I manage money for a living, so I'll tell you the same thing I tell my clients.

First, look at your risk tolerance and time horizon for your money. Current 30yr mortgage rates are at about 4%. Current 5/1 or 7/1 arm rates are at about 3%. A 'typical' equity market returns about 8% annually and that's compounding. So, if you have the time and risk tolerance to stomach a typical equity market, you're better off keeping your $ invested and using the bank's money for the house. Also, and I'm not sure how much you have in assets, but we do asset backed lending (against stocks, bonds etc.) at about 1.5% + 30 day libor which is .155% right now. So, a client can borrow against their account for about 1.65%. Much better than a mortgage plus you get to keep your money invested. I have lot of clients using this for investment property or second homes.

The basic rule of thumb is: if you can do better in the market than the cost of the loan, you're better off taking the loan vs paying cash.

Further, the 33 year bull market in bonds in over. Everyone keeps screaming about 'when rates go up' but we haven't seen that. We've seen the opposite in fact. Europe is negative on banking rates and deflationary, the rest of the world is frankly deflationary, so I don't really see rates moving up by any real measure anytime soon. We expect rate volatility, but we expect it to be across the curve accordingly and mirror inflation/central bank moves with some equity market influence.

That being said, I just bought a new house and got a 7/1 arm at 2.85%. Sure, in 7 years the rate will be looked at again, but in the mean time I'm saving 1.15% a year over a 30 year note. I'm still paying more than I would have paid on a standard note monthly, so it just helps me pay things off that much faster. I would have done just an asset backed line, but the mortgage deduction is large enough based on our income that it made more sense to get a low mortgage over using a line. Keep that in mind too on the cash vs mortgage route. If it wasn't for the mortgage interest deduction, many of our high net worth clients wouldn't even consider the idea.

PM me (or anyone) if you have specific questions, happy to help the forum out.