s just the two of us, and it’s plenty of space. We even finished the basement, making it a third bedroom/bath and expanding us to 2,300 sq ft.
And every visit the comments come out. Started as “cozy” and “charming” and now it’s flat out, “when do you think you’ll get something bigger?”
For who? The zero grandkids? Then it dawned on us when we started getting weekly picture texts of stuff they wanted to get rid of, but didn’t actually want to see go. We don’t want all your basement things…
BotherResponsible378 | 52 minutes ago
Bingo. Lol. My wife is saying she had the exact same type of interaction with someone on Reddit. Complaining about our parents to another child of a boomer.
I really hope that we're not like that when we're older. That generation thinks they know everything. And they can't even keep up with how much the world's changed.
Starboard_Pete | 23 minutes ago
I feel a bit of the out-of-touch vibe coming on. It’s mostly when I show my nieces and nephew how CDs or tape decks work, or regale them with stories about the phone being attached to the wall, and also having no internet.
Pretty benign things I think…I’m definitely not going to be demanding to see financially reckless behavior from them anytime soon lol
HGpennypacker | 4 hours ago
The idea of selling your home to make a killing only to turn around and try to purchase ANOTHER home at a worse rate is insanity.
BotherResponsible378 | 3 hours ago
Hahah, This is more cathartic than I pictured commenting this would be. I don't normally talk about this with literally anyone else. It's random mom bullshit. Tons of people have belligerent parents that think they know it all. I'm not special. So the only way this conversation ever goes is me telling my mother that she's insane and that this is my money and I'll do what I want with my money, while she makes up a laundry list of reasons to continue to criticize my decision to keep this house.
Seeing this many people come out and validate what I'm saying feels amazing. It shouldn't, but it does and I'm going to revel in it. I appreciate your contributions.
milehigh73a | 2 hours ago
the hope would be that you have enough equity from increased valuation to be able to offset increased rates. and then when interest rates go down, you refi. I wouldn't be on that unless we have an AI induced depression.
My rate is decent (3.5%) but even with our house price doubling, we wouldn't have enough equity to purchase to offset the rate increase. Maybe if we bought in the burbs.
Xenoanthropus | 5 hours ago
But what ever will you do if you aren't consuming 24/7?
Your mom probably wants an excuse to borrow money from you.
UtzTheCrabChip | 3 hours ago
If you bought anytime from like 2010 through 2023, your monthly payment is so low that you literally can't even sell and rebuy your own house without doubling your payments. No one can afford to upgrade
BotherResponsible378 | 2 hours ago
That's exactly it. If I sold my exact house and rebought it, my cost of living would go up. Rather dramatically at that. I would be paying around $200,000 more total, and I would have an interest rate that's at least 3 percentage points higher if not more than what I already have.
Plus, I've already put a lot of work into this place to make it a place that I want to be in. And I did all that work myself. My own hands. It's not like I paid someone else to do it. Completely redid the kitchen. Put in butcher block countertops. Tore down the cabinets sanded and painted them all white. Did tons of work on this place.
So in addition to the unbelievable price and interest rate I got, I've put a lot of personal work into this place that I really like. With my own hands that I feel very proud of. Selling this place just to buy a newer bigger place would be the peak of materialism.
NoonDread | an hour ago
I bought a house January 2020 at 2.9% interest for 220,000 USD. It is now valued at 325,000 USD.
Someone suggested selling it and moving up to a larger house but that would cost a lot at today's prices; not to mention that increase of interest. No thanks. I will enjoy my tiny little house. It is literally the only debt I have.
BotherResponsible378 | 50 minutes ago
Yeah. You can never bank on getting an interest rate that low again. With barring specific situational exceptions, I can't imagine selling a house with that low of an interest rate and not regretting it near immediately and probably for most of the rest of your life.
This is the same lady, that sold a shore house she bought for like 100K in a really amazing Shore town in the year 2000. A year later it jumped up like $200,000 in price today it's worth way more. And she's kicking herself constantly.
And here she is asking me to make the same mistake she did, lol
Efficient-Youth-6985 | an hour ago
"Are you happy son"
"Yes"
"Disgusting"
BotherResponsible378 | 45 minutes ago
Lololol. I got a chuckle out of that one. Lol.
You're not too far off from the truth. Without going into a ton of details, at this stage of life she had only owned a house for a short period of time, was only able to buy it because she married my father. She had no major life accomplishments aside from having children and being a mother, And her and my dad did not exactly have the happiest marriage in the universe.
Here I am buying a house when I was younger than her, having kids younger than her, getting married to my best friend of the last 22 years,
And she's sitting here bitching like it could be better, like I didn't grow up in that house lol.
Efficient-Youth-6985 | 34 minutes ago
congrats on marrying your best friend!
BrilliantMango | 2 hours ago
Do not buy a bigger house just because you’re supposed to! (Sounds like you’re already thinking that way). Guy I work with just retired at 53 partially because he and his wife stayed in their starter home.
BotherResponsible378 | 2 hours ago
Yep. Unless I'm forced to under some crazy circumstances, I have no intent of ever getting rid of this house until I retire. I was insanely lucky with this purchase.
My wife and I were looking for houses but we still had our student loans. I talked to her into waiting a year. Kill off our student loans, recoup that money and then try again in the next year.
