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PA, help me save for a house...
Raggaholic
Registered User regular
Registered User regular
Ok, I'm looking to buy a house next year. I've moved back in with my parents and I figure I can use a year's worth of "rent" payments that I save up for a down payment. My plan is to use one paycheck a month and pay "rent." In other words, I'd put it in a different account to save it.
Now, here is where you all come in. I have no idea what kind of account to put it in. I was going to open a regular savings account at my local bank, but none of the banks in this area pay more than 2.3% APR. I remember back in the 90s all of the online banks offering silly high APRs, but I don't know if those are around anymore. The account couldn't be a CD because I'd be adding money to it every month and I can't do that with those.
So PA, what do I do?
Now, here is where you all come in. I have no idea what kind of account to put it in. I was going to open a regular savings account at my local bank, but none of the banks in this area pay more than 2.3% APR. I remember back in the 90s all of the online banks offering silly high APRs, but I don't know if those are around anymore. The account couldn't be a CD because I'd be adding money to it every month and I can't do that with those.
So PA, what do I do?
Raggaholic on
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There's usually a good comparison of rates at fatwallet:
http://www.fatwallet.com/forums/finance/437553/
For paintings in progress, check out canvas and paints
"The power of the weirdness compels me."
And yes, I'm living with my parents right now. It cuts down on a lot of costs. My city also has a first time home buyers program where they will match your down payment up to $4000 for a house in the city. If you sell the house (or get forclosed) within six years, the city gets that money back from you.
Is 670 net or gross? If it's net, you're looking at a net income of 1340 per month.
The question to ask is "will I be able to pay for the following after I set aside X for the mortgage"?
* Food
* Insurance (both homeowners' and health insurance)
* Car payment (if applicable)
* Car insurance (if applicable)
* Utilities
* Any existing loans, debt, etc... payments
We'll only be able to help you determine that if we have a good idea what the monthly payment might end up being on a house in your area.
I know that here in Sacramento, you wouldn't have much outside of the house after paying the mortgage. Maybe enough for food if it was a small house (1-2 bedroom), but not enough for any insurance, utilities, or car-related expenses. =(
The sad thing is that in a lot of places around the country, housing prices have increased so dramatically that the average American just plain can't afford it anymore.
The rule of thumb I've heard is that if the house costs more than four times what you make in a year, you probably won't be able to afford it. Sadly, homes in most urban areas now are approaching (or are already over) ten times the average Americans' salary. =(
It's net, and I don't expect it to be that low for long. I was looking to start work as quickly as possible so I went with the first thing available. I have a bachelor's degree and am about to finish my MBA at the end of the year, so I expect my salary to be increasing within the next few months.
By that rule of thumb, I'll be just fine for what I'm looking for. What I need is how can I make the most out of the money I'll be saving?