The Way to Save a Down Payment

Generally, according to the Department of Housing and Urban Development, you want a deposit of at least 20 percent of the cost of the home you wish to purchase. That number can go lower according to many aspects, especially if your loan features mortgage insurance. The Federal Housing Administration, for example, insures a mortgage provided by several lenders that just requires a 3.5 percent down payment, as of July 2010. In any situation, you need to come up with the money.

Locate a place. Strive to get a sound but stable rate of return. Typically, you’ll have to access your deposit money in a couple of years. Stocks, by way of example, are too risky for such a time horizon. Maintaining the money under your pillow, however, is a poor idea.

Consider an internet savings account. Erin Burt, an editor in, says that savings accounts in the big banks, including Bank of America and Wells Fargo, typically have puny interest rates in comparison with an internet bank including ING Direct, or even a significant bank like Capital One that provides online options. Another perk of an internet account is no fees or fewer.

Ensure that your savings automatic. As the website suggests, treat economies such as a bill. Set a goal of how much you need to conserve every month, and have it automatically transferred into a savings account from your checking or other accounts on a set schedule which you adhere to.

Count backward to establish your goal. Determine how many months you’ve got until you want your money. Set that you want to save. Divide that number. Calculators abound that will do the math for you. Sock it religiously and away frequently When you know your magical number.

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