<prompt> Human: My wife and I will be debt free other than our house sometime toward the end of this year. We have a fully funded emergency fund. Our home is already a bit small for our needs now and were planning on buying a larger home in about 4 years when we have another kid we have two already We only have about 20K in equity now. Well have an extra 1500-2000 per month to either save or put extra on the mortgage once all the other debt is paid off. So is it smarter to save cash and have that money liquid when its time to sell this one and buy another or should we pay down the mortgage and use the equity from this house for the down payment, etc when we purchase a new home?  <response>: So if you put the money in the house, it means that youre going to need to sell the house in order to buy a new one. If you can save up enough for a down payment between now and then without putting extra money in the current house then that opens up your options; you have a stronger offer because you are less reliant on the old place selling. Of course, that means theres a potential period where youre paying two mortgages. You might want to talk with a lender just to get a feel for whether or not you could potentially get a second loan for a house of X while you transition and sell the old house. That will help guide your decision. 