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Lol. You would draw your equity and invest it in the stock market? Why don't you just save the money you would of paid towards the mortgage and invest that. Less risk that way.
You never use your equity in that way. You want to play Donald Trump? Go buy a investment property but don't use your primary residence or its equity.
Three points:
- The interest on the investment can pay the mortgage.
- You don't get 3% mortgages for investment properties, only for primary residences.
- If you have a $300,000 mortgage on a house and the value drops to $100,000, you can short sell or walk away. If you buy stocks for $300,000 and the value drops you're SOL.
Three points:
- The interest on the investment can pay the mortgage. true, but interest rate volatility is a double edged sword, especially if you can't lock in a stable interest rate on both sides of the investments. This works best if you can buy a long term bond paying a higher interest rate then your mortgage.
- You don't get 3% mortgages for investment properties, only for primary residences.
- If you have a $300,000 mortgage on a house and the value drops to $100,000, you can short sell or walk away. If you buy stocks for $300,000 and the value drops you're SOL. However, you can sell calls against your stocks, you get additional income and if you put the strike price at a price that is higher then what you paid for the stock, if you get forced out, you will capture gains and not losses.
What you propose can work but it's usually recommended for sophisticated investors who can ride out long term volatility and aren't betting the family farm on a get rich quick scheme.
No one likes looking back after having a "Woulda, Coulda, Shoulda", moment and having to dig in to start from the bottom again.
If you got the financial resources and the ability to handle market stress, I say go for it.
having paid off our mortgage a couple years ago took a lot of pressure off our finances when i was laid off this year. the same goes for paying down the credit card balance to $0.00 every month. May be old fashioned but my wife and i sleep better at night.
And as Dave Ramsey says...... A lender has never foreclosed on a paid off home.
It happened in Florida to some homeowners who paid their mortgage off several years prior. They then contacted the sheriff and had them foreclose on the property the local BOA branch resided on.
Lol one of our family friends has to be the smartest women ever born, and she told us the story of purchasing her first condo and applying for the mortgage. The loan officer tells her that the interest on the mortgage is tax deductible, and our family friend tells the loan officer if that's the case then she wants the highest interest rate possible so she can deduct as much as she can on her taxes
Apparently she failed math class. Paying a higher interest rate or getting a mortgage for this sole purpose is just throwing money down the drain for no reason. If you have to get the mortgage to buy the home then use it. I would much rather just send the IRS a few hundred dollars than to send the bank thousands a years just to uses their money. You will come out better that way.
True, but when you rent the monthly payment is often even more than a house payment these days and you get none of that back and don't have any equity or anything to sell when you move.
Oh I never said there is more value to renting v owning. Just don't lie to yourself about the great tax deduction that the interest on your mortgage gives you.
Having paid off our mortgage a couple years ago took a lot of pressure off our finances when I was laid off this year. The same goes for paying down the credit card balance to $0.00 every month. May be old fashioned but my wife and I sleep better at night.
I'd agree with that. I don't consider my personal residence as an investment. I take very good care of my home, etc. But there is a lot of value in knowing that you do not have a mortgage payment and no credit cards. I have also never borrowed against my residence.
...I don't consider my personal residence as an investment. ...
This is a myth that to this day is being perpetuated by realtors and real estate agents. I give cudos to those who don't pitch this garbage when trying to help their client secure a home to purchase. Before I have every realtor on this board jumping all over me I'm not calling all realtors bad or deceptive. I'm not against realtors. I just get tired of these realtors who use fear tactics to scare their clients into rushing into buying a home. Realtors don't make money by just representing people. Seller's agents make money off of clients buying homes. I know people who were personally duped by these tactics and will lose money while their realtor made good money off of them.
Home's don't automatically increase in value. The dollar value is usually adjusted for inflation, but the home is still worth what it was 20 years ago assuming it has been kept in good condition and no major upgrades have been made. Even so if you are paying full retail for upgrades you will never recover 100% of what it cost you for that upgrade. The value increase is not going to exceed the cost of putting it in.
This is a myth that to this day is being perpetuated by realtors and real estate agents. I give cudos to those who don't pitch this garbage when trying to help their client secure a home to purchase. Before I have every realtor on this board jumping all over me I'm not calling all realtors bad or deceptive. I'm not against realtors. I just get tired of these realtors who use fear tactics to scare their clients into rushing into buying a home. Realtors don't make money by just representing people. Seller's agents make money off of clients buying homes. I know people who were personally duped by these tactics and will lose money while their realtor made good money off of them.
Home's don't automatically increase in value. The dollar value is usually adjusted for inflation, but the home is still worth what it was 20 years ago assuming it has been kept in good condition and no major upgrades have been made. Even so if you are paying full retail for upgrades you will never recover 100% of what it cost you for that upgrade. The value increase is not going to exceed the cost of putting it in.
I should add that I have never lost money on real estate. I've been very lucky. But my personal residence has its own intrinsic value to me -- its just not an investment. When I sell it I will make some money, but that's just a bonus to me. Homes take a LOT of money to maintain. I don't think many new buyers have any idea what they are getting into LOL.
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This is a myth that to this day is being perpetuated by realtors and real estate agents. I give cudos to those who don't pitch this garbage when trying to help their client secure a home to purchase. Before I have every realtor on this board jumping all over me I'm not calling all realtors bad or deceptive. I'm not against realtors. I just get tired of these realtors who use fear tactics to scare their clients into rushing into buying a home. Realtors don't make money by just representing people. Seller's agents make money off of clients buying homes. I know people who were personally duped by these tactics and will lose money while their realtor made good money off of them. 
