<prompt> Human: From This Thread in rfinancialindependenceI have a paid off house, what are the costsbenefits of taking out a second mortgage for the max principalmax periodmin interest rate and reinvesting that money? For the math below, assume I can get a 417k mortgage at 3.2 interest for 30 years now. You are using your house as collateral to get a large, low-interest loan and then immediately reinvesting that into something else. Unless the market drops consistently, you should have enough enough in the investment accounts to liquidate them at any time and pay off the entire remaining mortgage balance. The math below says that at a rate of return on my investments of 4, I am growing my wealth. I am already mortgage free in this situation, so the math below is compared to me paying nothing each month. Please convince me what si wrong with this scheme.I used Mortgage Calculator to get the monthlyannual payments; here are some hypothetical balances:First year 1st year Mortgage Principal Paid 8,500 1st year Mortgage Interest Paid 13,085 Remaining Mortgage Principal 417,000 - 8,500 408,500 Investment account -5 return 417,0000.95 - 396,150 396,150 - 408,500 -13,085 - 8,500 -33,935 net loss Investment account 0 return 417,000 - 417,000 417,000 - 408,500 -13,085 - 8,500 -13,085 net loss Investment account 2 return 417,0001.02 - 425,350 425,350 - 408,500 - 13,085 - 8,500 -4,745 net loss Investment account 4 return 417,0001.04 - 508,320 508,320 - 408,500 - 13,085 - 8,500 3,595 net gainAt the end of 5 years: 5 year Mortgage Principal Paid 45,600 5 year Mortgage Interest Paid 62,500 Mortgage Principal 417,000 - 45,600 371,400 Investment account -5 return for 5 straight years 417,0000.955 - 322,666 322,666 - 371,400 - 62,500 - 45,600 -156,833 net loss Investment account 0 return for 5 straight years 417,000 - 417,000 417,000 - 371,400 - 62,500 - 45,600 -117,208 net loss Investment account 2 return for 5 straight years 417,0001.025 - 460,401 460,401 - 371,400 - 62,500 - 45,600 -19,098 net loss Investment account 4 return for 5 straight years 417,0001.045 - 507,344 507,344 - 371,400 - 62,500 - 45,600 27,844 net gainSome potential issues: MAKE SURE you get a mortgage with no early payment penalty, this could put you in a bad situation if you ever wanted to get out of this scheme. How easy is it to pick investments or funds to consistently get 4-5 interest? A diverse set of stocksfunds staying below 4 for 5 straight years seems like an extreme situation. How does capital gains tax work on large investments and eventual sale of those investments? What are the limits on mortgage interest tax deduction? Im sure that the taxes on your investment earnings and your mortgage interest tax deduction do not line up exactly, but how do they fall? You need sufficient cashflow in the first year to make the mortgage payments while you wait to get your first round of dividends I only know so much about investing so I assume there are stocks that pay out right away. I assume investing fees could eat up a lot of your profit I am not a saavy stock investor yet  <response>: This is a popular strategy known as equity harvesting. It is neither good nor bad; it depends on your risk tolerance. On average, what you propose will make you money. Unfortunately, you only get to live one life; you dont get to live multiple times and take an average of these lives.So, with that said, lets look at the SP 500 In 12 out of 46 years, your return would have been less than 4 26 of the time. In 12 out of 42 5 year periods, your return would have been less than 4 29 of the time. In 4 out of 37 10 year periods, your return would have been less than 4 11 of the time. There have been no 15, 20, or 25 year periods with an average return under 4.So, can you make payments for 10 years? If not, it sounds like a pretty big risk to me. 