Investing Borrowed Money Can Be Risky

You're getting into risky territory when you start investing borrowed money. At first glance, your plan may seem like an easy way to use the bank's money to easily rack up investment gains for yourself.

After all, you can probably get a home equity line of credit at or below the prime rate, which is now 8.25 percent. Assuming the interest on the loan is tax-deductible (which you can ascertain by checking out IRS Publication 936), you're actually paying 6.2 percent in interest after taxes, assuming a 25 percent tax rate.

So all you've got to do to come out ahead is earn more than 6.2 percent after-tax on the borrowed money you invest.

Some may think that sounds like a sure thing. But actually, several things could go wrong.

10 BIGGEST Home Buying Mistakes

Based on 25 years of home-building experience for 30,000 people, here are the 10 biggest mistakes in home buying:

1. Not doing your homework. Knowledge is power. Tremendous information is available on the Internet. There is no excuse for entering the market unprepared.

2. Trying to make a shrewd investment. People need to buy based on what fits their family. Don't try to guess what will happen to the market.

3. Choosing a poor location. Even within a neighborhood, location matters. Is it on the busiest street? Is there a shopping center out the back window?

Read about other home buying mistakes…

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New Ways Of Funding Remodels

For many homeowners hoping to remodel their kitchens or add square footage, borrowing against their home equity is a logical way to finance such a project.

That, or winning the lottery.

But for some homeowners, a construction loan is another option.

In decades past, construction loans were generally for homeowners who were building new homes on land they already owned outright. The loan covered only the construction process, and the homeowner typically had to seek out a long-term mortgage once construction was finished.

Find out more about the new ways of funding remodels…

Buying a House in a Buyer's Market

Now is a great time to buy a house.  Prices are falling, and so are mortgage rates.  Millions of houses are for sale, and sellers are getting anxious. 

That's one way of looking at it.

Alternatively, you could say:  This is a bad time to buy a house.  Prices might be lower in a few months.  Same with mortgage rates.  With more than 4 million houses on the market nationally, and more being added daily, sellers are bound to become desperate.  Why not wait them out?

In many places, it's a buyer's market in real estate, with sellers outnumbering potential purchasers.  The resulting downward push on prices makes buyers happy.  But it complicates matters for buyers, too.  In some markets, there are too many choices to sort through.  Even more bewildering, buyers wonder if they should wait a few months.

If you're serious about buying a house, this is both the first step and the final goal. To put it more precisely, you have to decide whether you will actively shop and then negotiate a fair deal, or if you'll just passively browse houses, hoping to stumble on a steal.

You're more likely to succeed with the active approach instead of waiting (possibly in vain) for prices to fall further. You can't predict when the local market will hit bottom.  Even if prices do fall, someone could buy your favorite house out from under you.

If you find the right house at the right price, buy it.

Second Home: Sell or Pass it Down?

To some it's a source of family harmony. To others, however, it's a source of great family division, anger and strife. Yes, it's the old family cottage or vacation property or compound or camp or call it what you will. And now with summer coming to a close, many Americans are trying to figure out what to do with their piece of heaven on earth.

Should they sell the property that has produced fond memories of times spent with loved ones? Or should they give it their children? Or should they do something entirely different?

Families should deal with the issue in four steps.