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Home Hazard: The Danger of Using a Mortgage to Finance Investments

When times are good—the stock market is high and mortgage interest rates are low—some investors consider refinancing or otherwise modifying their mortgage in order to invest in securities. After all, a times-are-good market looks like it will turn that mortgage money into a tidy profit, paying off the mortgage while generating additional income.

Unfortunately, worst case "rainy day" scenarios can happen, and they do happen. Taking out a mortgage for potential financial gain at the possible cost of losing a house is risky and dangerous.

Instead, before cashing out your home equity to buy securities, consider the following: How will the mortgage get paid if investments fail or perform poorly? What other financial sources can I turn to if that worst case scenario occurs?

If those answers prove troublesome, the risk is likely higher than it appears on the surface.

If you believe a broker or dealer has pressured or misled you into making an unwise mortgage-related investment, please call The Law Offices of Jonathan W. Evans & Associates for an investigation and consultation.

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