Credit Debt Cures

Dave Ramsey and Home Downpayments?

For those that are Dave fans, I'm curious about his advice on home downpayments. I understand that he advises that prospective owners pay at least 20% down on the home and go with the 15 year fixed-rate mortgage. My question is, where does he suggest you put the future downpayment money while you are saving it? Obviously, the first thought that most people would have is to simply put it in their savings account until they have the downpayment they need to buy a home. However, that would only earn 3 or 4 percent interest and doesn't sound very Dave-like. Any ideas on where he suggests the money be kept while saving for the downpayment?

Public Comments

1. a growth and income mutual fund with a 10 Year track record of 12%+(keeping it there about 5+years) until you are ready to buy or a money market account. you could go onto his homepage, ask him live on the phone during his show...or in an email. That way it will be clarified for you and other people since i believe you are not the only one with that question! Good one though!
2. """However, that would only earn 3 or 4 percent interest """ earn? remember you have to substract inflation with that 3 or 4 percent ..so basically you are earning next to nothing ansd in some cases its like you're paying the banks more of your money to keep it safe on top of all the charges they take from you I suggest a mutual fund if you are not stock/investment savvy go with vanguard, trowe price, fidelity - research them or ask lots of questions or invest in tax liens - pretty good secure income http://www.theforeclosuresinfo.com/tax-lien.html
3. If it will take you less then 5 years, he would advise a money market account. This money isn't a long term investment, it is to put onto the house. He isn't interested in the interest rate on a short term savings goal. A down payment for a home hopefully is a short term goal (Unless you are going to do the 100% down plan! :-). If it will take you longer than 5 years to get the down payment then he may recommend the mutual funds because these are longer term investments. He would remind you this savings is not for investing so if you make a little that is fine but that isn't the goal of this particular savings. The goal of this money is to save as quick as possible so you can purchase a home!
4. He usually says it depends on how soon you plan to use the money. If you plan on using it within 5 years, he says to put it in a money market account. If it's going to be more than 5 years, he recommends a growth stock mutual fund.