In order to discover how our parents and grandparents got the idea that a mortgage was a necessary evil at best, we must go back in time to the Great Depression. In the 1920’s a common clause in loan agreements gave banks the right to demand full repayment of a loan at any time. Since this was like asking for the moon ad starts, no one worried about it. When the stock market crashes in 1929, millions of investor lost huge sums of money, much of it on margin. Back then people bought $10 of a stock for a $1. When the value of the stock dropped they were forced to run to the bank and withdraw cash to cover their losses. Then…

Americans typically believe that home equity is a very safe investment. According to a recent study, 67% of Americans have more of their net worth in home equity than in ALL OTHER INVESTMENTS COMBINED. However, if 100 financial planners looked at a client portfolio that was 67% weighted in a single investment, 99 out of the 100 would immediately recommend the client diversify to reduce their risk and increase their safety of principal. Holding large home equity puts homeowners at risk that could be greatly reduced by diversifying into other investments.

Fear of losing their homes became ingrained in the thought process of the American people. They feared mortgage debt. In the 1950’s and 60’s families would throw mortgage note burning parties to celebrate when they paid off their homes. For nearly 75 years most people have overlooked the opportunities their mortgage provides to build financial security. Since then the FDIC was created to insure banks and demand clauses that allow mortgage lenders to demand repayment in full for any reason no longer exist.