I need some banking advice...

[4HppyCamprs]

I advocate keeping your money in your regular savings account (separate). When you go closing each of you can withdraw and combine what is needed to cover any closing fees and the down payment. I also advocate continuing I have separate accounts after the home purchase. Also it is wise to have 1 account for each of you and third account (joint) that could be used for paying household bills (mortgage, groceries, electric etc).

It is not easy to sell a house. It is expensive to sell a house and not necessarily a quick process either. If things don't work out as planned it is not as simple as breaking a lease.

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[Marionnette]

Also to clear things up a little, we would get married today...there's no commitment issue. It is unconventional, but this is the order in which we want things to go. I personally feel bad for my friends who spent all this money on a wedding (their parents $$ too) and now the idea of home ownership is put aside because they're broke. The idea of putting the house in one of our names and paying the mortgage together does sound like a safer idea though. Btw our parents fully support it.

So I guess I should have just asked:
I want to buy a house this year (in 7-10 months) where is the best place to put my savings?

Thanks again folks!

I often hear people say that they aren't getting married because they don't have or don't want to waste the money on the wedding. Marriage and big expensive wedding are not synonymous. If you really are ready and want to get married you can do so for very little to no cost. A wedding can come later if you still want to have one. That said, it is ok if you are not ready to get married. Just make sure that you are honest with yourself as to the real reasons. That will help you understand if buying together or in one name makes more sense.

ITA!

I don't understand this mindset that you have to have a huge wedding in order to get married. If you truly want to be married, you get married. You don't use the excuse that you're not getting married because then you wouldn't be able to buy a house after dropping a ton of money on a lavish wedding.

If you're not ready to get married, that's fine. Most people who are just out of college aren't prepared to make that leap. But if you're not ready to commit to being married, it's probably not a good idea to mingle your finances either.

The OP is going to do what she wants to do anyway. So the advice to keep the money where it is remains the same. You're not going to make a lot of money in a few months by transferring it to high risk/high yield account. It's not worth it. A mortgage company is not going to look at what you have in just one savings account when they review your application.

 

[miztressuz]

there's a nice savings calculator at bankrate.com that will help you determine what would make the most sense to you.
http://www.bankrate.com/calculators/savings/simple-savings-calculator.aspx

however, i would think that an account paying .75 or .90 APY that takes all of 15 minutes to open, would probably be a better option than an existing account paying .01 or even .20. it's only a few dollars but i'll take anything more than i already have any day for 15 minutes worth of work.

simple scenario: static $1,000. (no additional savings added to it) interest rate .01% APY. at the end of 1 year you will have earned $1 interest for a total of $1001.

same scenario: static $1000 but the interest rate is .90 APY. at the end of 1 year you have $1009.

You earned 8 more dollars for 15 minutes of time. Maybe a few more minutes if you do some research about which bank you want to use.

Online banking options pay higher interest, you can find some with no minimum balance or small minimums. That bankrate.com website also gives a listing of banks with their savings interest rates.

Doing quick search of 6 and 9 month CD rates, they're the same as some of the online bank savings accounts so there's no reason to go that route for a short term note. Stick with the flexibility of a savings account, but find one that pays better interest. You won't be getting rich off it, but I'll take the extra bucks.

Plus, you can always use that account for saving money after buying the house. You will need to have a savings plan for the house maintenance - if you save a little each year it won't hurt when the big stuff breaks (appliances, furnace, water heater, roof, siding, windows, etc) Big stuff will break; if you're lucky they'll give you some time in between each replacement to replenish the account

But you never stop saving, there is always something else you'll need to spend money on (car maintenance or replacement, house maintenance and improvement, vacation, etc). So don't think of it like you're only putting that money in it for 7-10 months, you should be using that account for the long term too.

Online accounts are usually linked to an existing checking account for money transfers in and out. You just need to allow 2-3 business days to get access to the money - unless you get one that gives ATM cards. As long as the bank you select is FDIC insured, its no more of a risk than a brick-and-mortar bank. Also check with the typical credit card issuers, Discover and American Express both have online Savings accounts and CD options now that pay in the .8 - .9 range. Just look for one that has no fees, you'll be earning interest just to pay the fees, defeats the purpose.

Good luck, homeowners need all they can get

 

[ssawka]

ITA!