We did that and we ended up finding a house that was about the size that we wanted, and it was $20,000 under asking price because it had on the market for a few months. Then I was able to negotiate another 10 off. And then we got an interest rate at 2.7%
Even if I suddenly became incredibly lucrative, I would be an idiot to sell this house and not at least rent it. I'll be shocked if I ever get an interest rate that low ever again
BrilliantMango | 2 hours ago
If you could got back in time about 20 years and have a conversation with my younger self to talk some sense into him I would really appreciate it!
malekai101 | 2 hours ago
And even if the value of your house sharply declined, with a good interest rate, you have a place to live that you can afford and presumably will continue to be able to afford. Stability is valuable. A house is much more than a financial asset.
nav13eh | an hour ago
This is why housing is a bad investment. It's a better investment than no investment, but it's a bad one. The gain in value is lower than market equities over decades and home equity is not very useful in most mid-life scenarios unless you take on more debt/risk. And taking on risk with a primary residence will just increase stress.
BotherResponsible378 | 47 minutes ago
Exactly. The situation that we got using a house as investment is incredibly rare.
I forget who it was but it was someone on YouTube I was watching, and he validated that POV for me. I used to argue with my mom about that all the time. That for the most part houses are not an investment. And this guy who's a financial advisor backed that up by saying, houses are a lifestyle choice. They are constantly trying to return to dust, and you are spending a fortune trying to keep them up.
The only time real estate is an investment is if you're doing it to make money. Not to also live in it. If you're treating it like a business. Great. If you're not? That's not an investment.
saml01 | an hour ago
You should take a heloc and buy another house and rent your first one. Make your house and your money work for you.
Wellontheotherhand1 | 59 minutes ago
Are you his mom? This is terrible advice lol
BotherResponsible378 | 42 minutes ago
You know, I have considered that. But I think the circumstances would need to demand it.
I work in entertainment, but I don't live in California. But, my wife and I have decided that if for some reason my career ever forces me out there, we will not sell this house. We will rent it out. Simply because I know I can rent it for more than our mortgage is.
But it would need to be a situation like that. Doing it any other way would be a huge risk or disruption to our life as parents as well. Just don't have the bandwidth to have a job and manage places.
MichaelGFox | 5 hours ago
you need to think of it like a stock. buy low sell high. nice work brother. doesnt hurt to solidify some gains she might be right
Single_External9499 | 5 hours ago
You don't live in a stock. When you sell a stock, you have to find another one to live in. In terms of assets, a primary residence is less like a stock than almost anything else I can think of.
MichaelGFox | 4 hours ago
this is why so many folks live paycheck to paycheck they dont solidify their gains
walkingthecowww | 4 hours ago
Where do you recommend this person lives after they sell their home?
Single_External9499 | 4 hours ago
This guys strategy only works if you sell in a HCOL area and move to a LCOL area. Some people are willing to do that for purely financial reasons. Most aren't.
MichaelGFox | 3 hours ago
you find another lowly priced house and rinse and repeat
walkingthecowww | 3 hours ago
Where? If their house went up so did all the houses in the area. You want them to uproot their life and move to a bad area so they can “lock in” their house gains earlier than if they waited? What is the point of life if you make yourself miserable chasing money?
MichaelGFox | 2 hours ago
you dont understand yet someday you will
walkingthecowww | 2 hours ago
Please enlighten us.
dust4ngel | an hour ago
you don't show your math yet someday you will
-Willi5- | 4 hours ago
This is a joke, right?
MichaelGFox | 3 hours ago
I would never joke about savvy financial maneuvering
TMK8273 | 4 hours ago
Bud Fox, is that you?
BotherResponsible378 | 5 hours ago
Nah. At any price that I could buy a house anywhere close to where I have to live, I would go bankrupt inside of a year.
If I'm buying low and selling high, I'm doing that when I retire. The interest rates alone now would kill me. I'm at 2.7%.
dogboy_the_forgotten | 4 hours ago
Yeah, unless you’re cashing out to buy something less expensive or to fund an ex-pat retirement I think you’re being super smart. Keep your low rate and house you can affordably enjoy.
BotherResponsible378 | 4 hours ago
Exactly. And that's exactly why retirement is the only time I'm willing to sell this. I've got kids right now, I can't afford a downsize. God willing, I'll live to be old enough to retire and I'll sell this at a profit and buy a much smaller place that will be easier and cheaper to maintain than a full house.
When I was younger I knew people who bought bigger houses for the sake of having a bigger house, and it didn't always work out very well for them. One of them now has two mortgages taking it out on it, the house is in disrepair because it was too much work for them, and with how bad it is, they'll never sell it for enough money to be able to pay off the mortgages.
Why on Earth would I invite that risk?
carbonclasssix | 4 hours ago
All residences rise with the tide though so when you sell high you're buying high for your next place. The only way out of that is to move to a lower COL area.
TailorSubstantial863 | 5 hours ago
Bingo. It will be a very bad sign when folks start tapping into the equity to pay the bills given current rates vs rates over the past 20 years. That will be a sign that they have no other choice.
JustHugMeAndBeQuiet | 4 hours ago
2nd lien (predominantly HELOCs) lending is presently at a 18 year high.
Hardship 401k withdrawals have never been this high.
No need to speak in the future tense: the very bad sign is here.
milehigh73a | 2 hours ago
The HELOC's might be an indication of people wanting to stay in their house, and buying to finance additions or other QOL improvements.
the 401k withdrawls are a very bad sign though.
