So the market seems plateaued in certain areas in Bay Area (some went down). If there’s a recession just around the corner (say 2~3 yrs), whats the best approach now? Hoard cash so we can buy a bigger place or keep paying down the mortgage like nuts?
Is it even possible to take a Heloc and use the money to make a downpayment on another property? Assuming our dti test comes out green, of course. I’m just trying to figure out the financial planning for the next few years…
I used to hold 2-3 months cash on checking account, but rest in taxable investment account.
Reg high credit cards, we should avoid it as the rates are around 20%+. HELOCs are perfect backup plan. However, banks may freeze during recession period (it depends on bank and at that situation). JP Morgan froze my HELOC during 2008-2009, but that was real estate recession.
Invest the cash wisely to grow higher, use it to buy real estate when you see correction on real estate prices. HELOCs can be used for next purchase, but banks may view HELOCs differently.
If you have 100k HELOC and use it, when you go to mortgage, they deduct 1% ($1000/month) as your monthly liability that will be deducted in your DTI eligibility.
Credit cards can be cancelled by your bank in 1 second. Not reliable at all. We had situation when 2 credit card 50K each (100k total) got cancelled by BoA and Amexi in 1 day… we relied on those CC. CC is “potential” money
In a crash, junk bonds are worse than dividend stocks right? Companies that issue the junk bond could go insolvent since by definition not so good companies issue junk bond Tesla is an exception? OTOH, dividends are given by good businesses that existed a long time and with a strong balance sheet.
Companies can stop paying dividends. In fact, as business deteriorates, companies will slash dividends first. The bond may take a small hit in price as business deteriorates but more often than not bond interest will continue to be paid. This is because a bond default is more shameful than a dividend cut. In the worst case (bankruptcy) bond holders have higher repayment priority. But I am sure you know all this. All I am saying is that you need to have a mix and not just dividend stocks.