These "underwater mortgage" questions got me thinking about all the variations etc that must be out there... and I came to an interesting "investing 102" parallel....
Buying a house is a big deal. Huge. We sometimes don't treat it that way - but it is a MAJOR investment and commitment. So maybe the parallel is that a home is like buying a stock. You have to really like it before you buy it - it might not always go up - just because it did so in the past.... so, like a stock, you need to want to love it and want to be in it through good times and bad.
The Sector we mention all the time could be thought of as the city or neighborhood.... better think about the "hood" because you might be there awhile! And like a house -- you don't want to have to sell it in a down market -- so don't put all your cash into something that clearly might not be so "liquid".
In fact.... You may choose to (like a stock in a down market) add on to the house or remodel it because you're in it for the long haul and know that eventually it will pay off. And the dividend in a home is that you are living "somewhere" - regardless of the cash value at the time --- just like the dividend will pay you every quarter regardless of the stocks daily price.
All of this -- of course -- is based on having made a good purchase in the first place. So if you were in love with the home and city and neighborhood when you bought - then you don't mind living there for awhile. If you bough just based on you thought the house would immediately double - and you hate the place... and it didn't double... Well... then you're a weak holder and will sell at a loss the first chance you (you - being anyone, not a particular "you") get.
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