Good point. But there does seem to me (never owned a home) that there is a qualitative difference between someone who owns their home in the clear, and someone who is using their home as collateral for a loan, which I thought the original poster was getting at. I might be way off though.

Sure there is: one homeowner has a couple hundred thousand dollars of secured debt, and the other doesn't. In neither case is there any practical difference vis a vis the house itself. The homeowner who "owns his home free and clear" can still lose the house owing to any other major debt; there are even states where you are likely to lose your house in a conventional bankruptcy.

> It's easy to see that the homeowner "owns" the house:

More to the point, the homeowner is the one exposed to appreciation or depreciation on the open market. The bank has a fixed dollar value worth.