Risks of having equity in your home?
Revealing, once again, my level of unsophistication in finance...
I was reading through some financial advice, and someone mentioned that having equity in your home has one kind of disadvantage that hadn't occurred to me.
If something disastrous happens to you financially, and the bank "gets" your house, you lose the house and all of your equity. Is this so?
Thus, it seems to me that once you "commit" to prepaying on your mortgage, you should truly follow through with it to the very last mortgage payment.
I paid off a huge portion of my mortgage, and realize that all of that equity goes 'poof!' if something crazy happens.
So, given this, it seems that I have two options:
1. Pay off the rest of the mortgage, so the bank can't score a touchdown at my expense!
2. Refinance my house for the full amount: Eeeww!
This is probably my fourth distinct "prepay the mortgage?" type of thread.
Even though I'm in my early 40's, I have somehow managed to acquire a depression-era mentality of sorts; always expecting and preparing for emergencies... so debt of any sort falls under the category of "bad", and now, putting the bank in a position to swipe my prepayments is no good either!