Saving for a down payment on a house

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ehead
Posts: 10
Joined: Thu Apr 07, 2016 3:00 pm

Saving for a down payment on a house

Post by ehead » Fri Apr 08, 2016 9:47 am

I've been researching the forums the last couple of days and think I know my best options, but thought I would make this post in case there is something I missed or some bonus being offered now someone might know about.

Basically we are trying to save for a down payment on a house. Currently I have about 40 thousand just sitting in a B of A checking account (pretty silly, I know) doing nothing. We think we will probably buy in the next year or so. Could be as soon as just a few months.

I doubt I have the discipline to properly utilize a high yield checking account so I've decide an online savings account is probably my best option. After googling and doing research I think I've narrowed it down to Discover or Ally, though I'm thinking about Barclay's and Charles Swab too. Discover has a $100 bonus right now so that may tip the balance.

Any thoughts?

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windhog
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Joined: Tue Dec 09, 2008 1:08 am

Re: Saving for a down payment on a house

Post by windhog » Sun Apr 10, 2016 7:57 pm

You are on the right track. It seems you already understand that funds to be used in less than 7-10 years have no business in the equity market. Your priorities are safety and liquidity. Ally gets mentioned here frequently, and some free bucks from Discover does tip the balance. Remember, you can always change when a better deal comes along. I hope this helps.

Paul

neuro84
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Joined: Thu Jul 24, 2014 11:25 am

Re: Saving for a down payment on a house

Post by neuro84 » Sun Apr 10, 2016 8:51 pm

I've been very happy with my Ally online savings account earning 1%.

Depending on your timeline, you could also consider a CD ladder.

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Fieldsy1024
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Re: Saving for a down payment on a house

Post by Fieldsy1024 » Sun Apr 10, 2016 9:07 pm

We are also saving for a down payment plus extra for repairs/emergency.

We are at Ally (1% int rate) and have just over 70k. When the interest comes out on the 25th, we get $700 which helps. 2 years of that and saving 700-800 a month of my own cash should build nicely.

ClaycordJCA
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Location: SF Bay Area

Re: Saving for a down payment on a house

Post by ClaycordJCA » Mon Apr 11, 2016 1:57 am

I also have an account with Ally and am very happy with it. Fieldsy, I think your math is a little off. With $70,000 and a 1% interest rate you should be getting about $700 a year, not each month.

huntertheory
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Re: Saving for a down payment on a house

Post by huntertheory » Mon Apr 11, 2016 7:19 am

All those high yield savings accounts work. The important thing is not to put funds you need in the near term in something that is volatile, as the money you need might not be there when you need it, and it sounds like you've got the right approach. If you plan to save for a down deposit it's pretty simple: Figure out how much you need versus how much you have, and divide the number of months until you need it to know how much you need to save per month. Then put your cash in either a high-yield savings like Ally or a combination of high-yield savings and CDs. Unfortunately there's not really a better deal out there. (I will admit that I cheated and had some of my down deposit in Vanguard's limited-term tax exempt fund, which served my purposes well but might give other Bogleheads a bit too much heartburn.)

jay22
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Location: Sacramento, CA

Re: Saving for a down payment on a house

Post by jay22 » Mon Apr 11, 2016 12:17 pm

Fieldsy1024 wrote:We are also saving for a down payment plus extra for repairs/emergency.

We are at Ally (1% int rate) and have just over 70k. When the interest comes out on the 25th, we get $700 which helps. 2 years of that and saving 700-800 a month of my own cash should build nicely.
$700 every year, you mean?

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Fieldsy1024
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Re: Saving for a down payment on a house

Post by Fieldsy1024 » Mon Apr 11, 2016 12:31 pm

ugh, I had a feeling the Ally person was wrong.

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