Why not refinance your mortgage and invest the equity?

Question by jeremyweiser: Why not refinance your mortgage and invest the equity?
Why not take equity out of your home from refinancing and put that into an investment vehicle that earns you interest? Considering that home equity doesn’t earn you any rate of return, wouldn’t this be beneficial?

Best answer:

Answer by AnOrdinaryGuy
Yes, it’s a good idea, but you have to take into account two things: the investment will have to earn more than the interest on the loan, and you also have to be prepared to pay income taxes on the profit from your investment when you cash it in. And it’s very hard to find an investment that will guarantee any rate of return. Bonds can do it but most bonds don’t pay as high a rate of return as lenders charge on their loans.

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