I would definitely agree with SK on this one. When you make the decision to buy, you should study the current rates with regards to the historical lows we have seen. If they are still at or near those low levels I would suggest to finance the home if you feel you can make a better return on the balance of the loan. Which I would imagine you can if we are going to be in an escalating rate environment down the road. Look back at the 80s where you could get muni bonds with double digit returns. Then again, if you make the purchase in the future and if rates are much higher at that time, you could see a combination of price drops and higher credit costs that would indicate a more heavily weighted downpayment. In general it is a question that is hard to answer until you are ready to pull the trigger and then what your personal thoughts are on the direction of long term yields.
