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?

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?

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!



*** BEST STOCK NEWSLETTER of 2020 ALERT ***

Updated September 13, 2020

At WallStreetSurvivor, we subscribe to dozens stock recommendation and advisory newsletters. There is ONE newsletter that is constantly outperforming all of the others--The Motley Fool Stock Advisor.

ONE of this year's Motley Fool Stock Picks Has Already quadrupled, ONE has tripled, and another TWO Have Already Doubled in just 8 months of of 2020!

We have been tracking ALL of the Motley Fool stock picks since January 2016. That's almost 5 years, 55 months and 110 stock picks. As of Friday, September 11, 2020 the Motley Fool's January 2 stock pick (TSLA) is up 333%, their March 19th pick (ZM) is up 209% in just 6 months, and another two have more than doubled. In addition, 6 of their 2019, 8 of their 2018, 8 of their 2016, 9 of theire 2017 and 13 of their 2016 picks have also doubled. Most impressively, over the last 5 years that we have been tracking every recommendation, their average stock pick is up 135%. That beats the SP500 by an average of 95%. And that's even accounting for all of this COVID mess that has wreaked havoc on most stocks. BUT, the Fool has done so well because they have quickly identified stocks this year that will perform well in the post-COVID world. THAT is how the Fool consistently does so well--they adapt and constantly pick stocks before everyone else realizes the opportunities.

  • CrowdStrike (CRWD) -- June 4, 2020 pick is already up 32%
  • Shopify (SHOP) – April 2, 2020 pick and it is already up 164%
  • Zoom Video (ZM) – March 19, 2020 pick and it is already up 209%
  • DexCom (DXCM) picked Feb 20, 2020 right before the market crashed and it is still up 41%
  • Tesla (TSLA) picked January 2, 2020 before the crash and it is up 333%
  • HubSpot (HUBS) picked December 5, 2019 and it is up 82%
  • Netflix (NFLX) picked November 21, 2019 and it is up 54%
  • Trade Desk (TTD) picked November 11, 2019 and up 117%
  • Zoom Video originally picked Oct 3 and it is up 398%
  • SolarEdge (SEDG) picked September 19, 2019 and it is up 105%

Now no one can guarantee that their next picks will be as strong, but our 5 years of experience has been super-profitable. They also claim that since inception, their average pick is up 529% and now we believe them. You sure don’t want to risk missing out. Many analysts are saying that we have passed the bottom of this COVID crisis and stocks will recover quickly. So make sure you have the best stocks in your portfolio.

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

CLICK HERE to get access to all The Motley Fool’s Stock Picks and their next 12 months of picks for just $99 per Year! 



GET UP TO $1,000 IN FREE STOCK

WHEN YOU OPEN A ROBINHOOD BROKERAGE ACCOUNT

Robinhood was the first brokerage site to NOT charge commissions when they opened in 2013. They just past 10,000,000 accounts and to celebrate they are offering up to $1,000 in free stock when you open a new account.

Here’s the details: You must click on a special promo link to open your new Robinhood account. Then when you fund your account with at least $10, you will receive one stock valued between $5 and $500. Then, you will get a link to share with your friends. Every time one of your friends opens an account, you will receive another free stock valued between $5 and $500. Click here to learn more about this Special Robinhood offer.

Claim your free stock NOW (before it’s too late)



Leave a Reply

Your email address will not be published. Required fields are marked *