Here's a thought experiment for you:
Mr. Money has $200k invested in a diversified, tax efficient index fund portfolio. He is about to purchase a $200k home and has asked your advice. He can easily afford the payments on a $200k mortgage. What do you suggest?
A. Liquidate all investments and pay cash for house.
B. Put 20% down and finance 80%.
C. Finance 100%.
D. Put 50% down and finance 50%.
If you pick anything other than A, please explain how this scenario is different than someone doing a cash-out refinance and investing the money - assuming, of course, that they have the cash flow to easily afford the refinanced mortgage.
It is entirely possible that two people could have the EXACT same balance sheet - one put down less money and kept investments, another refinanced and invested - and yet you would call one of them appropriate and one inappropriate?
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