11-01-2006, 12:12 PM
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Super Moderator
Join Date: Aug 2006
Location: West Coast
Posts: 773
Rep Power: 7  |
Should I take out a second mortgage to invest?
I come across this question almost daily. The market is doing phenominal right now and people want in. They tell me how much equity they have in there property or house and want to get the extra cash to put into the market. It's really hard to convince them not to do it.
I put it this way for them. What interest are you paying on your mortgage. Usually 5-7% is the response. The growth rate in some areas is 3-20%. If you are to refinance and invest in a high risk stock, you could gain a lot of money? But why would you want to take the chance... If you invest it and lose all that money, you could have a $100,000 loan and nothing to show for it. The best thing to do with a Refinancing is something that will return solid, visible items. Pay for home improvements, upgrade, or even buy another house or rental property. Never take out a loan for something that can depreciate or actually totally disappear. Last edited by titan22; 11-01-2006 at 12:15 PM. |
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