Home Equity Line: The Unemployment Insurance

As we were discussing yesterday ...
the average home price in many parts of USA skyrocketted
in recent years. This means that your ability to take a higher
loan from that equity has increased to a level never seen by
your parents or grandparents.

Our advice is: Utilize that ability but never use that ability to
spend. So, open or keep open a home equity line of credit
(which may come out to be from anything to even $100000
for average homeowners) in a mortgage bank. But try not to
use it or try to keep the balance zero. There could be an annual
fee - you may even avoid that by selecting a fee-free fund.

There are some costs for opening an account and the annual
fee could be below 100$. But why are we advising you to spend
even that for a loan that you'll not utilize?

We see that the job market is not growing as expected. Our
parents used to keep 2 or 3 months' salary as an emergency fund
for any gap of employment that they might have to go through.
Nowadays ... job-market experts suggest that we should be
ready for about 6 months to a full year of unemployment!

If such an emergency comes, the above costs may come out to
be cheap premium for an effective "unemployment insurance"
which no company on the earth ever offered. So, use your home
equity line of credit as an emergency fund only.