The mortgage payment that homeowners make to their lending institution is the best form of forced savings. Regardless of the fluctuation of property values, every mortgage payment is like putting money in the piggy bank. The equity in your piggy bank increases every month until the mortgage is paid off or the property is sold.

Baby Boomers have taught all homeowners a valuable lesson. In the 80’s and before the financial collapse of 2008, property values went up along with salaries. People kept buying more expensive homes or did cash out mortgage refinances when the value of the property was greater than the purchase price of the home. There was equity available to take a vacation, pay for college or buy a car. Everyone thought that salaries would increase along with home values.

BOOM Piggy Bank Broken.

The savings and loan collapse in the 80’s and the financial meltdown in 2008 demonstrated to everyone that nothing goes up for ever. Salaries and property values decreased at least 25%. People who had taken the equity out of their homes were now living in properties that were worth less than the mortgage amount owed.

People that were in financial trouble were faced with three unpleasant scenarios. Sell their home at a short sale where the seller must bring money to closing in order to make up the difference between the contract amount and the balance owed to the mortgage company. Lose the property through foreclosure or continue to make monthly payments on an undervalued property that could take years to ever appreciate again.

The best way to preserve your money through good times and bad, is never take the equity out of the piggy bank because the pot of gold might not be at the end of the rainbow if you do.

Stay healthy and safe and look for those great opportunities. Contact me to assist your search…

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