As the title states, I am trying to determine if it’s more advantageous to put as much money as possible down on a house or keep most of it where it is and have a larger loan to pay. I would not touch any money in my 401k or Roth IRA. So, I see 3 options:
- Use money from savings to put down ~10% on a house. This translates to about half of the money in my wife and my own savings accounts. Don’t use any other money.
- Sell most to all of the stocks in my brokerage account and use it to put down ~20% on a house. If my wife does the same, we could put down anywhere from 30-40%. Don’t use any other money. Would need to keep capital gains tax in mind if selling stocks (15%?).
- A mix of options 1 and 2
Given a conservative average annual return of the stock market (let’s say 5%) and housing loan rates (we’d like to do 15 year mortgage if possible), is there a sure answer as to which option to choose from? Is there a 4th option that I’m missing? Also, I would be a first-time home buyer.
As someone who doesn’t have much experience with large purchases and loans, is there a general financial rule for determining the path forward?
Thanks in advance!