Skip to main content

Posts

Showing posts from 2018

The Myth of Taking Equity from Your House

You aren't smarter than the market. It really is that simple.

The idea that you can "take money" out of your home is a common myth that gets a lot of people in trouble in a hot real estate market. It is a myth that is based on several misunderstandings that are often repeated.

Myth 1: When an investment you own goes up in value you have "made money."

In fact, you only make money from an asset's appreciation when you sell the asset. Until then, the current valuation is just an estimate of how much money you will make when you actually sell it. As long as you still own the asset, the value you will get is still in play. It isn't money. This is particularly important with a home. If you want to take your profit out of your house you have to sell it and that usually means replacing it with another home.

Myth 2:  Refinancing  "takes your equity" out of your house.

This myth is particularly pernicious. In fact, the description of people "using …