Q: We want to purchase our first home, but as we’re a newly married couple only a year out of college, we don’t have money saved for a down payment.

My husband has some investments (about $30,000) that he inherited which he would like to use for a down payment. With the interest rates as low as they are, would we be better off using less of the stock and putting down a smaller amount, or cashing out the entire amount for a larger down payment plus a few new items for the house?

A: You’ve asked the classic question: When do you cash out an investment to make a new investment (in your home)?

My husband cashed out some stock and used the proceeds to purchase his first home. We used the considerably equity he built into that first purchase to buy our second home, and turned that equity into the down payment for our current home.

I cashed out some stock I bought in 1987 when we remodeled and expanded our home in 1999. Would I have rather kept the stock? Given that the stock market crashed shortly after I cashed it out, no. But you never know that ahead of time.

Besides these real-life anecdotes, the best advice I can give you is to walk the moderate course. Consider selling some of the stock and taking out a slightly larger mortgage. Ideally, you’ll put down 20 percent and avoid paying private mortgage insurance (PMI).

Why? That stock is your emergency cushion. It’s not necessarily in cash, and it’s not necessarily easy to liquidate, and it may not always be worth what it is today (it could be more or less). By keeping some stock, you’ve got a fallback in case something happens.

On the other hand, you probably don’t need $30,000 worth of stock, and could use $15,000 as a down payment or for closing costs. It seems like a good compromise.

Dec. 1, 2003.