More cash or down payment on a house hedging inflation?

Benton
I'm contemplating putting 25% of my savings to lower my monthly payment for a home refinance. The net monthly payment would be lowered by $140/mo which does not seem too much, but what about long term projection and the fact I'm saving interest also? I see this as a way to hedge inflation since I'm taking dollars that will be inflated most likely in the near future and loose value in a standard savings or CD. Is this the wrong way to look at the situation?

Bess
I think interest rates have hit some lows we won't see in a long time going forward. If inflation hits they will go up. I think your worry of inflation lowering the value of the money is misplaced. You usually can beat inflation rather safely. But not by much.But it is always smart to lower your obligations for payments as low as you can in case you get in trouble, like lose a job. So that has a real plus. This hyperinflation thing I think is a Republican scare tactic. The Fed will raise rates if they see that coming. But that also means now would be a good time to refinance. If you look at the trillions of dollars that have evaporated from home values, the stock market, business losses, bank losses, then we are in a period of deflation not inflation. The Fed is working to inflate to avoid deflation. Deflation means you are better off holding on to your money. Your choice.

Keva
My recommendation is to first, get into a nice fixed mortgage with NO PMI. PMI is not tax deductable, so it's a big waste of money. I would put down only enough to get you over the PMI threshold. The extra money, I would invest in a well diversified portfolio. I can't get too specific as to what kind of diversification without knowing more about your situation. Investing in CDs or savings might be good if you need the cash to be liquid. If you were already planning on it being equity in your house, i'm guessing that you won't need it to be readily available. If that's the case, now is the time to get a piece of the market. History shows, the biggest gainer years are always the years coming out of a recession. Assuming history repeats itself once again, your money could earn you some very good gains. Feel free to email me if you have any more specific questions. BEST OF LUCK!!