I don't understand this mindset that you have to have a huge wedding in order to get married. If you truly want to be married, you get married. You don't use the excuse that you're not getting married because then you wouldn't be able to buy a house after dropping a ton of money on a lavish wedding.

If you're not ready to get married, that's fine. Most people who are just out of college aren't prepared to make that leap. But if you're not ready to commit to being married, it's probably not a good idea to mingle your finances either.

The OP is going to do what she wants to do anyway. So the advice to keep the money where it is remains the same. You're not going to make a lot of money in a few months by transferring it to high risk/high yield account. It's not worth it. A mortgage company is not going to look at what you have in just one savings account when they review your application.

And I don't understand the mindset that you have to be married to be happy and be in a committed relationship. DW and I have been happily married for almost 16 years, however since we were living together before we got married, the marriage was really just a formality. Marriage is not for everyone and marriage without the wedding (in the legal way, not the religious way) is kind of pointless. In the event that something happens to the relationship, you still have a legal battle ahead of you. Are you suppose to trust the person more because you have a piece of paper?

OP, as others have said, if you buy a house before you are married, just make sure both of your names are on the deed and if you are not contributing the same amount, make sure you keep proof of how much you've contributed.

 

[timmac]

As someone who works in the greater mortgage industry, I want to point something out about this old cliché: unless you have the money to buy you housing with cash, you are renting.

When you outright rent a property, you pay the owner for the use of that property.

When you 'buy' a property with a mortgage, you buy 20% of that property and rent the other 80% with your mortgage payment. Yes, each month you be buy a little more of of the house as you pay down the principle, but most of that payment is going to 'rent' the money you borrowed (also known as interest).

There are major upsides to renting: landlords replace broken appliances, fix roofs, pay for storm damage. Should you job or life situation change, you can simply stop renting and you are done with it...its even pretty easy to break a lease if you are in one. Same things happens when you 'own' a home, and you could face financial ruin.

Plus there are major expense when you buy and sell homes...title insurance, local transfer taxes, real estate commissions....the bottom line is that buying a home is a decision that should be made rationally, after considering your finances and future life plans.....not based an only-sometimes-true cliché.

So glad somebody else said this before me. I hate hearing the notion that "renting is throwing money away". It's not. It's paying for a roof over your head, with little obligation for maintenance on the property itself. There's value in that. Even a house that is fully paid off has expense in the sense that you owe property tax, and have to perform various forms of maintenance, etc, on a semi-regular basis.

Now, I'm not saying that buying is a bad thing either.. obviously there are plenty of advantages to owning your own space, namely that you own it yourself and can do what you want with it. My only point is that, it's erroneous to think of buying as home as always being a great financial decision. Many times, it's not.

 

[ssawka]

My only point is that, it's erroneous to think of buying as home as always being a great financial decision. Many times, it's not.

But many times it is! I'm not so sure with the market right now, but we have benefited greatly by buying our home in a very good location at a very good time. Maybe we got lucky, but we would not be living the lifestyle we have now if we did not buy our home.

The problem with renting is that you are subject to increases in the rent, where as if you get a fixed rate mortgage, you will lock in your monthly fee unless you refinance.

 

[Marionnette]

And I don't understand the mindset that you have to be married to be happy and be in a committed relationship. DW and I have been happily married for almost 16 years, however since we were living together before we got married, the marriage was really just a formality. Marriage is not for everyone and marriage without the wedding (in the legal way, not the religious way) is kind of pointless. In the event that something happens to the relationship, you still have a legal battle ahead of you. Are you suppose to trust the person more because you have a piece of paper?

OP, as others have said, if you buy a house before you are married, just make sure both of your names are on the deed and if you are not contributing the same amount, make sure you keep proof of how much you've contributed.

I didn't say that you had to be married to be in a committed relationship. Point it out where I did. What I DID say was that if you want to get married, then you don't allow excuses like "I want to be able to buy a house" stand in the way of making that leap.

If you're not ready to "commit to marriage" (which is not the same thing as being in a committed relationship, just ask anyone who cannot get legally married), then it's a good idea not to mix your finances because there are protections under the law that cover married couples but not couples who choose not to get married. Yes, divorces is a messy business but there is a legal blueprint in place to dissolve marriages and divide the assets. There isn't one in place to dissolve committed relationships. That makes things more complicated and anyone choosing to follow that path would be wise to do their best to cover their assets.

