Homeowners have $17 trillion in equity. Grant Cardone says, “Imagine if that money were invested earning 6% – 8

According to a recent report, homeowners in the United States are sitting on a gold mine – $17 trillion worth of home equity. This is the portion of a home’s value that a homeowner actually owns, after accounting for mortgage debt. With rising property values, many Americans have seen their home equity grow significantly, often without realizing it.

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The big idea: investing your own capital for higher returns

Grant Cardone, a well-known real estate investor, recently sparked a conversation on Twitter by suggesting that instead of giving up all that equity, homeowners could invest it to earn much higher returns — anywhere from 6 percent to 12 percent. %.

According to him, this approach could unlock trillions of dollars in passive income, especially for older homeowners who could use the extra money to improve their lifestyles.

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Ways of using equity

1. HELOC (home equity line of credit)

HELOCs work more like a credit card. You can borrow money as needed during a certain period and then pay it back later. You can typically borrow up to 85% of your home equity.

2. Loan on own funds

It’s like taking out a second mortgage. You receive a lump sum upfront and pay it back over time with a fixed interest rate. You usually need to keep at least 20% equity in your home.

3. Cash-out refinancing

Here, you take out a new, larger mortgage and receive the difference in cash after paying off the old mortgage and covering taxes.

Why doesn’t everyone agree?

However, not everyone agrees with this idea. Many people responded to Cardone’s tweet with concern about the risks involved.

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For many homeowners, the equity in their home is a financial safety net because it is a safe asset that does not fluctuate with the stock market. Most people prefer to keep their equity intact rather than risking investments that may or may not work out. As one user X said, “Prefer safety to returns. I talk to them every day.”

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Others pointed out that using equity to invest could backfire. If investments don’t perform well, homeowners may struggle to repay their home equity loans or lines of credit, which could lead to foreclosure, leaving them homeless.

Some have even joked about the idea of ​​everyone cashing out their equity, asking, “Where would everyone live? On the street or in a cave?” Homes are not just financial assets. They are where people live and raise their families. Risking that security for the chance of higher returns is a gamble not everyone is willing to take.

And one of Cardone’s followers tried to explain what Grant meant even with his original tweet. He said: “For those confused, Grant believes that people should rent where they live but own properties (commercial and residential) that pay rent.” It’s something Cardone supposedly does.

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Financial expert Dave Ramsey also has a different take on Grant Cardone’s idea, as he is known for his conservative approach to money management, especially when it comes to debt. He often advises against borrowing against equity, stressing the importance of financial security and living debt-free. For him, using equity to invest in the market is too risky, especially for those approaching retirement.

While the chance to make more money is enticing, the risks are high and should be considered carefully. For many homeowners, it may be smarter to keep their equity safe so they have a safe place to live no matter how the market changes.

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This article Homeowners have $17 trillion in equity. Grant Cardone Says, “Imagine If That Money Was Invested Earning 6% – 8 – 10 or 12%” originally appeared on Benzinga.com

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