Saving for a Down Payment: Where Should I Keep My Money?
Saving towards a down payment for a mortgage is the first major step towards buying a home. It requires the discipline to put aside the money, obviously, as well as a decision on where best to store those funds. How Much You'll Need to Save When granting a mortgage, a bank requires a down payment to help reduce its risk in financing the remaining cost of the home. Conversely, if you're deemed to be a high-risk borrower, because of your credit history or other factors, the bank may seek a higher percentage of the home's value as a down payment before they'll grant the mortgage. Whether to use a bank, an online bank, or the stock market to stash those tens of thousands of down-payment dollars depends on your timeline. You're free to opt for a down payment of more than 20% of the home's value if you have the money available. The bigger the down payment, after all, the smaller the mortgage and the less onerous its monthly payments. (To calculate the numbers ...