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I don't know if it's wise, but it will get you a good mortgage rate and a quick close. At least it did with my recent home purchase. However, I will say that I'm looking forward to the closing on my old house in two weeks so that I can replenish those funds in my savings portfolio. That 20% down was a big chunk of dough!
For many mortgages 20% is the minimum to put down, where I am if you plan to rent out the house you need to put down at least 50%.
Where are you? Investment properties require 20% down, investment multi-units (1-4) require 25% down in America.
The relative wisdom of the move, IMO, has to do with your access to capital in the future. You generally cannot do a cash-out refinance over 80% of the value of the home (85% FHA, 100% VA, but for the most part it's 80%.)
To that end, if something were to happen in the future that required funds "now," and you sunk your savings into a 20% down payment, it's suddenly not a smart move.
I'm a huge fan of carrying the bulk of your debt in the house. Mortgage interest, for the most part, is a tax write-off, and mortgage rates tend to be lower than credit cards. So, keep open-and-empty credit cards, try to avoid a car payment, and if this can be facilitated by a 3-5% down payment on a house, so be it.
Mortgage rates tend to be very similar for higher-credit borrowers, on conventional loans, whether you put 3-5% or 20% down. You can avoid Mortgage insurance by doing a piggyback loan, such as an 80% first mortgage and then a second mortgage for 10%, 15% or (next month) the remaining entire 20% of the price.
Sure, equity is great, but not if it means carrying thousands in higher-interest credit card debt.
I personally am a fan of this strategy, but I totally understand that it can also make smart people uncomfortable, too.
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