“Yet he will not have to worry about not paying the mortgage.” SD R
Truth is, bad things happen sometimes. People do lose their jobs, become injured and unable to work, have their identities stolen, etc…all of which can lead to ruinous credit scores and the inability to borrow money, even against home equity.
The ironic thing is that even though there is currently a tremendous percentage of equity in this guy’s house, there is always the chance that he may not be able to tap into it via borrowing, should something bad happen to him or lending programs change. The craziest part is that lenders are more apt to foreclose on someone with high equity than low equity due to the fact that there is a higher probability of getting out of the loan unscathed.
This was an awful move.
Remember…it is far easier to qualify for a loan when you don’t need one, than when you do. I’d pull some equity out for a cushion, or at least establish a credit line to be safe.