JustHugMeAndBeQuiet | 16 minutes ago
You're absolutely correct and it's irresponsible to make blanket generalizations based on a single data point.
That being said, it is alarming amidst the myriad of other "the American consumer is stretched paper thin" indicators we're navigating.
_N4AP | 29 minutes ago
I've started getting ads on my podcast downloads recently from Rocket Mortgage, right? A cheery, pleasant woman's voice suggesting homeowners tap into existing home equity through Rocket Mortgage to pay down high-interest credit card debt with a loan financed by leveraging their house.
My fucking jaw dropped. I can't imagine paying off credit cards (which is an unsecured form of debt, thus the interest rates in the first place) by risking a wholly owned piece of real estate.
(For the record I have zero credit card debt, no idea why I get these ads)
TheRealCabbageJack | 5 hours ago
Right?! I've got a reasonable mortgage at a ludicrously low rate...why chance things with a second mortgage or HELOC in this economy?
MattyBeatz | 5 hours ago
That's me. Paid off house #1 right before the financial collapse in 2008, moved a few years after that and then paid off my current house right before COVID hit. Didn't plan the timing on either of these situations, but let me tell you how much peace of mind it gives someone to have their house free and clear during uneasy economic times like those.
JustHugMeAndBeQuiet | 4 hours ago
Can you please stop paying off houses? Every time you do it causes a catastrophe.
MattyBeatz | 2 hours ago
Good news is I have no plans to move for the foreseeable future.
JustHugMeAndBeQuiet | 16 minutes ago
Thank you, Matt. From all of us.
MajesticBread9147 | 4 hours ago
This is why we should not be beholden to current homeowners for housing. We need to build more housing in America's most in-demand and opportunity filled areas so people can get a home without being at the mercy of existing homeowners.
The money that homeowners are able to ask for are only as high as the lack of other options allows.
Crismus | 3 hours ago
The main problem I've noticed in my city is that the only apartments being built are "luxury apartments" that all come with high rent. They never seem to build affordable apartments.
Also the people building new complexes are the worst of the worst corporate landlords that push rents higher because they also need infinite growth to make their stock value grow. They're also the people that use apartment data brokers who make sure that they always rent at the highest possible rent. The people like Real Page, that know all the rates of every other complex in the area so there's no real elasticity in rent.
Also, only new renters get deals, which turn out to not be deals because the rent was artificially higher anyway. And moving costs thousands of dollars, so you get huge "market adjustment" increases for staying in one apartment on a new lease, even when the other apartments dropped to much lower prices.
flakemasterflake | 3 hours ago
All new housing lowers housing costs. It doesn't matter how a marketing team bills new housing
Emotional_Goal9525 | 3 hours ago
It is because so called luxury appartments can sit in the books with mark to fantasy valuations. Low cost rentals are valued by rental revenue.
1234nameuser | 2 hours ago
Lols, nobody builds brand new affordable apartments......but NIMBYs love spouting these talking points.
New Class A creates new Class C.....it's not rocket science
FlobiusHole | 3 hours ago
They’re building plenty of houses in my area. I can’t afford those either though.
illmatico | 3 hours ago
Where are you gonna build it?
Willing_Activity_855 | 2 hours ago
i think it was 2021 or 22 the japanese developers built over 200,000 units in tokyo. If they can figure it out then our strip mall parking lot cities can figure it out.
illmatico | 2 hours ago
Americans don't want to live on top of each other or share a wall with each other. Its against their DNA
Willing_Activity_855 | an hour ago
We don't actually know that because building them is illegal
illmatico | an hour ago
We do know that and believe it or not there are places where building those is legal, or where the proper zoning could be acquired if developers sought it (greenfield developments etc.)
PeaceJoy4EVER | 5 hours ago
Exactly. So happy to have a paid off house. The tax man takes years to take your home. The bank takes months.
BornAgainBlue | 5 hours ago
Yep! I'm sitting on a ton of it. This economy is going to crash and it's going to crash fucking hard. I for one do not intend to be holding debt.
MichaelGFox | 5 hours ago
when is it going to crash and how hard do you think? why?
Hero_of_Brandon | 5 hours ago
Nothing make sense anymore. Everyone can tell the economy is in a weird place, but the markets keep going up.
Everyone is in this holding pattern until the first domino falls.
user485928450 | 4 hours ago
Next Tuesday, just a little bit
BornAgainBlue | 5 hours ago
When? Not sure on that one. The why is much easier... Ai is overhyped and it's a bubble. Gold prices, oil prices, every fucking commodity you can name prices.. Are all unsustainable.
But honestly... I've always had a gut for these.
My wife actually has asked me to stop predicting things because I get them right so often that she basically thinks I'm jinxing us...
ThorThulu | 4 hours ago
Im gonna need you to start predicting the housing crash, guy. Need some cheap houses that my buddies can remotely afford
awildstoryteller | 4 hours ago
Any housing "crash" will likely be modest at best. A "crash" might mean a drop in 10, or even 20 percent very quickly. But not much more.
The likely scenario is a modest price fall, and long term stagnation in housing prices. When you look at housing "crashes" through history this is the pattern.
JollyManufacturer388 | 3 hours ago
What will mortgage interest rates be in April 2027 please? I am pulling a house I have FSBO now as the discounting I would have to do to sell to understandably stressed buyers is larger than I want to cut. No mortgage and I do not have to sell now but I would if I did not have to cut due the high rates now.
