With property values dropping, I could pull out the equity and make that money work for me. What would you suggest
2007-12-24 06:08:12 · 5 answers · asked by truluv78 2 in Business & Finance ➔ Investing
If you are a sophisticated investor and can invest money at a higher rate of return and risk similar to your home mortgage, then you may benefit from using some of your home equity to invest. Home mortgages carry favorable interest rates, and if you can borrow on a home at 6% and invest the money at 8%, it is like having 2% with no investment. However, it is unlikely that you can invest at a low enough risk and still get a return that exceeds the interest you are paying. If you are willing to take the risk and know how to manage the risky investments, then go ahead. Remember than your home is an investment, and although prices have declined recently, they will recover and in the long run, your home will be worth more than you paid for it.
2007-12-24 06:30:24 · answer #1 · answered by Anonymous · 0⤊ 0⤋
How would this equity work for you??? Your loan would be for 7, 8, 9, 10%. So just to break even, you would have to earn this much. Where can you get this?? The stock market averages 8 - 12% a year. And that is just the average. We go into a bear market, and lose 7, 8, 9, 10% a year.
Never borrow money to invest. Unless of course you've got a sure thing. Do you have a sure thing???
2007-12-25 06:00:28 · answer #2 · answered by exactduke 7 · 0⤊ 0⤋
Im sorry but with the limited information you are giving it sounds like youre not sure at what you are geting into, much less knowing where to invest.
1. When you refi your house there are some things you should know; banks dont refi for the whole amount of the mortgage, you pay closing costs for this transaction, the interest paid is likely higher than the market interest.
2. If after al this you think you can double or even triple your money in a short time (say 2 years) then go for it.
2007-12-25 14:18:37 · answer #3 · answered by dennisgonzalezdgm 4 · 0⤊ 0⤋
Think about it, while is unlikely, it is not impossible property values will continue to drop. If you take out "all your equity", and your property drops in value below that amount, the loan company will probably "call" your loan (ie ask for their money back, and NOW!) since you will no longer own anything they can sell to recover their money if you default.
Bad idea...
2007-12-24 06:55:06 · answer #4 · answered by Anonymous · 0⤊ 0⤋
by all means, if you can find a bank who is willing .
2007-12-24 09:59:52 · answer #5 · answered by Anonymous · 0⤊ 1⤋