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[quote=Anonymous]Home ownership makes sense as a diversification of your portfolio, not as *THE* portfolio. The 6% you will see in stocks over time will far outweigh the value you will see in homes over the long term.

In our case we 1) Identified how much we could reasonably afford, while 2) minimizing the down payment we put in and 3) maximizing our mortgage. Please note this doesnt mean getting the biggest mortgage you can. It means if you want to buy a house for $500K and you can pick between paying cash or putting down $500K and mortgaging $400K, the smart money is on mortgaging $400K.

The reason for that most often cited is the tax benefit of mortgages, which is not the right answer. The reason thats the smart move is that the $400K you DIDNT tie up into the house is very likely going to return 6% or more per year while the mortgage is costing you 3 or 4% - the tax benefits are merely a perk. Plus if the $400K you had is (or could be) put into a tax advantaged account you now have even MORE going for you.

Theres also the liquidity argument, but I think most people miss the real value here. Lets say for the sake of argument, that you make $100K a year and most years you struggle to max out your retirement. Lets say that under option A) you take your $200K and you buy a house. Option B) you DONT take your $200K and buy a house, but you DO invest it.

Now fast forward a year and lets say the market has gone up by 10% - on the home and in stocks. In either case your 200K has increased in value, but in option B you can now take the $20K you have gained, realize the gains, and use it to top off your 401k. In option A, you cannot. What option B has allowed you to do is two things: 1. Take some of the earnings off the table, 2. Move those to a tax advantaged status. Obviously that means less if you already max out both your 401ks, but if not...

So for that reason, I say rent until you have enough for both a down payment AND other money in the bank. Then buy something modest (see  "are we stuck for now" for a how-to-not-to-do-it) and invest. 
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