Home Equity is Liquid Cash

Home Equity is better as Liquid Cash - Stop Making Extra Mortgage Payments and Take Out a Mortgage Even If You Don’t Need One. Cash is king in a liquidity crunch. The worst thing you can do in this environment is dump more of your cash into your home equity because you may not be able to get access to it if you run into financial difficulties, if the housing market continues to decline, or if the credit crunch gets worse.

Although it sounds counter intuitive, you should have as big a mortgage as possible even if you don’t need it and leave as much cash as possible in a safe, liquid place that is readily available to you. This empowers you to weather the storm and also have your funds available to take advantage of bargain opportunities that are becoming available because others have not followed this advice. In this environment, the one with the most cash wins.