 

[timmac]

But many times it is! I'm not so sure with the market right now, but we have benefited greatly by buying our home in a very good location at a very good time. Maybe we got lucky, but we would not be living the lifestyle we have now if we did not buy our home.

The problem with renting is that you are subject to increases in the rent, where as if you get a fixed rate mortgage, you will lock in your monthly fee unless you refinance.

Oh, absolutely, it can work out that way as well. I should have been more clear in making my point, I did not mean to imply that buying was necessarily a bad decision. What I was really trying to get at is just that decision may have a lot involved, and that simply that thinking in absolutes in often erroneous; an impression I got from the "throwing money away by renting" comment.

I know for my situation, we will likely buy a place eventually, but it's not likely in the near term future of 5-10 years. Where we live (just outside
Boston), rent is high, for sure. Unfortunately, sale prices on homes are just as bad if not worse... and the overwhelming majority are very old
construction that would inevitably be maintenance nightmares. On the other hand, we've also considered moving in the (far) future when my kids are grown up, and found many parts of the country where buying would be a no brainer. I guess my point is, it depends

 

[ssawka]

I didn't say that you had to be married to be in a committed relationship. Point it out where I did. What I DID say was that if you want to get married, then you don't allow excuses like "I want to be able to buy a house" stand in the way of making that leap.

If you're not ready to "commit to marriage" (which is not the same thing as being in a committed relationship, just ask anyone who cannot get legally married), then it's a good idea not to mix your finances because there are protections under the law that cover married couples but not couples who choose not to get married. Yes, divorces is a messy business but there is a legal blueprint in place to dissolve marriages and divide the assets. There isn't one in place to dissolve committed relationships. That makes things more complicated and anyone choosing to follow that path would be wise to do their best to cover their assets.

I apologize if I put words in your mouth, but the OP came here to ask if there is a better place to put her $ because her and her boyfriend are thinking about buying a house and all she's been given is advice to get married first.

Is buying a house with someone you are not married to risky, sure! But so is going into business with someone, but people do that everyday. Marriage is certainty not a panacea for an equitable distribution of assets in the event that the partnership dissolves.

OP, if you still plan to proceed with your home purchase, I would seek some form of legal council to make sure that you are both protected if the unforeseeable happens. Do not rush into marriage just to buy a house. Proceed with caution and if everything looks good after the T's are crossed and the I's are dotted, move forward with your purchase decision and enjoy your life together, married or not.

 

[RitaE]

I don't think people are necessarily saying you have to be legally married to have a good relationship.

The fact is, there are laws in place which dictate the assets owned by a couple and there are divorce and inheritance laws in place which dictate who legally is entitled to what should the partnership dissolve, for whatever reason.

When a person enters this type of joint ownership without the legality of a marriage --- then they are opening themselves up to a can of worms of bad outcomes if they don't carefully protect themselves.

For instance, what if this person puts her partner's name on the deed and he passes away in a car wreck without a will. Is she going to be happy that his parents now own half her house? It happens. And worse happens.

 

[sookie]

The OP has been very sweet.

OP, I like credit unions. I think they have the best customer service. ALLY was owned previously by Capitol One and I would not trust them as far as I could throw them.

I do agree with sharing credit histories with each other before merging accounts.

Congrats on moving forward with your relationship - merging finances is a big step!

 

[dmiller64152]

Shop around! My bf (who is a much better saver than i), switches accounts every few months to get a high introductory rate (upwards of 3%}, then moves the money when the rate goes down. These are all FDIC insured banks so there really is no risk involved, just time.

 

[platamama]

When you're applying for a mortgage, you have to submit lots of documentation of your money for the most recent two months. So just be sure that, regardless of where you park your money, that you're not moving money around a lot. Stability makes lenders happy.

Don't open credit cards or store charge cards as those will affect your credit score. Don't have high balances on credit cards. Don't have any late payments. On my last mortgage, the lender pulled credit reports on me and DH from all the big 3 and used the LOWEST score that showed up. Those credit scores affect what interest rate you qualify for on a loan! Those lower rates only get offered to the people with excellent credit scores. And if you can get a lower interest rate, the difference in your monthly payment could be substantial. Maybe (in fact, likely) even more more than any extra interest you could earn by searching for a bank account paying a barely-higher rate.

So I'd suggest you and your boyfriend find out your credit scores and work on getting those as high as you can if you're serious about buying a house. If you both are over 800, then kudos to you!