Re-investing your mortage?

Question

Lets say you have a 500,000 house then you take a 2nd mortage and put that into a mutual fund or other investment that creates 10% or better. Every year you would have $50,000.

Answer 1

You actually know a lender who will give you 100% on a refi in todays market ?

And I just ran the numbers for a doz mutual funds for one my friends .
NONE made it to 10% and several had drops this last month that wiped out 1/2 or more of the years gains .

Did you have any real lenders or mutual funds for this theory or
Were you just day dreaming ?

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Answer 2

how much is the first mortgage? The total of all mortgages can't be more than $500,000. If you have less than 20% equity with the 1st mortgage, you might not be able to get a 2nd mortgage with the problems in the mortgage industry currently. AND, there is no guarantee you'd make 10% every year - you could lose it all, AND - You'd have to pay taxes on any income you did make on the investment. If you can afford a $500,000 mortgage, you're probably in the 28% or higher tax bracket - and that's just federal

Answer 3

What's the question? And that's assuming you've paid off all of the equity in your house. You can't take out two 500,000 lines of credit on a 500,000 house

Answer 4

or look at it another way..... assuming you could get 100% 2nd loan....(questionable... but ok)

you borrow 500,000..... against your house that you bought for 500,000?... lets just assume you paid cash for the house.

now the market goes down 15% and your house 10%...

so you sell your investment and payback what you can of the loan..... leaving you with 75000 mortgage.... so you sell your house and downsize.....450,000 -75000 =375,000....

nice work turning 500 k equity into 375,000 without having money to invest.

Answer 5

Why don't you ask that question to one of the mortgage people that have been laid off because the the crash.