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Old 10-14-2020, 08:10 PM   #21
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I echo njhowie, and am also reminded of a certain classic NSFW video, an excerpt from which I will roughly paraphrase here:

“Anybody who is up $2.5M knows what to do. You get a basic house with a 30-year roof and a cheap, dependable car. Then put the rest in low-cost ETFs. That’s your base. That’s your fortress of solitude.”

I view my paid-off, simple old house as my fortress of solitude. I can’t imagine imperiling it for market investments, and if I had to I would realize that I didn’t have enough to retire.

And I view my house as an asset. It is part of our NW. But unless I was in a Helm’s Deep scenario, I would never use it as leverage for market gains, income or the like.
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Old 10-14-2020, 08:28 PM   #22
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HELOCs have a bad habit of not being available when you need the liquidity.......
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Old 10-14-2020, 08:34 PM   #23
Recycles dryer sheets
 
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Quote:
Originally Posted by audreyh1 View Post
HELOCs have a bad habit of not being available when you need the liquidity.......
+1

That is another great point. I forget the details, as it seems like it occurred during the Spanish-American War now, plus my memory is shot, but I recall that we once had a HELOC that sat unused for several years. The bank just up and terminated it one day, for reasons I no longer recall.
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Old 10-14-2020, 08:41 PM   #24
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They really dried up in 2008.
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Old 10-15-2020, 06:25 AM   #25
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I'm not worried about my HELOC being reduced. In hindsight, I wish I had asked for more but the total LOC was 1/3 the market value (which has increased since) and from reading the documents, about the only cause for them to unilaterally do anything would be if the value of the property dropped below the LOC limit. There are no non-usage fees/penalties. I do like that I can just log into my CU and transfer money from the HELOC into my checking account if I had an immediate liquidity need while I sort out how to fund it out of assets/get funds transferred.



Obviously, I would be using it to defer withdrawals from assets on hand and not "living on debt" It would be short/mid-term leverage when valuations are lower to, ideally, not sell as much in depressed markets. Again, I don't see myself doing this (and hopefully, I see few years of declines!) but I do think it could (would likely) boost return with minimal risk as the leverage is covered at all times.
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Old 10-15-2020, 10:41 PM   #26
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"Obviously there are interest costs (expected to be offset by gains upon market return to mean, and a risk of compounding SORR if there were multiple years of declines that required a larger withdrawal to pay the HELOC at even further depressed market prices."

This line of thinking worries me. HELOC rates are variable, and if you take a large loan and rates go up, you will be in trouble. Even if they don't, the "risk equivalent" rate you earn on your investments will never be as high as the rate you're paying on your HELOC. You seem to have taken the false pretence that market returns will always outpace the HELOC rate.
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