Hello,
My wife and I just inherited her uncle's house. It's worth about $250,000 here in California...so it's a small house
However, we're taking out a small home equity loan of $75,000 to pay for improvements. We actually are only going to need $50,000 of that dough, so we were thinking of just using the rest to pay the loan back. However, my neighbor stopped by and got me thinking....
He says we should pull out as much equity as possible, and roll it into investments (CD's, IRA's, etc). Since the interest on the mortgage would be 5.5-6%, we could make money on a higher interest investment. Plus, the taxes of the mortgage would be tax deductable, giving us even more profit.
His advice was to just to make sure we have investments that mature at the proper intervals so we never have to pay the mortgage out of wages. So we'd start off with a 3mo CD, a 6, 12, 24, etc.
It all sound too good to be true. Is it really that easy for me to make money off this inheritance? I don't need you guys to give me too many details, but if it is possible, tell me so I can get to a financial advisor ASAP. But don't forget the warnings of pitfuls that I might not know about.
I've never had this kind of money available... so when it comes to finance, I don't know what I don't know.
Thanks.