Cash Out Refinance to Invest?

I have the opportunity to do a cash out refinance on my house. With the still low interest rates and rising market values, I think I can pull $40-60k in equity out while still keeping my mortgage payment completely manageable.

I keep going back and forth in my head about paying down my mortgage faster (I’m on a VA 30yr at 2.375% $294k), or just leveraging the current equity to invest more.

I’m 37, single mom, securely employed, with about $22k in investment accounts, contributing 8% into my 401k with a 3% match, while maxing out my Roth IRA.

I really want to set future me up for success, but is it better to pay my home down faster for peace of mind and lower living expenses, or take advantage of the equity and dump a bunch into the market now to give it time to grow?

Personally, I would never put myself into deeper debt just so I can invest in the stock market. You’re just “robbing Peter to pay Paul” in that instance. Especially, if I’m a single mom, I would want there to be enough money for emergencies. Also, taking equity out of the mortgage means you’re putting more investment money into the house (long term). And the ROI on the house will not be much.

If your mortgage is manageable now, I’d recommended sticking with that, then use the monthly leftover money to max out your 401k on top of what you’re doing. And if there’s additional money leftover after maxing out all the tax-advantages plans, put it towards a brokerage account.

Or consider downsizing to reduce the mortgage and put the extra money into retirement and/ or investment accounts.