""Cash used to pay off a mortgage becomes home equity, and home equity cannot pay your grocery bill, your health insurance, or your San Francisco rent if you sell and need a bridge before buying elsewhere. You cannot eat equity.""
""Then why would you pay off the house? Just put the house up for sale. You may be buying a property that's twice the size and half the price in a different market, more affordable market.""
A web engineer lost their job but has enough cash to pay off their San Francisco mortgage. Financial expert Dave Ramsey advised against this, emphasizing the importance of liquidity sequencing. Paying off the mortgage converts cash into home equity, which cannot be used for immediate expenses. Selling the house instead allows for flexibility and potential financial benefits in a different market. Current economic indicators suggest a cautious approach, as consumer sentiment is low and savings rates have declined significantly.
Read at 24/7 Wall St.
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