And why would it ever be a good idea to borrow if you can pay cash and pay no interest to the bank?
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Cash is hugely useful – you can use it for anything you want.
House equity is one of the least liquid assets. Accessing it in good times is a hassle, and if you lose your job the only way to access it is a sale, at which point you have to settle for whatever the market says it’s worth and pay the transaction costs.
If you lose your job would you rather have $100,000 in equity or $100,000 in cash or other liquid assets?
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