Where to put my money for buying a house?

Discussion in 'Community Discussion' started by SilentPanda, Mar 3, 2006.

  1. SilentPanda Moderator emeritus

    SilentPanda

    Joined:
    Oct 8, 2002
    Location:
    The Bamboo Forest
    #1
    So... I've decided to become a "grown up" and buy a house, most likely near May of next year. I should easily be able to save $10,000 or more by then... I was looking at my bank and right now I'm getting 0.60% interest... bleah. INGDirect.com has 4.75% interest on new accounts (which mine would be). So I was thinking about putting it there... has anybody had any experience with them? Is there something better? Should I send the money to that Nigerian guy? :)

    Basically I'll be slowly building up $10k or more over the next 12-14 months. I want to do something that has no risk... I'm not into stocks or double your money making ventures. Something simple. Any ideas or is ING a pretty good spot?

    Also if you have house buying advice that's fine too... :) I am self-proclaimed home buying noob.
     
  2. iGary Guest

    iGary

    Joined:
    May 26, 2004
    Location:
    Randy's House
    #2
    Well, unless you have a wad to plunk down at once, you sound like you are on the right path. You really don't need any money down to buy a house, but it is good that you are, according to Branch Manager Rob.

    Congrats and good luck!
     
  3. Applespider macrumors G4

    Applespider

    Joined:
    Jan 20, 2004
    Location:
    looking through rose-tinted spectacles...
    #3
    Investigate what the prices in your area are doing - and how much of a savings deposit you need in order to get one.

    If the prices are increasing faster than you can save, and you can get a 100% mortgage, then you're better off buying sooner rather than later. I bought a flat 8 years ago on a 100% morgage. If I'd waited 18 months til I could afford the 10% deposit, I wouldn't have been able to afford the flat.
     
  4. Danksi macrumors 68000

    Danksi

    Joined:
    Oct 3, 2005
    Location:
    Nelson, BC. Canada
    #4
    INGDirect is fine. Easy to acccess/transfer money, usually within a couple of days. Good rates of interest (especially in Canada) - with little or no risk.

    Depending where you live, you may be able to use an off-shore savings account - but keep it in your own currency. They may give slightly higher rates of interest, but won't tax you meaning you should make more over the longer term (make sure you're honest with the tax-man though). May take a little longer to xfer your money and most have restrictions how much and how often you can xfer your money.

    Basically for your house deposit, you'll want the maximum gains, with minimal risk (the risk will be in buying the house and hoping it goes up in value!). You'll also need reasonably fast access to your money - for when you find that place you want.
     
  5. floriflee macrumors 68030

    floriflee

    Joined:
    Dec 21, 2004
    #5
    The hubby and I have savings accounts at ING Direct. We love the high interest rates--they're the best we've found anywhere. The only drawback is that you have to wait about 10 days or so before money you transferred into the account becomes available.

    Other things to note regarding savings account banking...it takes a couple of days for the money to get transferred into and out of your account. You also can't wire money from the account and you are only allowed 6 withdrawals a month from any savings account. Those issues aren't really a big deal if you really are just saving the money and don't plan on using it soon.
     
  6. SilentPanda thread starter Moderator emeritus

    SilentPanda

    Joined:
    Oct 8, 2002
    Location:
    The Bamboo Forest
    #6
    Yeah. I'm only opening the ING account for throwing the house buying money into. It has a better interest rate and I'm also afraid that leaving it in my normal savings account will let me "dip" into it on occassion. With the transfer time of 10 days or so there's a much higher chance I'll rethink my non-house purchase before it arrives. ;)
     
  7. ejb190 macrumors 65816

    ejb190

    #7
    I might suggest looking at a short term CD. A few of the banks I deal with have had some pretty good specials on short term CD's (a year or less and a $5k-10k minimum). The only problem is that you can't add money to the account easily.
     
  8. iGav macrumors G3

    Joined:
    Mar 9, 2002
    #8
    Vegas baby!!!!!
     
