That said, cash-out refis do present a tax issue, since interest paid on the cash taken out of the equity is not deductible as home mortgage interest unless the money is used to make improvements to the home.
I will also point out that if the asset loan from eTrade is not secured by the property, that interest will not be deductible as home mortgage interest. A $592.6k interest only loan at 5.69% will generate $33.7k in interest a year, which by itself, even without accounting for up to $10k in SALT deductions, medical deductions, charitable contributions, or any other itemized deductions, exceeds the standard deduction even for a MFJ couple who are both over 65.
In comparison, interest on a purchase mortgage is fully deductible, and by making it so that other deductions can be itemized, could provide some benefit to taxpayers who currently can’t itemize their deductions.
So any comparison between the asset based loan and a mortgage needs to account for the potential difference in tax-savings.
AJ