Re:95% of Bay Area Cities Lost Zoning Authority
by rcpt on Thursday February 23, 2023 @12:22PM
(#34913486)
I would trade a million dollar debt for the inconveniences of getting a HELOC any day. Wouldn't you?
Re:95% of Bay Area Cities Lost Zoning Authority
by PaulDavisThe1st on Thursday February 23, 2023 @12:36PM
(#34913722)
For the most part sure.
But there are situations where the HELOC will either be hard to get. For example, you may own the house outright but have very very low income. Or the bank may not be willing to view the land in the same light as potential developers.
"House rich, cash poor" is generally convertible into "have mortgage, and cash", but it is still a distinct condition from "Income rich, have mortgage", especially for low income folks.
The person with a $1.8M property holds a very valuable illiquid asset. They cannot convert the value to cash trivially (they could perhaps take out a home equity credit or remortgage the house). Effectively none of the value of asset is available to them to meet any other needs, and will only be fully realized when the house (their home) is sold.
The person who can pay the mortgage on a $1.8M property has substantial income and/or cash reserves, which are liquid assets and thus distinctly different from the property owned by the previously discussed person. They may not have a net worth of $1.8M but they are much more easily able to shift financial resources aound to meet their needs.