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How do you save up for a down payment?

On Behalf of | Nov 16, 2022 | Real Estate & Development

Preparing to buy your first home can be both exciting and nerve-wracking, especially since it is an important rite of passage for many people.

Having a down payment is an important part of the process. This money can exist within a savings account in order to grow, but however you do it, you need to have it ready to go.

Avoiding high-risk investments

CNBC discusses different ways to save up for the down payment on a home. First, know what mistakes to avoid. Some people think that the best way to handle saving for a down payment is by placing their money in the market in order to grow it as quickly as possible.

Unfortunately, many people figure out the hard way that high-risk investment is not the best way to go about setting their accounts up for success. If you cannot access your savings account, you may not have what you need to buy a property. Thus, it is important not to invest if you need the money within four years.

Protection via savings accounts

Instead, choose to focus on ways to protect your savings such as opting for a high-yield savings account. You can save money with insurance with a savings account, too, as it provides an interest rate of around .04 percent on average.

Savings accounts are incredibly accessible too, and all banks will have the option available. It allows you to keep the money out of reach while also leaving it accessible in the event that you need it or find a property you want to buy on the spot.