When taking out a mortgage, you must get a savings account. A savings account will have the funds in place for when the next mortgage payment arrives.
But what savings account is best for mortgage? The Citibank Accelerate Savings that has a .50% APY is the best savings account for a mortgage. The Citibank Accelerate Savings account offers physical and online banking, which is great for borrowers who need flexibility.
The best savings account for mortgage allows you to make quick payments and have customer service if any issues arise. When looking for a savings account, check to see if it requires a minimum balance. If it doesn’t, it is easier to create the account and start preparing for the next mortgage fee.
This article was made to help you determine what makes a good mortgage savings account. We’ll even show a few examples of banks to help you save money for your mortgage.
By the end, you’ll have enough information to help you prepare for your next monthly mortgage payment.
Best Savings Account For Mortgage
To explain, a savings account is where money is deposited and receives interest over time. Since you’re using this money for your mortgage, you’ll want it to be easily accessible.
Sometimes, the savings account will have a fixed interest rate and temporarily restrict access to your account. Fixed savings accounts tend to have better savings than accounts that provide easier access. Meanwhile, easy access accounts have variable or lower interest rates.
Mortgage savings accounts come in two different forms: online banking or a physical banking location. An online savings account offers more flexibility as you can access it via computer. For those who prefer face-to-face interaction, physical branches are available.
When using traditional banks for a savings account, you get access to features such as an ATM, debit card, and branches. However, they have a strict application process, meaning that you’ll need a certain balance to keep the account active.
With an online savings account, you can pay your mortgage fees through an eDeposit. eDeposits allow you to instantly add your check onto their platform and pay your mortgage fees. Use an online savings account if you want a more accessible option.
But an online savings account is not without its vulnerabilities. You cannot make a direct deposit, which can lead to difficulties if you have a financial emergency. When getting an online savings account, make sure your information is private to prevent hackers from sabotaging your account.
Here are some examples of some bank companies that provide savings account for a mortgage:
- Citibank: Citibank features a Citibank Accelerate Savings that has a .50% APY. The bank offers physical and online banking, which is great for borrowers who need flexibility. It requires a $500 minimum to open an account, so it can be expensive.
- Capital One: Capital One has a savings account that has competitive rates, no maintenance fees, and lower fees. The FDIC secures these savings accounts, and you can use the app to check your account balance.
- American Express: If you want 24/7 customer service, American Express is the right bank for you. They offer a 0.40% APY and no annual or monthly fees. This makes it a good choice if you need professional assistance with your mortgage. You should also check out the American Express Rocket Mortgage offer.
- Barclays Online Saving: Barclays Online Saving is great if you need to check your mortgage savings on the go. There are no balance requirements, and you can withdraw money by connecting it to another linked bank account.
- Synchrony: Synchrony provides an ATM card for cash transactions and withdrawals. However, it doesn’t have an option for a checking account or physical branches. So use this if you need an online mortgage savings account.
Finding the best savings account for a mortgage will take some time at first. Take time to compare the different banking options available and see which one suits your needs the best.
How Can I Save For Mortgage?
After deciding how much you have to spend on mortgage fees, here are some ways to save for it:
Using Budgeting Apps
Let’s face it; if you don’t pay off your mortgage on time, you run the risk of losing your home. Fortunately, some apps are available that will help you better track your spending.
Apps such as Oval can round what you’re spending to the nearest zero. Then, they will deposit that amount into your savings account.
However, most budgeting apps don’t have an interest in your spending. Because of this, you should transfer your funds to a mortgage savings account that pays interest.
Earn on What You’re Spending
If you are a heavy spender, consider using a cashback card. This will allow you to get a portion of what you’re spending as a form of credit. To get the most out of a cashback card, you have to use it 2-5 times a week.
When using a cashback card, make sure you pay the monthly balance. Like mortgages, the monthly balance will have penalties if you don’t pay it on time. The added interest that they charge can outweigh your earned cash.
Create a Better Budget
Compile your credit card payments and bank statements. Look at where you’re spending the most of your money. Analyze how much you spend on necessities (i.e., rent, utilities, food) and how much you spend on entertainment (Netflix, gaming, etc.).
Making minor changes to your daily spending will add up over time. Recheck your monthly bank statements carefully to make sure you haven’t missed out on any transaction. Perhaps you realized that you’re spending over $200 a month on clothes or $600 annually on drinks.
Identifying these areas you’re spending heavily on can free up extra cash to be placed in the deposit fund.
Skip The Vacation
While it may be tempting to go out on vacation, it can be expensive. On average, a family of four will pay around $4,500 on vacations. This can be a lot of cash that could be saved for your mortgage payments.
Instead, save that money for a mortgage payment and make a staycation in your current area. For instance, you can visit an art museum or a historical site nearby to experience culture at a reduced price.
For frequent travelers, the feel of seeing something new is the best part of a vacation. Make a new artwork at your local art center or try new foods at a local cooking class to recreate this experience.
To conclude, the best savings account for a mortgage will depend on if you want to make payments online or in person. When saving up for a mortgage, try to cut down any unnecessary expenses. That way, you’ll have enough money to prevent your house from entering foreclosure.