My second question is, would $3926/yr be worth it for the safety of liquid cash just in case something happen? Such as a major accident or a job loss?
I am not going to debate cd’s vs money market that’s not the point.
If the stuff hits the fan accident loss of job illness,which is what you say your “hedge” strategy is for you still owe the $400K and have to pay on it plus the remaninder of the balance so its a slippery slope. Since you are using it as a hedge against bad luck at a time when you are way upside down or over leveraged in theory wouldn’t you go through it in a lot less than 102 years and what do you do with that big fat mortgage when your “hedge” is gone? I hope I am not misunderstanding you completely?
One other question about HELOC.
If let say you have 400k equity in your house so you open a 400k HELOC and the property dropped by 400k, can you still withdraw from that HELOC?
I hope this is not about another “hedge” strategy :).
Helocs are generally for much less money there might even be a cap at 100k. I said the equity position should be very good I am not suggesting someone should ever heloc out the last dime.The bank will probably pull the loan back though and there are stipulations that you have to report loss of job and such I believe,if its true probably no one does.. I am really not the expert helocs and I have wondered some of those same things just never pushed myself to find out.
I better get some work done or else I am going to be in need of a heloc:). I will check back later. Hopefully someone will answer your questions and fill in any mistakes I am making.