So please predict how rates will react via T bill adjustments once the Iran war stabilizes? Also can you guess my generation?
BornAgainBlue | 3 hours ago
Nope, but Poland. Is going to invade or at least attack Russia, if that helps...?
JollyManufacturer388 | 2 hours ago
Kaliningrad Oblast? or into White Russia?
knicksfinals2026 | 2 hours ago
Or you just say thing will happen for years and years until they do then think you called it. No AI bubble either
BornAgainBlue | 2 hours ago
Whatever helps you. I've been wrong, its not like im a fortune teller. Zero powers. And no i don't do what you stated. I usually go "called that wrong" or "shit"
milehigh73a | 2 hours ago
AI taking jobs. I doubt its a true crash, more slow grind downwards.
user485928450 | 4 hours ago
I’d need income to take on debt….
wheresmyadventure | 4 hours ago
Cut to my parents selling their almost paid off house, bumming it with my grandpa til he died, and then bought his house in their mid 60s. My parents will never be able to retire.
grossguts | 3 hours ago
Yeah there was a time when people's house value would double and then they would pay for Renos and new vehicles using their increased equity as collateral increasing their monthly payments when their income hadn't increased, or refinancing their mortgage extending the term they're paying and effectively increasing interest they pay on their debt. This was generally a stupid financial decision and if housing crashed and then they couldn't make payments because their construction job slowed down they went bankrupt. Most people with a lot of equity in their homes view the home as their primary investment to sell and downsize to fund their retirement or sell and pay for assisted living facilities. Taking on more debt because they have more equity is risky unless they're looking to become a landlord and have a positive outlook on the housing market and a long enough time horizon that it actually makes sense. People being smart with their money should be a good thing for the economy.
Willing_Activity_855 | 2 hours ago
Want to know a smart one. Back when interest rates where low in 2011 my grandparents did that. Tookt outa huge loan against the house.
At put it all in the stock market 100% into big tech.
They did exttremely well.
SCTurtlepants | 2 hours ago
Not to mention the recent memory of record-breaking low interest rates makes taking on a 7% right now feel quite unpalatable
dust4ngel | 2 hours ago
> People using their homes as piggy banks is a quick way to cause a whole lot of mess
"these people are sitting on healthy retirement accounts, but are not tapping into them to buy jet skis and blow. the reason why will shock you."
hiricinee | 46 minutes ago
Im not about to take out a 500k loan at 7% for the chance I can get a 7.2% return.
Bram24 | 26 minutes ago
Right. Some of us learned from 2004-2007
caterham09 | 5 hours ago
Because there isn't any good way to extract equity from a home besides selling. Interest rates are so high that HELOC doesn't make sense. Same with mortgage rates. Unless you have enough equity to buy outright, you really can't do anything with it.
wbruce098 | 4 hours ago
I have a rock bottom mortgage rate from a few years ago. I would like to move to a smaller place now that my kid’s grown but I’m probably gonna die in this home, unless there’s a housing construction boom. Why would I risk moving? I can deal with the commute. I’m not gonna get these rates again, but trumpflation is making everything else cost more so that dries up my incentive to move.
hockeycross | an hour ago
In theory either once your mortgage is paid off or small enough that your equity buys you a new house all cash are your only chances.
Snlxdd | 3 hours ago
Selling also doesn’t make sense.
Most homeowners either own outright, or have a low rate. With rates being relatively high, you can make more by renting and just waiting for rates to drop and prices to increase again.
Oracle_of_Ages | 3 hours ago
I just took out an unsecured 60k personal loan for less interest than my HELOC offered.
Granted I looked at one company. (My loan servicer).
But it was 11% vs 12.5%.
And my heloc wouldn’t even cover my entire $60k. So I said f it.
No_Ant_5064 | 2 hours ago
Also the article itself says that the increase in equity is due to market appreciation. It's not like people are paying their mortgages off faster. there's not guarantee the market doesn't crash and you're left holding the bag. To me, a HELOC seems riskier than ever before (besides maybe in 2007), and yet they're portraying people not doing this like some kind huge issue.
fenderputty | 5 hours ago
The only time you should ever pull out home equity is if you're using it to improve your home and build equity.
Also ... taking out a second with these rates is wild.
snowyday | 4 hours ago
That’s exactly what we did six years ago
Refinanced to a 15 year mortgage at 2.375% and also cashed out $20,000
Since then, we’ve used that to pay for all hardwood flooring, then pay it back to myself, then a new back deck, then paid it back to myself, then a new roof, roof and gutters … which I’m now paying back to myself
Remote-Ask7999 | 4 hours ago
What does paying back to myself mean?
snowyday | 4 hours ago
Once I took that cash from the refinance, I put it into a dedicated high yield savings account.
I’d take out enough for a project, then month by month replenish the account till it was back to $20k.
