take no chance of losing your house....after all, the money can quickly disappear in the market. Especially if you are a novice trader....so r u or r u not? Also depends alot on whether you are single or married(w/ kids?). If you are already profitable trader with wife and kids, I'd down 25%-50% and spend rest of the money for trading. If you are losing/novice trader with wife and kids, I'd down as much as 50% or payoff the house. you don't want to bankrupt in this case. worst case scenario of course. If you are novie trade, but single.....u can afford to take more chances. ....down 20% and risk the rest on trading.... If you are a profitable trader and still single......wage in the interest-to-earnings factor and down accordingly.
considering only 5% of the traders are profitable Yet we have 100% who are trrying to borrow on mortgage, then take that money to trade on the stock market , 95% of them will be unprofitable therefore losing their supposedly "put to better then 5% interest use capital" Thats why we see a lot of traders who go nowhere in life, all of them are ........ pipe dreamers. --------------------- If you make the money in stocks, make it, pay off your home, keep making more money , simple. damn pipe dreamers using their capital to fund their pipe dreams all end up with in the end... a rusted old pipe. ---------------------------- I have 3 propertiies, paid in cash, end of story. What I trade with is excess.
far more than 5% of traders are profitable imo. I'd say around 15-20%. but keep in mind that 1% of those profitable traders are over millions net/year.
I went through the same exercise last year with my mom. I calculated the after tax cost of the mortgage v.s. the risk adjusted return if she invested the money. Right now, the way the market has been going, I feel pretty smart but I could have been wrong. However, as stated, the peace of mind knowing your house is paid for and not having to have insurance (unless you want an equity line) might be worth taking a loss to the market. Those intangible are worth a loss to me but that's something you'll have to decide for yourself.
This is pretty much what I am doing. Please see this thread. http://www.elitetrader.com/vb/showthread.php?threadid=137558
If you are smart, you pay cash and use an attorney instead of a realtor. If you are average, you pay 20% down to get around PMI. If you are an idiot, you pay 0% down at the top of the market, and finance all closing costs.
If the expectancy of your trading system in terms of % per year is > the annual % APR on your mortgage loan then take the mortgage.