In this age of sophisticated and complex investment products, many of us have forgotten the utility and potential value of the good old savings account. While investments in stocks and restrictive plans may be fraught with risk or difficult to actually use in an emergency, a savings account has no such issues. Your money will continue to grow in a stable and secure manner and the liquidity of a savings account allows you to draw upon these funds whenever required.
Among the many savings account options in the market today, it is important to identify one that enhances the value of your savings to the maximum possible extent. To put it simply, this means you should focus on savings accounts with the highest interest rates. Rates have been falling lower and lower over the past couple of years – in 2013, the average annual percentage yield (APY) for savings accounts in the US was 0.06 percent. Still, there are banks out there that offer reasonably APYs as high as one percent. Savings accounts offer you the opportunity to grow your money with minimal risk, and at least a portion of your portfolio should be kept in such accounts.
While most conglomerate national banks offer very low rates, there are still many savings accounts with high interest rates. These include Synchrony Bank and GE Bank with APYs of 0.95 percent and 0.90 percent respectively, with no minimum balance requirement for either. Barclays Online Savings Bank offers a 0.90 percent APY, while Ally Bank (voted as the best online bank by Money Magazine from 2011 to 2013) offers 0.87 percent. The highest APY offered at the time of writing is by Quora Federal Credit Union – 1.05 percent with no minimum or maximum limits. For those who can maintain a minimum deposit of USD 1,500, EverBank too offers an attractive 1.01 percent. For those under the age of 18 years, Ultima Bank promises an APY of 2.02 percent although early withdrawals are subject to penalties. All the banks mentioned above are FDIC insured.
As with the fine print in savings account, it is also important to understand all the associated costs during the process of buying a home. For instance, in addition to the down payment prospective home owners must be aware of closing costs, which include all the fees charged by third parties involved in the sale of the house. Costs such as the loan origination fee, annual homeowners’ insurance, appraisal fee, credit fee, and prorated interest must be taken into account while calculating this figure. The total closing costs are usually about 2-5 percent of the purchase price, although you may be lucky and pay as little as 1-8 percent.
It may also be wise to negotiate with the seller and see you if you can persuade them to meet some of the closing costs. You can even ask your lender to cover a few associated costs if you are short of cash. This can help to keep the home loan amount down and save you a significant amount of money. It is important for you to ask your lender for an estimate of closing costs. You can calculate your estimated closing costs online to check if the quote seems unusually high; direct any questions you may have towards your lender or broker. For accurate estimations, you must enter the correct data in each field.