Essentially, it’s the same as a HELOC, but it’s at the interest rate of my mortgage, which is much lower than a typical HELOC rate
Fluxtration | 4 hours ago
Where do I get one of those?
space_force_majeure | 3 hours ago
A cash out refi? You get one at any bank
AliveJohnnyFive | 4 hours ago
Where do you live that you bought a roof and a deck for $20k?
snowyday | 2 hours ago
2020: refi and took $20,000 from my mortgage equity. Put that into a savings account
2021: paid $11,000 for a new deck
2021-2025: made monthly payments to myself till that was paid and my savings account balance was back at $20,000
2026: Paid $14,000 for a new roof using money from that same account
srebihc | 3 hours ago
Many areas south of Ohio tbh
PR0H181D0 | 2 hours ago
nowhere you'd willingly live in, i tell you that
SCTurtlepants | an hour ago
My only financial regret is I wish I was you. I refied to that same rate in 2021 and was just happy to get a low % and wanted to pay my house off asap and didn't want to take on any more debt. I've learned more since then about debt and man I wish I'd done a cash out refi. We're doing fine, I just wish I had more project money lol
snowyday | an hour ago
We all learn as we can. I'm an old guy and it took me years to get savvy on such stuff
Franklin_le_Tanklin | 5 hours ago
I use my home equity every day.
By living in my damn house and not paying rent.
Let me make mu comment linger by regailing you with a poem. There once was a guy who had equity in his home. At home he was left alone. So he lived out his days never dealing with landlord ways, reading articles that hurt his dome.
SawNickYouth | 5 hours ago
I might be conservative about this, but it was always a bad idea to use home equity for most things people were using it for. Obviously frivolous purchases were the worst, but I know a lot of people who were using their equity to finance additional properties.
Sadly_NotAPlatypus | 5 hours ago
The financial advice world is full of advice to use home equity loans to finance other properties to build wealth. Books from decades ago say this frequently and now the Internet is full of people saying the same.
I do think in certain circumstances it can work well and actually build wealth, but I think a lot of these people don't understand the risk they're taking.
gravescd | 5 hours ago
It makes sense when the rate is low and rate of return relative to price (cap rate) is greater than the interest rate. Very, very few single family properties pencil out nowadays.
GhostFaceRiddler | 4 hours ago
It worked great for people that were already in the 60's with full retirement accounts or substantial assets / almost paid off houses when rates were in the 2.0's. You just need the property's value to increase at a rate higher than the interest on the loan to make money. Now that rates are in the 7's, its much harder to make that math work.
SawNickYouth | 5 hours ago
I agree it can be a smart play for the right people, but I worry it creates a larger issue where the government is less likely to let those homeowners fail for fear of another 2008 situation. Maybe I'm not thinking of this correctly.
ThatOneIDontKnow | 5 hours ago
See, it was ideal for people with home equity (and stable employment) AFTER 2008. You could leverage your equity, to get rock bottom rates and buy houses at rock bottom prices.
Today you would be using equity to get the highest rate loan you’ve ever had to purchase a house at its all time highest price, wild idea.
Kreed5120 | 2 hours ago
I feel the worst is the people who used home equity to pay of credit cards. Mathematically it makes sense because interest rate is lower, but often times that just treats the symptom not the illness. After a few years many of those same people run the credit cards back up and repeat the process over and over.
Thelonius_Dunk | 5 hours ago
I understand the concept, but right now the interest rates just seem too right now for the math & risk profile to make sense. If I got my mortgage during the prime sub 3% years, why would I take out a loan now when it's above 7%? It seems like the ship sailed after rates went higher than 5% for me to personally consider doing something like this as that's just too much risk for me.
RockHardSalami | 3 hours ago
Its a brilliant plan until you're unable to rent them and then you find out exactly why not everyone did the exact same thing.
Successful-Ship-5230 | 5 hours ago
What would Rich Dad do? /s
AZdesertpir8 | 3 hours ago
He would take out all the equity and roll it into more mortgages on other properties... /s
Basicly-Inevitable | 5 hours ago
You shouldn't use your primary home for this, but if you're lucky enough to have a second house, then you're not risking as much to do this.
sweatboxy | 3 hours ago
That’s how you build a house of cards. It’s great until the wind blows.
SawNickYouth | 3 hours ago
Yup, agree!
On the other hand, some friends build a small empire doing this and thus far escaped unscathed (and loaded!).
pinkpanthers | 3 hours ago
By you are richer than you think!
rumblepony247 | 4 hours ago
Why do I need to "use" it? The common premise that equity in a home is 'locked' unless tapped, is just flat wrong.
My paid-for house acts as an internal annuity, the only difference being that the cash flow I get from it is in the form of reduced expenses (no monthly mortgage or rent payment) as opposed to increased income. Net cash-flow wise, it is identical.
AZdesertpir8 | 4 hours ago
Exactly.. I am another homeowner with a boatload of equity in a paid off house, but I refuse to tap into the equity for frivolous reasons. Banks want homeowners to continue to borrow on their homes for any and all needs, as the interest paid on that borrowed equity is income for them. For me, Id rather cash flow improvements or save up for them instead of paying obscene interest at these rates.
My home is my castle and refuge, first and foremost... not a piggy bank. Last time I checked, 100% of foreclosures happen on houses with mortgages that can't be paid back.
ConnectedVeil | 3 hours ago
You can't live forever. Just take out a huge loan against it. Buy, borrow, die. /s
AZdesertpir8 | 2 hours ago
Oh on second thought, I'm going to drain my equity, buy a Lambo, and then YOLO the remainder with margin into AI stocks... What could possibly go wrong! Thanks! /s
Seamus-Archer | 5 hours ago
Why should they? With mortgage rates as is, “tapping” equity (I dislike that characterization) doesn’t make any sense unless you need the cash. I’d rather maintain that equity as I work towards either paying off my house or roll it into a bigger down payment if I ever upgrade.
