Author Topic: What to do with savings for a house?  (Read 2388 times)

latetotheparty1977

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What to do with savings for a house?
« on: May 20, 2015, 08:13:41 AM »
Hello,
My husband and I would like to move within the next two years. Where would you put savings until then for our down payment? I'd like to not just let it all SIT in a bank.
Also: we own our house outright now, but will have a difficult time selling it, most likely. We live in a buyer's market and values have dropped at least 25% since it was purchased in the early '00s bubble.
Any tips much appreciated!
« Last Edit: May 20, 2015, 08:18:23 AM by latetotheparty1977 »

nereo

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Re: What to do with savings for a house?
« Reply #1 on: May 20, 2015, 08:20:12 AM »
It's become a common questions...
If you are firm on wanting to move in two years, then you should protect the principle of that down payment and put it into a savings account, even though you are likely to get only ~1% interest on it.

However, if you have some flexibility, and you could 'put-off' moving or buying a home for a few years, then you may want to put it in the market and see what happens.  About 70% of two-year periods beat out inflation.  You run the risk of it dropping though.

You have to weigh how 'locked in' you are to that 2-year time frame with the potential lost opportunity of putting it somewhere that will earn more money.

forummm

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Re: What to do with savings for a house?
« Reply #2 on: May 20, 2015, 08:37:22 AM »
Agree with nereo. There's nothing safer than a savings account. Anything else is too volatile if you *need* the money in 2 years or less.

Since you own your house outright, couldn't you use that as a down payment source somehow? Are you going to look for a house you want, and then start to buy it, while simultaneously starting to sell your house?

latetotheparty1977

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Re: What to do with savings for a house?
« Reply #3 on: May 20, 2015, 09:52:48 AM »
How do we use it as our down payment source if we haven't sold it yet? I am hoping we can get it ready and put it on the market before we move, but it may not work out that way. My husband thinks that because it is so small and filled with our things, it would be easier if we are moved to get it ready for sale.
Perhaps we do just leave the funds in a savings account if other avenues are too risky.

forummm

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Re: What to do with savings for a house?
« Reply #4 on: May 20, 2015, 10:17:06 AM »
How do we use it as our down payment source if we haven't sold it yet? I am hoping we can get it ready and put it on the market before we move, but it may not work out that way. My husband thinks that because it is so small and filled with our things, it would be easier if we are moved to get it ready for sale.
Perhaps we do just leave the funds in a savings account if other avenues are too risky.

I've never done this myself, but I think people:
1) Look for a house and put theirs on the market
2) Get a mortgage that is in some way conditioned on the cash coming out of the old house
3) Rent their old house for awhile if needed from the new buyers to allow the closing to take place on the new

Talk to your realtor about your options. But if you have the cash now, it may be more of a hassle than it's worth to line up everything.

rmendpara

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Re: What to do with savings for a house?
« Reply #5 on: May 20, 2015, 08:39:34 PM »
As mentioned above, a savings account is what you should use if it's short term (< 5 yrs) for the majority of the balance. You can put some in the market if you like, but it's sort of a gamble. Sorry, I lied. It is a gamble. No one can predict what the market will do in 2 years.

On another topic, I would recommend you try to sell your current home ASAP. If it does indeed take some time, you want to get started while the housing market is as good as it's been in a long time. Take a loss if you have to, but at least you know where you stand. Rent it out if it is a reasonable investment property, but otherwise take the hit and move on... unless you feel strongly it's going to appreciate.

If it does sell, you can celebrate! And then, you have a few options.
- rent from new buyer for a few months, if they will go for it
- put the majority of your stuff in storage, and find a short term rental to help with the transition... depending on how long it will be before you move

Just a few other ideas I didn't see above...

good luck

dess1313

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Re: What to do with savings for a house?
« Reply #6 on: May 20, 2015, 10:30:41 PM »
Do you have a PODS storage service in your town?  You fill it up, and they deliver it to the new location.  a storage rental facility?  Now is the time to start decluttering, and anything you don't use regularly, can be packed away.  or sold.  or thrown out. 

This will help you in decluttering, making it easier to show for potential buyers.  Plus much of your stuff is ready once you do have your new place.  Grab boxes and take to new place.  Its amazing what you forget is taking up room in a dirty closet somewhere that you don't use