"I don't understand why a Wharton professor would not recognize that unused home equity is a missed opportunity...Isn't home equity safer in a conservative side fund than buried in the house earning a 0 percent return?" Your view reflects a new "wisdom" of household finance that has emerged in recent years. It says that if you have excess cash flow, you should purchase financial assets rather than pay down your mortgage balance. And if your house appreciates, you should take a second mortgage or refinance the first for a larger amount ("cash-out") in order to invest. This view contrasts sharply with the received wisdom of my father's generation, which was that a mortgage should be paid off before you retired. That way, you would not have a repayment burden when your income dropped at re...
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