DisasterContribution | 5 hours ago
Rolling it into a down payment is the only thing that really makes sense right now, and even then...the math doesn't really math for a lot of people between house pricing, interest rates, and COL going through the roof.
This is the boat I'm in. We need to upgrade as we need more space, but even with ~150k in equity and ~75k liquid available, in order to stay in the same general area we are, we're looking at having to roughly quadruple/quintuple our current mortgage. It's a tough pill to swallow. (Admittedly, our current mortgage is peanuts because it was a small house we bought in '17...but still. )
phoenix823 | 3 hours ago
Because the economy is slowing. Because of the stagflation. "Please everyone take out more debt to keep the party going!"
Choosemyusername | 4 hours ago
I am using it all right.
For the purposes of owning my home and not being able to be kicked out onto the streets to be homeless the next time the economy shits the bed like it does cyclically.
zeroman987 | 4 hours ago
Come on people, do your duty!
Some rich white man isn’t making the most money he could possibly make!
Risk your access to shelter at high interest rates so that this rich white guy can buy a yacht!
Thanks for your attention to this matter - CNBC
He2oinMegazord | 4 hours ago
What do you, expect him to have a yacht with only one helipad? Like a fucking peasant?
PR0H181D0 | 2 hours ago
OP's lack of empathy makes me nauseous
zxn11 | 4 hours ago
"Banks mad that homeowners are making financially sound decisions instead of taking increasingly unsustainable risk to artificially create more bubbles."
jayr114 | 5 hours ago
With rates where they are why would you tap it? Most people with substantial equity have the means to cover most of their expenses and plan ahead for larger one time purchases.
user485928450 | 4 hours ago
Yeah I’m not paying down a sub-3% mortgage, but that doesn’t mean I want new debt at 8%
lakem5050 | 5 hours ago
Have you seen the interest rates on home equity loans?
No one is doing shit, let cheetoh crash the economy completely for the rich and maybe things will get better.
Its already crashed for regular people.
Aconite13X | 5 hours ago
Yeah put of curiosity i went to see what my rate would be, it was higher than a personal loan would be at 10.49% and that was before interest rates jumped
ill_be_huckleberry_1 | 3 hours ago
Why the fuck would people take out a heloc, wifh a variable interest rate, at a time when ghe bond market is signaling a depression level event?
dually | 2 hours ago
If the bond market really is signalling a depression level event then this is the perfect time to borrow at a variable rate because the rate will go down.
ill_be_huckleberry_1 | 2 hours ago
If you have a paid off house and no debt, taking out a heloc in uncertain times is pretty stupid as there is no gurantee the economy will be stable and you wont be out of a job.
The world is signaling they are going to decouple.
We dont know whats going to happen as globalization ends.
dually | 2 hours ago
If consumers are sitting on massive equity just sitting there waiting for rates to come down, you can be quite certain that the future holds very little uncertainty.
Squarehip123 | 2 hours ago
And then promptly lose your job
workntohard | 5 hours ago
Not all that long ago a lot of people got burned during the housing mortgage crisis due to using equity in house. Now with rates going up again and so many having employment issues makes sense not to gamble with equity.
Dr-McLuvin | 2 hours ago
I’ve never understood the push to “use your home’s equity.” I honestly think it’s just a scam by the mortgage industry. Once my home is paid off, I’m done forever.
Chemical-Idea-1294 | an hour ago
This. Why should i pay interests on money i must pay back? Then just do it the other way round. Save first, gain interest and spend then.
Nythoren | 4 hours ago
For what purpose would I strip equity from my home? I'm not selling or refinancing (my mortgage is 3.25%, I'm not losing out on that kind of rate), leaving a HELOC as my primary way to tap equity.
The national average for a HELOC is 7.25% APR right now. The average annual return for the S&P 500 is ~8% if you don't reinvest the dividends. So I'm gaining, what, a 0.75% annual return on my HELOC, but with the risk of taking a bath if the S&P experiences a downturn while my loan terms are still in place?
Let's be generous and call it a 1% return. I have ~$240k of equity in my home currently. Should I should take out a $200k HELOC with the hope of netting a $2k annual profit on it, with a risk of actually losing money? What's the point in that?
Only reason I'd tap my equity is to make improvements or repairs to my property. At the moment I don't have any improvements or repairs to make. Sure I'd like to pave my roof with solar panels, but not with this administration in office.
So no thanks, I'll just leave that equity in place just in case I need it in the future. Not every penny of my net worth needs to be constantly working. It's OK to have some of it at rest in a secure investment earning a lower rate of return.
eurekaanchor | 5 hours ago
My home is the last place I'd freely let capitalism "tap" into... We all know private equity wants us begging for basic needs like water, air, food and healthcare.
Piod1 | 5 hours ago
Translation.... cmon, more debt to stimulate the economy is a great idea. This will guarentee property prices have to remain high. The equity and pension funds remain happy. Fk the rest of you.
americanspirit64 | 5 hours ago
Also, most banks want you to take out a equity line loan, which has a much greater interest rate than say a small second mortgage using the equity in your property as a 100% down payment on the loan. As equality lines make them a great deal more money and they also don't count the same when it comes to tax breaks, although I am not sure of that.