  9. SilentPanda thread starter Moderator emeritus

    SilentPanda

    Joined:
    Oct 8, 2002
    Location:
    The Bamboo Forest
    #9
    Yeah... the other problem was the interest rates didn't seem significantly better than an ING savings account.

    Well... I am going to Vegas in May for fun...

    "$10,000 on 23 please"

    *cries*
     
  10. jelloshotsrule macrumors G3

    jelloshotsrule

    Joined:
    Feb 7, 2002
    Location:
    serendipity
    #10
    do you have any reference codes for ing? if not, wait a little bit and i think i have one at home that gives you a free $25 for opening an account... every bit helps!
     
  11. nbs2 macrumors 68030

    nbs2

    Joined:
    Mar 31, 2004
    Location:
    A geographical oddity
    #11
    Can I make a suggestion? While the wife has given the thumbs up to INGDirect, I would suggest something that will make you a little more money, depending on how quickly you can save.

    Everytime you reach $1,000 in your ING account, buy a t-bill (one year for money saved by this may, 6 month for money saved between May and November). You will get roughly the same rate (it's purchased at discount), but you don't pay any state income tax on it.
     
  12. SilentPanda thread starter Moderator emeritus

    SilentPanda

    Joined:
    Oct 8, 2002
    Location:
    The Bamboo Forest
    #12
    Well I won't pass that up if you do! :) If you stop by the bamboo forest you can have a free nights stay! :D
     
  13. floriflee macrumors 68030

    floriflee

    Joined:
    Dec 21, 2004
    #13
    Per the ING website.... here's the deal for getting the $25. They used to not have a minimum deposit so that part must be new....

    "If your friend opens an account with at least $250, we will deposit a $25 bonus in their new account and a $10 thank you bonus in your Orange Savings Account. If 25 of your friends or family each open a new account with at least a $250 initial deposit, you will earn $10 each up to $250."

    I'm willing to also send you a referral so you can get your $25. :D
     
  14. crdean1 macrumors 6502a

    crdean1

    Joined:
    Feb 14, 2005
    Location:
    Texas
    #14
    Another vote for ING. My bro in law has an ING account and we will soon be transferring our money to an ING.

    As for the house, I would try to follow two rules:

    1. Try to put down 20%, and you can avoid the PMI insurance monthly cost.(I know this is not very realistic, but is it worth eating beans and rice this year to save about $100.00 per month or more on your house payment for the next 8 years.)

    2. Don't base the type of house you can afford by your approval notice, or what you may qualify for. You may be approved for a $300K house, but can only afford a $150K house. Try to find a house where the monthly payment is more than 30% of your take home pay, and if you can, try for a 15 year mortgage.

    All this said, I live in Texas where the cost of living is very low compared to other states (i.e. Cali)
     
  15. Clix Pix macrumors demi-goddess

    Clix Pix

    Joined:
    Oct 9, 2005
    Location:
    8 miles from the Apple Store at Tysons (VA)
    #15
    I, too, have an ING account and am quite satisfied with it. As someone else mentioned, it's a good way to stash money away and have it not be quite so readily available for impulse buys. In order to get any of it out involves a process, during which you would have time to rethink whatever that impulsive purchase would have been....
     
  16. brikeh macrumors 6502a

    brikeh

    Joined:
    Jan 24, 2006
    #16
    Having a roof over your head is waaay overrated IMO.
     
  17. Jschultz macrumors 6502a

    Jschultz

    Joined:
    Mar 14, 2005
    Location:
    Chicago, IL
    #17
    What kind of interest rates do they have on Caves in Sweden then? :p
     
  18. ~Shard~ macrumors P6

    ~Shard~

    Joined:
    Jun 4, 2003
    Location:
    1123.6536.5321
    #18
    I think you are doing the right thing in doing your due diligence and investigating your options like this. Many people simply think, "Oh, I don't really need a lot of money to put towards a house", etc. and don't care about the size of their down payment, interest rates, etc. It is important to keep all these things in mind, and it sounds like you're off to a good start.

