Where should we be keeping our downpayment account so that we have ready access in next 4-6 months but strong interest? It is currently in a simple

Asked by Mary Ellen Flaherty, Longmeadow, MA Tue Jan 5, 2010

savings account at our local bank.

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Laura Stevens, Agent, East Longmeadow, MA
Tue Mar 2, 2010
Mary Ellen,
You should be able to get an interest rate of between 2 and 4% with instant access to your money by searching for an online checking account with interest... I know that on the one hand, 2-4% interest sounds low, but on a vehicle that allows you instant access to your money, that is a very good rate in this economy.

There are some "catches" if you want to call them that. Most of these internet "banks" have stipulations, such as: you must make a minimum number of automatic deposits and payments and you must use their atm machines a minimum number of times, but from what I have heard, the stipulations are not unreasonable. One "bank" that I read about stated that you must make at least one automatic deposit every month, pay at least 1 bill thru the internet and use their atm machines or debit card at least 5 times per month. That particular one offered 4% interest and deposits were insured. That bank also had a max of $20 thousand dollars before the rate dipped to the high 1's.

I am not a financial advisor, however I would suggest that you check with one to learn more about this form of checking account. I am also looking into it and don't know enough about it to determine if I am going to move my checking.

I hope this info helps, and I hope that if you decide to buy or sell a home, you will call a Keller Williams Realty professional.
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J.M.Jones -…, , Massachusetts
Tue Jan 5, 2010
LEAVE IT ALONE and here is why I say that, You want access to those funds on demand, and unless you can get a CD to drop early penalties the moment you need the fund availability it's going to cost you big.
If you must, please consider shopping around to find the highest BANK interest in a savings account. 4-6 months is not enough time for much and if the dream home pops up in 3 months and you have trouble accessing those funds, your not going to care much about the extra $ 160 you might have made.
This is just my opinion and you should seek financial assitance from a source you trust and have proven themselves to you - only banking specialist is quaklified to give you all the facts you need to know.

If you want to chat - or even see a property - call me anytime and I will be there for you.

J.M. Jones
Century 21 Northshore
Direct: 978-335-9092
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Michael Ford, Agent,
Tue Jan 5, 2010
all rates are ridiculously low these days, but have a look at

ally bank, utah, 877-247-2559
intervest national bank, new york, 212-218-8383

unless you have some real money the benefits of opening an account may not be worth it. if you are talking about a smaller amount like $35,000 the increased return (maybe 1.65%) over the local rates (maybe .5%) is just about $200 assuming a full 6 months.

be sure that the institution you select has a way for you to get fast access to the funds..my account with ING is a pain in the butt...

for the sake of making your life simple and keeping your mortgage process easy i advise leaving the cash where it is so the underwriter doesn't have to do any thinking as they go about confirming all your assets and their SOURCE. the lenders are nervous these days and it seems that they see every glitch as a stick in the spokes and a reason to delay or deny a loan.
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Christine St…, Agent, Longmeadow, MA
Tue Jan 5, 2010
Mary Ellen,

Can you tell me what you mean by strong interest?
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Loan Do, Agent, Oceanside, CA
Tue Jan 5, 2010
http://www.ingdirect.com is FDIC insured, you just link it to one of your regular bank accounts for withdrawals and deposits. It's an online bank so they have low overhead cost and higher interest rate. A term deposit can charge you a penalty if you pull the money before its maturity date. What if you need your money sooner than 4-6months?

You can also shop at Bankrate.com for a competitive rate.
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John Harring…, Agent, South Hadley, MA
Tue Jan 5, 2010
Hi Mary Ellen,

Just to keep things simple I have a couple of ideas for you to consider.

You might want to consider a short term CD at a local bank - United Bank, Peoples Savings, Polish National Credit Union, Bank of America.

Both Bank of America and United Bank are close by at Longmeadow Shops.

Another option is to search on the Internet - there are many banks advertising short term, i.e 3 to 6 months, CDs and you can shop for a great rate and still have quick liquidity for your funds.

I would not get into a financial instrument where tax liabiklities or quick access are going to be an issue.

A question I have is are you a first time home buyer or currently own a home?

Either way there is the tax credit available until April 30, 2010.

First Time Home/Condo Buyer program offers up to $8,000 and current home/condo owners are eligible up to $6500.

