Borrower beware of ‘dead home equity’ offers

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Q: "I bought a house two years ago that is now worth $340,000, with a mortgage of $240,000. I am being told that my $100,000 of equity is "dead," just sitting there doing nothing for me. How can I make my equity work for me? I don't want to do anything stupid." A: "Dead home equity," with its implication of opportunity foregone, is a meaningless concept. Home equity is equal to property value less all liens on the house, which in your case comes to $100,000. Calling equity "dead" is a distortion of the English language. The fact is that the more equity you have, the better off you are. If you have a car with no car loan, you have dead equity in your car, but no car owner should feel guilty about that. Owning an asset free and clear is an objective to be sought, whether it is a car or a house. Proponents of the dead-equity idea want to sell you the loans that would deplete your equity, and the investments they claim would more than recover it. There are circumstances where this might ma...