Planning to purchase a house: Is there a better way than just keep the money in my savings account?

Question

I'm trying to save up for downpayment for a house. I am hoping to be able to buy a house 6 months from now. I'm trying to save part of my paycheck for that but I was wondering, is there a better way than just keeping it in my savings account?

Answer 1

6 months is a short time frame. Depending on the size of your account you can get something more than the 1% paid on most savings accounts but do not lock up your money in a CD.

You want to put your money in a bank account now rather than investing it elsewhere, because lenders like to see that the money was there for a few months and didn't magically appear (it then looks like maybe you borrowed it and that makes them nervous). Be sure to start saving your statements so you can show a history on this money.

The other reason to use a bank account is that it shows a lender that you have some continuity in your banking relationships and the account is easily verified. Now some people are going to tell you that these things don't matter any more, but if you want to be able to get the best possible deal, you want to be able to satisfy the most nit-picky lender.

Another thing to consider is shopping around to see if there is a local bank that is a low-cost lender and opening a savings and checking account there ASAP. 6 months is enough time to establish yourself as a customer and if you don't have any skeletons in your credit closet but don't have a long, high-quality credit history, the bank is more likely to look kindly on your application if you are an established customer.

Answer 2

Not really, perhaps a 3 month CD would help you earn a little more interest. 6 month CD's would pay more, but depending on timing, if you need to pull the money early, you'd lose any advantage to penalties.

It's possible, depending on your bank and how much cash you have saved, they might have a money market account that would pay more than a normal savings account.

6 months is way too short a time period to invest that money in stocks or mutual funds. If you lost any money, you have no time to get it back. Plus, the transaction costs would likely eat up any gains, if you had any.

So you need something that has zero principal loss risk, like a CD, savings account, or money market account. Ask your banker what they've got that could help you.

Answer 3

Yes Savings Account is best option.

But you should try to Find the Best Deal
on a savings account.

it's important to shop around and
find the bank that has the best offer
on interest rates and features.

Request interest rate quotes and
information about the different types
of accounts that are offered at several banks in your area...

by comparing these quotes and the information on the available accounts, you can make a decision on which savings account would offer you the best return on your money.

Answer 4

There are high-interest savings accounts yielding 5% right now (USAA and eTrade bank both have one - they can even be managed online). If your bank offers one, ask if they'll convert your existing savings account (mine did). The closest CDs in interest would lock your money away for years! Anything else is too volatile to trust with money you intend to use in the near term.

If you don't want to open a new savings account, your existing one is the best place.

Answer 5

do not locked up the money
put the money in the bank high interest saving account