From: "Don Zimmerman" 
Newsgroups: misc.invest.real-estate misc.invest
Subject: Re: Refi Higher amount and invest it?
Date: Wed, 31 Dec 2003 04:23:06 GMT

"Jacob Burnetski"  wrote in message
news:fqb4vvg2o62en5b9bnh9uh838fbvjed1sc@4ax.com...
> I am refinancing my current 15 year fixed mortgage from 7.125 to a 5/1
> ARM at 4.75.  The payment based solely on the current payoff would go
> from 702 to 261.  My mortgage broker suggested refinancing a greater
> amount, like $77500 for a payment of $402, and taking that additional
> $30k and investing it in mutual funds.
>
> I have several quality mutual funds, and am not at all intimidated by
> investing it, but I'm wondering what the general consensus is on using
> equity in a house to invest?  The house has gone up in value from $92k
> to about $130k in 6 years, and I expect it to continue to increase.
>
> Thoughts anyone?

As my wife and I found out a couple of years ago, lenders will try to demand
a somewhat higher interest rate if you refinance and take "cash out." You
may be able to get around this rule by switching to a new lender, as we did,
under the condition that they waive the "cash out" rule. Another possibility
is to refinance at the lower interest rate with no cash out and put the
extra savings in monthly payments into the mutual funds on a month-to-month
basis.