Using a Home Equity Loan to Invest: Risks and Rewards

As the housing market repairs itself, so do the home values. With home equity on the rise, it gives way for potential investments and financial fortitude. If you find yourself with a decent amount of home equity, it might be worth it to consider investing in a home equity loan to try something new.

What Can I Accomplish with a Home Equity Loan?


ALSO READ: Should You Abandon Index Funds During the Coronavirus?


If your mortgage is low, but your home is retaining high equity, it can be the ideal situation for a home equity loan. A home equity loan can then be used to invest in a new potential second source of income-whether it be adventurous like a business venture, investing in a rental property, or other forms of investment. Taking out a home equity loan can have the goal of generating a profit that exceeds the cost of the loan.

If you’ve been waiting for your chance to start a business or own more properties to make residual income, the time has never been greater.

Additionally, taking out a home equity loan can mean using that cash to increase its value. If you plan to sell the home in the future, making substantial improvements can make the home higher in value to sell.

How Do Home Equity Loans Work?

*** SPECIAL ALERT — May 10, 2020 — Motley Fool Stock Picks On FIRE! ****

The recent Motley Fool stocks picks, even with this COVID crisis, are STILL performing well and beating the SP500! Here are some of their most recent picks and their performance:

  • Shopify (SHOP) – April 2, 2020 pick and it is already up 90%
  • Zoom Video (ZM) – March 19, 2020 pick and it is already up 16%
  • DexCom (DXCM) picked Feb 20, 2020 right before the market crashed and it is still up 17%
  • Tesla (TSLA) picked January 2, 2020 before the crash and it is up 77% compared to the SP500 -12% so it is ahead of the market by 89%
  • HubSpot (HUBS) picked December 5, 2019 and it is up 4%
  • Netflix (NFLX) picked November 21, 2019 and it is up 37%
  • Trade Desk (TTD) picked November 11, 2019 and up 50%
  • Zoom Video originally picked Oct 3 and it is up 87%
  • SolarEdge (SEDG) picked September 19, 2019 and it is up 20%
  • Zoom was also picked October 3, 2019 and it is up 95% since then.



The average stock they’ve recommended is up a life-changing 346% – more than 4X the return of the S&P 500 !

Now, no one can guarantee that every pick in Stock Advisor will have the same mind-blowing returns as Netflix and Disney. But you sure don’t want to risk missing out.

Normally the Fool service is priced at $199 per year but they are currently offering it for just $99/year if you click this link.

[sc name=”Fool-SA-Dates”]

CLICK HERE to get The Motley Fool’s Stock Picks for just $99 per Year!

States like California have some of the highest valued property in the nation, especially in cities like Stockton and Los Angeles. So, similar to Title Loans in Stockton, when you utilize a home equity loan here, you are borrowing off of an asset or collateral. Your home’s location can affect loan value!

You will use the value, or the equity in your home in order to obtain funding. You will borrow off of your home, which makes it the collateral for the loan. If your home is not already paid off, generally, you will be paying two loans- your mortgage, and your loan payment.

What are the Risks of a Home Equity Loan?

While the outcome can be rewarding, there are risks to consider with this loan. Your business or rental property might be profitable and help cover the principle loan. However, one potential outcome to consider with a home equity loan is the potential loss of your home. Extracting its value for cash can be a good idea, but the risks of being unable to pay off the first and second loan should also be a factor in your decision to borrow off of your home.

Be certain you are borrowing for the right reasons- you should have a solid business or financial plan in place before choosing this loan to avoid risks or potential consequences.

Be Smart about Your Lender

When choosing the right bank or lender for your home equity loan, stick close to home! Often, your home bank can be the best place to start to compare rates. Be mindful to shop around and find the best rate for your financial situation, just as you would with any other loan. Your current mortgage lender can also be a good avenue to choose, as they may already be a trusted source of lending. A trusted lender can make or break your experience with your loan, as good rates and customer service make a huge difference!


INVESTING TIP #27– HOW TO GET FREE STOCK!

Get Up To $1,000 in Free Stock with Robinhood–the
Commission-Free Brokerage!


Open a new account and receive one free stock valued at up to $500! Then, once your account is open, get more free stocks (value from $5 to $500) for each friend, family, person you refer!

USE THIS LINK to get started with Robinhood!


Related articles

Comments

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Enter Your Information Below To Receive Free Trading Ideas, Latest News, And Articles.

Please Enter Your Email Address:




Your information is secure and your privacy is protected. By opting in you agree to receive emails from us and our affiliates. Remember that you can opt-out any time, we hate spam too!

Share article

Latest articles

Limit your losses by using these 3 investment diversification methods

Trading a specific asset, be it a Forex pair, stock, or precious metal is always dangerous and associated with high risks. On the one...

Stock futures point to higher Monday open

Despite harrowing Covid-19 case numbers reported across large swathes of the US over the weekend, stock futures are pointing to a marginally higher open...

Trade to Help promotions results

Our Trade to Help promo ended in Spring, but this is only today when we can summarize it. The reason is simple - your...

Independence Day Announcement 2020

Dear Clients,There will be a temporal change of the trading session schedule due to celebration of Independence Day in the USA.Please, be informed that...

US stocks close short week on a high after jobs report

The S&P 500 continued its run up yesterday following an expectation-beating US jobs report, which showed 4.8 million nonfarm payrolls were added in June....

Newsletter