11. Lars and Leigha saved up for years before they purchased their dream home. They were considering (1) using all of their savings to make a large down payment on the home (90 percent of the value of the home) and barely scraping by without backup savings, or (2)

making a more modest down payment (50 percent of the value of the loan) and holding some of the savings in reserve as needed if funds got tight. They decided to make a large down payment because they figured they could always refinance the home to pull some equity out of it if they needed cash. What advice would you give them about the tax consequences of their decision?