Am I better off with a larger down payment? A smaller one will leave me with more cash on hand and a bigger tax break.
Couple things to consider; would the larger mortgage payment constrain your housing budget and can you avoid mortgage insurance with your larger down payment. All else being equal you may want to keep your cash. Once you put the money into the house it will be there until you sell or cash it out; it cannot earn a return for you. If you retain the cash it can earn a return when invested.
| 11.14.13 @ 22:15
Having liquid (cash or cash equivalent) funds available after closing is always preferable to tying up your funds in the new home. If the water heater breaks, the AC goes out, etc, you want to be able to cover those repairs quickly. The tax break is only a portion (20-35%) of the interest you pay on your mortgage, so a smaller deduction merely means you paid less interest, which is a good thing. You should ask your loan officer to examine your assets, employment, and liabilities to get an informed opinion. Just as with most mortgage questions, there is no "one size fits all" answer here, it all depends on individual circumstances and goals. Hope that helps, let me know! Ted | 07.27.15 @ 20:16