My friend is leaving his job of the past five years to work on his own start-up.  When he got an e-mail solicitation from his mortgage officer about whether she could come by his office with a set of boxed lunches for him and his colleagues, he told her “no thank you” because he was leaving.  He purposefully kept his plans vague and hoped she’d just leave him alone as he attends to his new life.

Instead, she came back with the following response,

“I am sorry to hear that? When you land at another organization, please let me know.  Also, let me know if I can help through the transition. Since you are still on payroll, I always suggest putting a Line of Credit in place. And if you need a brokerage account to rollover your 401K, we can certainly assist.”

Pretty thoughtful right?  Or is it?  My friend responded,

“Thanks.  It’s actually voluntary.  Doing my own thing.  I’ve got enough saved up for the next 8 years, so I don’t think I need a HELOC, unless the rates are super low.  Even then, I don’t need it because I have the cash.”

Seems like a nice way of saying he’s fine and does not need the banker’s help.  Instead, the banker comes back and says,

“I always suggest putting a line in place even if you have cash on hand. Especially since you are still on payroll as it makes the process much easier. I recommend investing your liquid savings in higher yields within your comfort zone and instead put a home equity line in place for say $100,000 to act as your emergency line.  If you need it it is there for you, if you don’t great it does not cost you anything.”

At this point, my friend is starting to get annoyed.  He’s been polite about saying “no thank you” twice now, and yet the banker keeps on pushing.  She recommends my friend use his 8 years of excess liquidity to invest in riskier assets, so he can borrow money from the bank via his home to keep liquid!?!  This seems to make no sense.

“Sure, give me a risk free 4% yielding security and I’ll take out as big a Line of Credit as you want!”

No response from the banker yet, and it’s been a week………

Wealth Building Recommendations

Shop around for a mortgage: Check the latest mortgage rates online through LendingTree. They’ve got one of the largest networks of lenders that compete for your business. Your goal should be to get as many written offers as possible and then use the offers as leverage to get the lowest interest rate possible from them or your existing bank. When banks compete, you win.

Explore real estate crowdsourcing opportunities: If you don’t have the downpayment to buy a property, don’t want to deal with the hassle of managing real estate, or don’t want to tie up your liquidity in physical real estate, take a look at Fundrise, one of the largest real estate crowdsourcing companies today.

Real estate is a key component of a diversified portfolio. Real estate crowdsourcing allows you to be more flexible in your real estate investments by investing beyond just where you live for the best returns possible. For example, cap rates are around 3% in San Francisco and New York City, but over 10% in the Midwest if you’re looking for strictly investing income returns. Sign up and take a look at all the residential and commercial investment opportunities around the country Fundrise has to offer. It’s free to look.

Updated for 2019 and beyond.