    I have way too many friends who don't realize the power of interest - both ways. They don't realize how much money they can make/save via simple things like an ING account, as you have cited, and conversely they also don't realize how much they will be paying in interest to the bank with their mortgage. Especially with housing prices these days, it's scary - what's the interest on a $300K house over 30 years with only $10K down? A LOT. You end up paying almost twice as much for the house in the end. And that's essentially money you're throwing away to the bank. But many people don't think about that. When they buy a house for $200K and sell it 5 years later for $275K, they think they've made $75K on the house, not taking into consdieration the money they threw away in interest, appreciation of the market, and how much money they no doubt invested in rennovations, etc.

    I have been fortunate in saving my money wisely and investing over the years such that I do not have a mortgage on our new house which we just bought, so I am much further ahead in that respect and am very appreciative of that - I realize how lucky I am, trust me. But many people aren't in my position, and don't realize all of the costs, hidden or otherwise, of home ownwership. As I said, you are taking the right steps in investigating your options and such, as buying a home is a huge investment - probably the biggest of your life.

    If you have any further questions along these lines, by all means, just ask. :cool:
     
  19. jeremy.king macrumors 603

    jeremy.king

    Joined:
    Jul 23, 2002
    Location:
    Fuquay Varina, NC
    #19
    Another way around PMI is two loans ;) While you won't save as much as furnishing 20% in cashola (since the second loan traditionally has a higher rate), you will still save tons vs. paying PMI or taking on a loan with no PMI and a much larger rate - such as those offered by HSBC.

    Edit: To the OP, I have been a customer of ING for about 1.75 years and haven't had an issue.
     
  20. brikeh macrumors 6502a

    brikeh

    Joined:
    Jan 24, 2006
    #20

    Omg, are you one of those guys that think we have polar-bears running around? :eek: :D

    I live in a 1 bedroom cave with my cat...I couldve had a nice house in the burbs but I keep spending my $ on gadgets :rolleyes:
     
  21. jeremy.king macrumors 603

    jeremy.king

    Joined:
    Jul 23, 2002
    Location:
    Fuquay Varina, NC
    #21
    Beats a van down by the river...:eek: :D
     
  22. brikeh macrumors 6502a

    brikeh

    Joined:
    Jan 24, 2006
    #22

    Depends...what kinda van?
     
  23. Clix Pix macrumors demi-goddess

    Clix Pix

    Joined:
    Oct 9, 2005
    Location:
    8 miles from the Apple Store at Tysons (VA)
    #23
    One advantage to having a mortgage, though, is that in the US you then have somewhat of a tax break, especially in the first few years of home ownership. That can kind of ease the pain of making those monthly mortgage payments that are mostly interest....
     
  24. SilentPanda thread starter Moderator emeritus

    SilentPanda

    Joined:
    Oct 8, 2002
    Location:
    The Bamboo Forest
    #24
    Thanks for all the responses people. I'm shooting for a minimum $10k in cash however I'm pretty sure I'll have closer to $15-20k total. That's sorta scary considering I coulda been saving that much for the past several years... ah well... live and learn right?

    Most likely I'll be getting a house in the 100-150k range. I've seen plenty of nice houses (for my situation) in this range. I think I'll be going with the ING account simply because that seems to be the popular option... I suppose I could blow it all in Vegas but... :) The T-Bills look interesting so I might look into those more too. Just depends on how lazy I am (answer: very).

    I'll probably start posting more house related questions as months go by... it's a big process for anybody I think and the more advice the merrier.

    Although... if you ever see me post "My quad processor PowerMac Pro with 32 GB of RAM, 6 TB HD, 4 graphics cards, and quad 30 inch monitors just shipped!" then you'll know I've failed... ;)
     
  25. ~Shard~ macrumors P6

    ~Shard~

    Joined:
    Jun 4, 2003
    Location:
    1123.6536.5321
    #25
    See, it is different in Canada. The interest you pay on your mortgage is not tax deductible, whereas in the States it is. If I understand correctly, in the US you have to pay capital gains on your house though when you sell it - yes, no? In Canada we don't.

    So, I worked things a bit different in my situation so that I didn't have a mortgage and did not have "bad interest" (non-tax deductible), and instead, I have "good interest" (tax deductible) in another form.
     

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