A recent study showed that the average family’s monthly interest payment has grown by more than $250. Even worse, the typical family now spends just $2,400 on their mortgage each month on the typical 15-year term.
When it comes to your balance and your monthly spending on housing, it is wise to invest in one of these things:
A high-interest savings account
A high-interest savings bond
An investment in a housing index fund (also called a real estate index fund)
Or, buy a home with a mortgage (if you can afford it).
But if you can’t afford to buy a home with the money you save from interest savings, you can still save money with a real estate investment trust or a real estate investment partnership…or even an IRA. (If your employer allows it, your employee can also take these types of deductions…but you won’t get to take a deduction if your plan provides only a nominal rate).
But if you still want to save some money for saving a down payment, there are several ways to get there that do not involve the purchase of a home with a downpayment or the purchase of a mortgage.
3 Simple ways to save money on mortgage payments and/or home purchase with the money you save from interest savings
There are three simple ways to save money from a mortgage payment and/or home purchase using the interest savings:
1. Invest your money in higher-yielding bonds
By investing in higher-yielding bond funds, you reduce your mortgage interest rate from the current 3% to an even more reasonable 3.99%.
You can invest these stocks in a number of different bonds (e.g. the S&P 500 index, the German G10 index, or the Euro).
And, since you can invest these bonds in virtually any asset, they’re also suitable for short-term investments. For example, I invest the interest from these investments in a low-yielding, 10-year Treasury bond.
What’s more, these same bonds can be redeemed for money in the form of a cash check at any time.
2. Set up a personal mortgage loan
If you really love to travel, you may be able to set up a personal mortgage loan or home loan to pay for your flights and hotel stay without having to incur expensive monthly payments.
Find a qualified mortgage lender.
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