My Home Depot

Does it make sense to take a home equity loan out for $100K or so a year in advance of renovations and invest?

I'm thinking of putting it all in a couple of mutual funds or maybe half mutual funds/half CDs. I would cash out on other investments to avoid short term capital gains. I get hit with the alternative mimimum tax so my accountant said I should invest in property as in an upgrade or rental.

Public Comments

1. NO...there are a hundered reasons that this is a horrible idea, but the 1st is that prime is at 8.5% right now so anything you make will be canceled out by the interest you are paying on the loan.
2. no u will end up spending or losing the money and not be able to renovate
3. I'd fire my acct. if I were you. That's the worst advice I've ever heard. Wait until you need the money for the renovation, then borrow. Interest has been steady as of late, and you should be all right.
4. I did that, seven years ago. A home equity loan for $100,000. Tried to invest it in a market that went bust. I am not kidding, this is true. Well first, I, (we) lost the $100,000 on the stock market (options really---thanks to Wade Cook). Second, with $1,700 already due on the first loan, and now $1,100 due on the HEL we soon lost EVERYTHING: Lost he home, lost the marriage, my dog died, my credit went to hell, etc. Filed bankruptcy, and damned, if the loan from BANK ONE, which was the home equity loan, wasn't written off completely.---true story But don't do it, you'll be sorry, too.