If you have any questions or would like to know more info on the tax credits you can reach me two ways.

Email: john.harrington@era.com

Cell: 413-335-5622

Good luck and feel free to contact me anytime.

Regards - John Harrington
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Tony Bernard…, , Longmeadow, MA
Tue Jan 5, 2010
Hello Mary, my name is Tony Bernardes Im a realtor in town here at Keller Williams in Longmeadow. You can keep your money where ever you feel is the safest and is earning you the most money, although in such a short term your earnings will be limited. (probably not worth it) You should definately keep it readily accessible just in case you find something and your ready to put in an offer at a moments notice however moving money around constantly is a red flag for lenders so try to keep it in one place.

When your ready to start your home search feel free to paruse our website at http://www.BernardesBrothers.com its full of information whether your buying or selling a home.
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Robin Silver…, Mortgage Broker Or Lender, Garden City, NY
Tue Jan 5, 2010
You could also look into some of the online accounts, like ING, HSBC Direct, Emigrant Direct, etc. Your local bank may be paying you less than 1.5% right now on the account you have. Whatever extra you get, you will at least feel like you are getting more, but not putting your money at risk. The suggestion of a 3 month CS is a good one as well if you feel it will give you more interest. Many of my clients use the online accounts for the "house fund", and know that they can have it transferred into their linked checking account within a matter of days.
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Andrew Adams, , 01915
Tue Jan 5, 2010
It would depend on your definition of "Strong Interest"...Regardless just make sure that the funds are liquid and it will not cost you anything to withdraw the funds should you need the funds quickly.
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Don Tepper, Agent, Burke, VA
Tue Jan 5, 2010
Keep it where it is. The additional interest you'd earn isn't worth the risk. Example:

Let's say you've got $30,000. Right now, S&Ls are paying about 1.5% per annum. That's $450 a year, or $37 a month. In 4 months, that'd be $148; in 6 months that'd be $225. Agreed, that's pretty paltry.

Suppose you put the money into a mutual fund. Let's say Fidelity's Massachusetts municipal bond fund. FDMMX. During the past 12 months, it's had a 13.6% rate of return. Sounds good, and it is. That'd be a return of about $4,200 in a year. Or $1,400 over 4 months, or $2,100 over 6 months. Still, over a 4 month term you're only talking about a difference between that ROI and the S&L rate of $1,175. But the big point to remember is that funds--including bond funds--can decline in value. The value of a bond drops as interest rates rise. And most people expect interest rates to rise. Over the past 3 years, that fund has return 3.68% annually. If it performs in line with its 3-year average, you'd earn $368 in 4 months, or only $120 more than keeping it in your savings account.

And if the fund declines? In the past 3 months, that fund's cumulative return has been -0.88%. So if you'd put $30,000 into the fund 3 months ago (excluding any expenses), you'd have lost $264.

And there are plenty of other examples of drops even in an up market. Fidelity Spartan Long-Term Treasury Bond Index Fund--1 year return -13.41%. And there are many, many more.

So, you might end up a few hundred dollars ahead. But you could as easily end up a few hundred dollars--or even more--behind.

Don't do it. It's not worth the risk. Keep the money just where it is.
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Kathy Weber, Agent, Murrieta, CA
Tue Jan 5, 2010
Mary Ellen,

Realistically, for the short period of time you want to invest the monies, you're not going to see a substantial amount of interest being paid.

The longer the term of investment, the better interest rate you'll receive, and the more interest you'll gain.

Also, even if you roll your monies into a "cash" account through a reputable firm, you will have to pay servicing fees', which in turn, may set you back more than the interst you received.

I would recommend discussing with the bank you curretnly have your account with. You don't want to put your money into an account and get PENALIZED with fees & interest if you have to withdraw early,.

Best of luck!
Web Reference:  http://www.weberhomes.INFO
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Scott Godzyk, Agent, Manchester, NH
Tue Jan 5, 2010
Mary Ellen you will want to make sure it is safe but you have ready access to it. If you know for sure that it will be 3 months then put it in a 3 month cd or if in 6 months but no shorter, than place is in a 6 mo CD. If you are looking and think you may need it at a moments notice, then keep it where it is as penalties can wipe out your interest in an instant. Good luck with your search
Web Reference:  http://www.ScottSellsNH.com
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