The main downside of a cash - back mortgage is that you have little
equity cushion if home prices fall and you need to sell.
Not to mention that even if he has equity in the house and prices in his market continue to fall, he'll be reducing
the equity cushion if he has to make an unplanned move.
Not exact matches
Second,
if between now and the rate increase, the economy slows down, then the
Equity ETF will fall in price but the high dividends will provide a
cushion until the economy eventually recovers.
Tapping
equity can add years to your mortgage payoff and means less
cushion if the home loses value.
But
if you need the «
cushion» of a sizable bond / cash portion to handle market turbulence, then your own index portfolio will lag the
equity index performance over long term.
If equities rise then fall then the rise you experienced earlier in your retirement should
cushion you from the later fall.
Think a «
cushion of
equity» is going to protect you from foreclosure
if you lose your job?
Having a healthy
cushion of
equity gives you more flexibility to refinance or sell your home in the future, even
if its price drops somewhat.
If you are overweighted in
equities right now, you might want to consider buying fixed income to «
cushion» your portfolio (though safety is expensive right now).
Tapping
equity can add years to your mortgage payoff and means less
cushion if the home loses value.
Tapping
equity can add years to your mortgage payoff and means less
cushion if the home loses value.
If an economic correction or even a minor recession comes along, that
equity provides a nice financial
cushion.
If you have the cash handy, I would buy in cash 100 % of the time, and have a large enough
equity cushion to refinance should I desire.
Of course, I also like to get an
equity cushion, but I won't pass on a deal
if I can get a good return on the cash I have into it and I have some extra cash sitting idle.