home equity mortgage refinancing loan

Investing home equity elsewhere risky business

Q: We recently attended a mortgage company workshop on equity maximization, in which they touted putting the equity in your home to work earning income and building wealth. They recommended refinancing to an interest-only loan and investing your equity, plus the difference due to your lower mortgage payments, in an insurance instrument plus side accounts.

The interest-only loan tax deductions would help offset taxable 401(k) withdrawals. Another key element was using a death benefit insurance policy as a primary investment device that would encompass side funds. They stated that even taxable IRA accounts could be legally rolled over, in time, to these side funds. These funds would then become nontaxable accounts from which you could borrow funds monthly for living expenses, etc.

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Tame your out-of-control equity line of credit

If you owe money on your home equity line of credit or if it feels like you have a gazillion payments left on an adjustable rate mortgage, you are probably feeling the pain of higher interest rates.

Perhaps you obtained your loan when lenders were bragging that rates hadnt been so low since the Cuban missile crisis. Unfortunately, the killjoys swept up the confetti many months ago.

Yet many homeowners are surprised at how quickly their once-great loan packages have turned into aching charley horses. Someone who snagged a home equity line of credit with a 4 percent interest rate in 2004 could now be making payments with a rate thats doubled.

Not surprisingly, interest in refinancing has dropped as the rate miasma has repelled shell-shocked homeowners.

But bunkering down in your overpriced tract home and adopting an attitude of abject hopelessness wont necessarily be your best strategy.

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