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don't own your home! ???

 
Trailboss
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So I met this woman that is a successful real estate person. She sounds really savvy in all sorts of finance stuff. Way over my head.

She tells me something I've never heard before that is kinda spooky. She says that people should always carry a big mortgage on their home. Otherwise, somebody will sue you and take it all. If you have a big mortgage, you don't own anything worth suing you for - so the jerks leave you alone.

She seems to know of lots of folks where this has happened. And she herself keeps a mortgage.

Does this sound like truth to anybody else?
 
Ranch Hand
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Paranoid rubbish.

There are two major problems with this story.

(1) You have to be successfully sued for something. While the U.S. is certainly a litigous country you can't just sue people you don't know for no cause and win huge amounts of money.

(2) Even if you discount the first point a house is still just another asset. So if you had a mortgage for $100,000 and $100,000 invested elsewhere that asset is no more or less protected than your house.

I would surmise that short of pulling your leg your real-estate source is confused about stories involving identity theft. To some degree a larger mortgage may protect you from identity thieves borrowing on your house and sticking you with the bill. However one should note the use of the word may. If someone has stolen your identity you are going to have problems regardless.

Here is what the Federal Trade Commission has on identity theft (how to prevent it and what to do if you think it has happened) http://www.consumer.gov/idtheft/

But if you are still worried about being sued because you don't have a mortgage you should talk to a lawyer or even your accountant.
 
Ranch Hand
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Originally posted by Paul Wheaton:
So I met this woman that is a successful real estate person. She sounds really savvy in all sorts of finance stuff. Way over my head.

She tells me something I've never heard before that is kinda spooky. She says that people should always carry a big mortgage on their home. Otherwise, somebody will sue you and take it all. If you have a big mortgage, you don't own anything worth suing you for - so the jerks leave you alone.

She seems to know of lots of folks where this has happened. And she herself keeps a mortgage.

Does this sound like truth to anybody else?



Hey Paul Wheaton do you have any mortgage on you home? I wanna sue you.
 
Bartender
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Paul,

This advise sounds a little odd to say the least.

If you are worried about being sued - ie: personal liability - one would get an umbrella policy - above the homeowners policy (say add one to two million) - a lot cheaper than interest.

Now the other thing, look into the bankrupcy laws for your state: uaually you can declare and save your house and retirement.

If on the other hand you are using your home as a business, then the rules change a bit.

But - if you are concerned, first talk to your insurance agent (about what is covered in your homeowners), then schedule an 1/2 hour with a personal liability laywer in your area - should be less than a hundred dollars and you would have it first hand (ie: in a different circumstance, the guy that wants to take you money for someone else, but keep a little - sounds a little like politics).

-steve
 
town drunk
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Originally posted by Paul Wheaton:
So I met this woman that is a successful real estate person. She sounds really savvy in all sorts of finance stuff. Way over my head.

She tells me something I've never heard before that is kinda spooky. She says that people should always carry a big mortgage on their home. Otherwise, somebody will sue you and take it all. If you have a big mortgage, you don't own anything worth suing you for - so the jerks leave you alone.

She seems to know of lots of folks where this has happened. And she herself keeps a mortgage.

Does this sound like truth to anybody else?



My wife & I have been told this, but only because she's a doctor, and she's bound to be sued @ some point. For normal people, I'm not sure it makes a lot of sense.

M
 
Bartender
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I heard a similar theme about large companies that have financial problems; better to have a large dept than a small one. If a business owns a considerable amount of money, then the market prefers to keep it afloat. Nobody would benefit from the insolvency - suppliers, shareholders, customers, employees would all lose out.

A company with smaller dept is easier to push into bankruptcy - so it assets can be sold.

I think this is what happened to British Energy a while back.
 
pie sneak
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I think it makes sense to have a mortgage aside from that theory.

The interest is tax deductible and you could take that money from the mortgage and invest in something.

Anyway, think about the whole suing thing... so you get the mortgage to "protect" yourself - now how do you protect all that money? :roll:
 
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