92037 | 5 hours ago
This. Rates are insane so why would anyone want to do this?
frawgster | 5 hours ago
Why would anyone willfully “use” their equity to do anything in these times? Political uncertainty and economic uncertainty…wish a dash of extremely unattractive interest rates…don’t exactly create an environment that’s favorable for borrowing against the most valuable asset (for most folks) people own.
As benign as the headline reads, I hate how low-key suggestive of negativity it is.
gaoshan | 4 hours ago
“and not using it” I would argue that having it sit in reserve as an emergency, last ditch resort that you will hopefully never have to access is using it very appropriately.
CaliTexan22 | 5 hours ago
That pile of equity might be an illusion.
I have bought and sold houses during declining markets. No fun for the sellers.
High interest rates? I bought a house in 1981 and assumed a first mortgage at about 9% and took on a second mortgage at 17%, for a blended rate of about 14%.
People complain today about high interest rates, but it's only "high" in combination with property prices that were established during a period of very low interest rates.
When interest rates are high, property prices have to decline.
benuntu | 5 hours ago
I guess I'm one of those. But I'm hesitant to take out a 100K HELOC at 6%, instantly lose money on closing costs, and then invest to maybe earn higher than 8%. I have an opportunity to do just that right now on a multifamily investment, but the risk just isn't worth it at this point.
brianwhite12 | 3 hours ago
If you don’t have to, why would you risk your home?
During times of turmoil, people look to security. Few things are more secure than owning your home and property, particularly with no HOA. It’s easier for a bank to take it from you than the county.
spinonesarethebest | an hour ago
Home equity is a lie. It’s a fictitious amount of cash that you can’t use.
Consider:
It’s not really yours. You can’t spend it. If you borrow against it you have to pay it back now, not when you sell the house.
So say you have a ton of equity and decide to sell. You’re going to have to take all your cashed-in equity and give it to the guy you’re buying your next house from, to cover his built up equity.
And taxes. I’m paying taxes on what city assessors say my house is worth, so I’m being taxed on equity I can’t really use for anything.
And when I sell, I’ll pay taxes on the equity I’ve been paying taxes on, with money that’s already been taxed.
freedomandbiscuits | 5 hours ago
This will be the next domino to fall. At some point the rising mortgage rates will put dramatic downward pressure on home values, chipping away at all that equity.
joeyjoejoeshabbadude | 5 hours ago
It's already starting in some areas. My place has dropped about $25,000 in the last 2 years. Great for taxes.
Timelycommentor | an hour ago
For those who don’t plan to move or got a good rate a few years ago this won’t matter to them. I have almost 200K of equity in my home. If the market tanked back to where I bought my home I’d be ok.
Ice_Solid | 4 hours ago
The only reason to take out a HELOC is for a major repair that is needed. Example, if your insurance company is making you change up your plumbing.
OtharriSunsGlory | 4 hours ago
Plus, HELOC interest used for home repair is tax-deductible
Beastw1ck | 3 hours ago
Oh really? That’s good to know if I ever run into that situation.
[OP] Extension-Finance179 | 4 hours ago
I know people who have used them to buy cars because the interest on it is cheaper than a car loan or stocks because the interest on it is cheaper than margin from their brokerage
JustHugMeAndBeQuiet | 4 hours ago
I'm all for financial responsibility and not deploying home equity without a tangible plan, but this is a very narrow take. HELOCs absolutely have their place in one's overall financial mosaic.
Broke_Banker01 | 3 hours ago
A couple issues.
1 - no one wants to pay 8% interest to borrow their equity.
2 - for being with rates under 4%, it doesn't make sense to sell and buy at 7.5% unless they have absolutely no room. For most people, low rates make it easier to rent it out if they can save a down payment for a new house. If they cannot afford that, they probably don't have enough of a safety net to be risking a high rate on a new house.
Waggie_1979 | 3 hours ago
What was meant to say is that Banks are upset that they cant get anyone who paid off their house a shitty loan product using thier house as calladeral.
averyrose2010 | 3 hours ago
CNBC can't understand that some people like to actually OWN something.
If I wanted to have payments forever I could just rent and have less maintenance.
KoRaZee | 2 hours ago
You have to relocate to a cheaper market to get any real benefit from equity. There is a reason that other market is cheaper than the one you are currently in. It sucks
frogBayou | an hour ago
Many of those with high home equity will soon be using that to pay for the health issues and elder care as they age. The transfer of wealth will not be to their descendants, but to nursing homes.
Vegetable-Client-147 | 34 minutes ago
Is this just home owners or will renters have to pay for health issues and elder care too? Im a little confused by this
frogBayou | 32 minutes ago
This is America, anyone without enough assets late in life is SOL. But, assuming renters have equity elsewhere, they’ll (in general) use that I assume.
Remarkable_Lead_4475 | 24 minutes ago
Hot take - Home equity is a dumb way to look at net worth. Unless you are tapping it which for most people makes 0 financial sense then it is random numbers that have little impact. Contributes to the wealth effect too where people increase consumption. Similarly if rates go even higher it should push down home prices.
OrganicDoom2225 | 4 hours ago
Rates are going in the wrong direction. The AI bubble needs to pop and tank the rates first.
Words words words words words words words words.
mechadragon469 | 3 hours ago
Oh god when this bubble pops and the debt load that comes with it either money will flow like a river from the Fed or the Feds will TARP the hell out of it. Or both.
