Why Borrowing Against Your Home for Investing Is a Risky Game

Rising real estate values have tempted many homeowners to tap their equity through HELOCs (home equity lines of credit) to fund other investments. But personal finance guru Dave Ramsey has a blunt take: it’s a terrible idea.

Here’s why this strategy backfires:

Your Home Becomes the Bet — You’re literally putting your primary residence on the line. If your investment tanks or cash flow dries up, foreclosure isn’t theoretical. It’s a real outcome.

Variable Rates Are Killers — You might lock in 7% today, but rates adjust. Suddenly you’re paying 9-10%, and that “smart investment” now costs way more than you calculated.

You’re Just Shuffling Debt — Moving money around doesn’t eliminate the problem; it amplifies it. Ramsey’s philosophy: get debt-free, not creative with it.

Lifestyle Creep Is Real — With a credit line sitting there, you borrow more than planned. Oops, now you owe $100K instead of $50K.

Emergency Fund Gets Skipped — Many use HELOCs as a backup plan instead of building actual savings. Then an emergency hits, and you’re taking on MORE variable-rate debt during a crisis.

Ramsey’s bottom line: build wealth through discipline and savings, not financial engineering. Your home is your shelter, not your ATM.