Millions of Americans have been using their home equity for several years just to survive. And then they tap out their 401K, in spite of the penalties and additional taxes. Unless they fit into some government statistical report (i.e. employed, recently unemployed, in default or foreclosure, etc.) they simply don't exist.
And most people really, really don't understand -- until their number comes up.
“Millions of Americans have been using their home equity for several years just to survive.”
Over the last few years a number of my coworkers were spending their home equity not for survival but simply to live well. Cars, swimming pools, furniture, remodels, electronics, toys, the California economy was booming and my office mates were helping it boom.
Alas, the bubble stopped and now some are worrying about economic survival. No longer can they run off to a loan broker for a credit fix each time they want to spend.
The fact that borrowed home equity isn’t free money is starting to hit home hard. One has lost three houses, a second is fighting foreclosure, and a third is running up credit card debt because her mortgage just increased $1200 per month to nearly $3k.
All of these people purchased their homes before the bubble with 30 yr fixed mortgages. If they had left their purchase loans intact none of them would be in jeopardy. All of them fell for the lure of easy money. It was like watching people get hooked on drugs.