We desperately need to get people in office who will let these massive corporations collapse not bail them out.
OrganicDoom2225 | 3 hours ago
Exactly!!!
phoenix823 | 3 hours ago
I bought a house this month. I'm already unhappy with the interest rates, why would someone with a rate 4% lower than mine want to sign up for this willingly?
SigmaINTJbio | 3 hours ago
I bought a house in 1990 to live in. Was it also an investment, sure. But I’m now retired and don’t need or want to move. It’s paid off and I have zero debt.
MackinCeleBrini | 3 hours ago
What exactly am I going to do with it?
I can't go get a bigger house, I don't want to surrender <3% rates for >7% rates.
I don't want to downgrade, and even if I did it would have to be so much I have no mortgage or I'd just be paying more interest on a tiny mortgage than I pay for my current decent sized home and mortgage.
Wealth in land is useless mostly unless you retire and spend it by moving from HCOL to LCOL, or is used by your estate (but even then probably is used to buy land for the next generation... so you gained potentially no net from the growth).
PurpsMaSquirt | 3 hours ago
Considering younger homeowners have sacrificed a lot of long-term savings to afford a home, if you pay it off early you’re much better off rebuilding your newfound chunk of savings rather than pretending your house is a piggy bank.
ForestGuy29 | 3 hours ago
My family has outgrown our house, and our equity is about 150% of our original purchase price in 2015. The only thing holding us back is the rates. Even going to a house of similar value to our current one would raise our mortgage payment significantly.
TheManWhoClicks | 2 hours ago
They will once they have to live in an elderly care facility and they will get milked for it. Hence the ever increasing care cost. They won’t leave that kinda cash on the table. I wonder what that tsunami of houses on the market will do
Bbombb | 2 hours ago
I mean, they probably have indifferent outlook than us. Their economy was blooming/all roses for them with a multitude of opportunities and tons of safety. Obviously its different now. I have a hard time chastising parents who simply just can't know or understand-attiude makes the difference I guess.
No_Ant_5064 | 2 hours ago
Are you actually kidding me?
House prices skyrocket, and cnbc is freaking out that people aren't taking out loans against the equity in their homes and risking being underwater if the market corrects? The article itself says this is due to appreciation, not like people are paying off their mortgages fasters. Not taking loans against equity in your house that wasn't there 5 years ago is the smartest thing you can do.
So typical. God forbid the middle class not indenture themselves in more debt then they portray it as some kind of systemic problem.
Go to hell, cnbc
AdviceNotAskedFor | 2 hours ago
I was saving my equity to buy a bigger home, but I'm buying into the same crazy ass market I'd be selling in and the interest rates make it an insane idea
SidFinch99 | 2 hours ago
Most people I know don't have pressing issues. If rates were lower I might take out a HELOC and do something like upgrade the master bath, but it's not a priority.
3-car-garage | an hour ago
It's almost like the system should be designed to favor those in it, as opposed to those in it designed to prop up the system. This is the politest "go fuck yourself" I could muster.
jollyllama | an hour ago
As a normal human being: why would I care about the equity in my house and whether I’m “using” it? I’m a working dude trying to raise a family in a home that I own, I’m not trying to min/max my debt to income ratio and use my house like a fucking investment portfolio. Fucks sake man, this is madness
sdKae | an hour ago
Yup, just mortgage your house to bid up housing prices more to get a second one to use as an airbnb or a rental unit. How could this go wrong? /s
Oryzae | an hour ago
These threads are so depressing… it’s either people who can’t buy a home or people with incredible asset or cheap mortgage. I feel more and more screwed since I bought in 2025 at near ATH. I think I’m gonna have to be a NIMBY or something because I certainly am not going to advocate for it to be cheaper lol
mrtrololo27 | an hour ago
As a former mortgage loan officer, its worth noting that while helocs are a bad idea for most people, cash out refinances are also a bad idea for most people. A loan officer will try to sell you on using your equity by stressing a low monthly rate, but that ignores the substantial fees rolled in, along with the new interest rate. We'd often offer 30 year to get the lowest monthly payment, which, is stupid and a part of why I left the industry. They'd push people to do debt consolidation since so many Americans have substantial credit card debt, but moving that debt to a lower interest rate always came with those thousands+ of fees, a new interest rate (which now can't beat the old ones), and new loan term. It's far costlier to access the equity in your home than they'd lead you to believe. Avoid at all costs unless you're one of the unicorns where these costs could make sense.
loldogex | an hour ago
I work in 2nd liens and there is a crazy amount of people taking out a 2nd mortgage. HELOCS and closed end seconds are among the popular products I see in the market.
ClassicMidwest | 57 minutes ago
Look, anyone still working with equity in their home isn’t touching anything. Layoffs are all over.
This hizzy is my exit strategy- my silver parachute if you will.. the last lever I can pull when it all falls apart.
Healthy_Employer4 | 12 minutes ago
Every responsible adult with home equity should apply for a HELOC now while they don’t need it. It’s like a credit card with a 6% interest rate. Use the tools at your disposal
rethinkingat59 | 5 hours ago
Two positive points people don’t talk about in the past few years is how housing costs have fallen for 60+% of the population as a percentage of their income and how much net wealth has increased for median family households.
ocolobo | 4 hours ago
That “equity” is about to vanish lol
They better sell soon
Not sure who can afford a $750,000 fixer upper at a 9% interest rate though lol lol lol
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