Use a mortgage to fund a mutual fund investment for cash reserve?

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As rates continue to fall, I’m considering the following:
My home will appraise for ~500,000
I currently owe $ 200,000 in year 5 on a current 30 yr mortgage @5.875%.

I have spent the last 5 years paying down mortgage debt (my only debt) as fast as possible. Should I tap into my 300k of equity to fund an invetment plan?
I’m considering:
1) Take out a $ 350,000 loan for 30 years (hopefully, at 5%)
2) Pay a monthly mortgage of ~$ 2,000
3) Put the $ 150,000 into a conservative mutual fund to earn a modest 8% interest.

Given the tax advantages of the mortage interest, the numbers look promising. I understand that mutual funds don’t automatically return 8%. Some years they may lose and some years they may get 16% or more. It’s the average.

The numbers will create a nice cash reserve in about 5-10 years, which is comforting.

Does this make sense. The numbers all point to yes, but I don’t know if I’m missing something. I do have a separate IRA for retirment

Any suggestions?

We will be happy to hear your thoughts

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