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[CamB]

"taking out equity" - that is twisting the definition of equity a little.

Depends what you do with it (as Thom says, spending it on an SUV and plasma tv isn't good) - specifically, what other class of asset you invest in - what the interest rate is (compared to the return on the other class of asset), and it should also reflect an assessment of the underlying value (maybe not the current market value) of the house. In other words, don't overgear.

I guess what I'm saying is that a 4 week holiday in Hawaii is not "equity".

[turbo6bar]

Good point, Cam. If you're making smart moves with that cash-out refi or equity loan, it's not a bad risk. I was averse to interest-only mortgages, until I finally heard the numbers. I don't know the points or closing costs, but some 1 and 6 month interest-only mortgages are hovering in the 2-4% range. On $100k of cash, your monthly payment is between $166-$335/month. That's not a lot to pay for $100k of cold hard cashola.

I can buy one nice rental for $100k, generating $1100/month in rent, or two smaller rentals generating $1600/month in rent. Either way you slice it, there is money to be made if you're smart. Operative word: smart.