Where do I put money saved for a home?

[Buyingahome]

I have heard some pros and cons about mortgages. The pro of course means in 15 or 30 years from now I can be making the same payments I make today but with a significant change in inflation. The con is that I have a debt.

If anyone has comments on these points above, please share. But my main question is What do I do with the money I'm saving for a house? Investing in stock is clearly a bad choice but I was hoping to find something better than a savings account. Ally offers a CD with a 1-time no penalty withdrawal, is that a good option? Or does anyone else have any ideas?

I will be saving at least 20% but planned to pay 25%+ and maybe more (is that a good idea?)

And my timeframe is not set in stone but 6 months to 2 years is the likely timeframe. At the moment in the savings account is about 20% (not including closing costs and taxes/fees) of the max budget price house (hopefully we won't need to spend that much to find a home we love).

[feh]

For such a short time frame, just keep it in a money market/savings account. Good interest rates are currently .85%.

[Buyingahome]

For such a short time frame, just keep it in a money market/savings account. Good interest rates are currently .85%.

Are these rates found anywhere other than online banks like ally?

[HappySaver]

We were in a similar situation as you, and we kept the money in a money market savings account. No, the interest rate was not that great, but we needed immediate access to the money whenever we finally did find the home we wanted, and boy were we glad we had it ready to go! We didn't know when we'd find the right house - our search took several years as our price range went up, and we were expecting to wait even longer, but we got lucky with a great find. We live in a VERY difficult real estate market to find decent housing. By the time we purchased we had saved enough for 23% down plus a six-month EF plus some extra leftover for new furniture.

Whenever I did anything at the bank, and the bankers saw how much money we had in liquid savings, they would try to convince me to put the money in a CD, investment, etc. But I always said no, because this wasn't just savings, it was a house downpayment, and wouldn't do us any good if we randomly found the house of our dreams and weren't ready to jump. Which is exactly what happened - we were one of 6 offers on opening weekend, and not the highest bidder (actually we were initially the lowest), but we did have a significant downpayment and a reasonable seller who was most concerned with a quick sale. So stick to your guns, and don't let yourself get pressured.

[feh]

Are these rates found anywhere other than online banks like ally?

Not to my knowledge, but I'm no expert on this matter. I use Ally for my EF.

[disneysteve]

Are these rates found anywhere other than online banks like ally?

If you search around, you might come across a community bank with some special rate but why bother? The online banks are the way to go. Safe, secure, insured, and good customer service.

[scfr]

Link with good list of the best rates available on savings accounts:

http://www.depositaccounts.com/savings/

Wouldn't hurt to check with your local banks and credit unions to see if they are offering any savings promotions. Once in awhile (not often) you can find something better than you can find on-line.