Reply to Cash out refi to invest in stock market?

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[quote=Anonymous][quote=Anonymous][quote=Anonymous]Amazing that virtually everyone has said it's stupid to do a cash-out refinance to invest in the market, but everywhere else in this forum, it is an article of faith that one should never make additional principal payments on one's primary residence and should instead invest as much as possible in the market.  Folks, when you invest in the market instead of paying down your mortgage, you are doing the EXACT SAME THING that the OP asked about!!  I have always said that people's primary savings goal should always be to first pay off the mortgage on their primary residence (for the exact reasons mentioned in this thread), yet that idea is always met with scorn.  Of course, averaged out, the market returns are higher than the 3% that you get from paying down your mortgage, but maximizing returns is for people that have already achieved some baseline stability - you don't play games when you don't even have a roof over your head secured!

Plus, we have been in a bull market for so long that many people have forgotten that markets can go down![/quote]

Uh it's not the same thing. OP is talking about taking out $ that you already paid. You're talking about paying extra. Both are stupid, what makes sense is to just pay your mortgage and then invest the rest in the market, vs paying extra. (Or taking $ out and putting it in the market--that seems too messy) [/quote]

Um, they are the EXACT SAME THING - they are both ways of borrowing against your house to invest in the stock market.  When you don't pay down your mortgage, you are choosing to continue borrowing against your house to invest in the market.  It makes no difference whether you are pulling out money implicitly in the present (by not paying back your mortgage) or pulling out money that has actually accrued in the past.  IT IS THE SAME THING and smart people don't leverage up when they don't have a basic foundation to stand on.[/quote]

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