Is it bette to put more money down, initially, on the mortgage, or have a higher monthly payment?

I am considering purchasing a house for 500k. I could put down 300k on the house, and have a mortgage for 200k, or should I put down only 100k, and have a 400k mortgage. I could invest the other 200k in the stock market or bonds.Is it bette to put more money down, initially, on the mortgage, or have a higher monthly payment?
This depends on how old you are, if you have any other big purchases planned (car, college, etc.), whether you have any other investments, and other factors. However, I'll provide two scenarios that can be used as guidelines.





If you're relatively far from retirement, I would put down at least 20% so you do not have to pay Private Mortgage Insurance then invest a large part of the rest (say 80 - 90%) in Exchange Traded Funds. Finally, keep the rest in a high yield savings account (ING Direct, Emigrant Direct) for emergengies. I would do this because you have plenty of time to pay off the mortgage (and you can still pay ahead if you want). I read somewhere thay paying 1 extra payment per year will reduce a 30 year mortgage by 7 years. You can just increase the amount you send in each month by 1/12th to accomplish this goal. You can also earn more investing (8-10%) than the interest rate you will have to pay on a mortgage (5-6%). The interest you pay is also tax deductible.





On the other hand, if you are nearing retirement it would make more sense to pay more up front. You want to be more secure in knowing you will have a roof over your head. You don't have as much time to recover from dips in the market. It will be easier to make a lower payment during retirement.Is it bette to put more money down, initially, on the mortgage, or have a higher monthly payment?
It's a question of balance.





While I agree with the first answer that you should pay off the mortgage first, it's wise to have some funds in reserve - and by that I mean in a savings account, not at risk in the stock market. Yes, you'll be paying higher interest on the mortgage than you receive on the savings, but this isn't a get rich quick scheme, it's a safety first plan.





So I'd say make a down payment of 250K, borrow 250K and put 50K aside, unless, that is, you already have an emergency nest egg put aside somewhere. You could, by the way, place part of that 50K in a traditional or Roth IRA.





Good luck.
Pay off the house first.


The higher monthly payment means you are paying more interest.
Depends on the return rate of your investment. As long as the return rate is higher than your mortgage interest rate, you should allocate more funds into investment. US stock market returns 10% historically.