[Lisa Talley]

I posted about my delay in buying a home in another thread. Long story short, as a newly self-employed person, I need to wait until I have filed an income tax return showing my self-employment income for two years in a row. Only then can I quality for a home loan. In my case that means I may qualify in early 2018.

In the meantime, I keep hearing about rising interest rates and I’m concerned. Is there anything I can or should do while I’m in this holding pattern, to improve my situation for purchasing a home one year from now? For example, I have a down payment sitting in a simple savings account – is that the best I can do?

[Carla Dearing]

It’s great that you recognize this is a holding period, Lisa, because that is the key to your options. Generally, you only want to put money in the stock market that you can leave there for five+ years, because that gives time for the market to have its regular ups and downs and you are less likely to be forced to withdraw during a down cycle with this extra flexibility in your time frame. You need this money short term, so it shouldn’t be in the market. The slightly better option than your bank savings account is a short-term Treasury fund from one of the very low cost providers, like Vanguard. These kinds of funds can experience some volatility but will have the chance of giving a little more return than your bank account. It’s worth setting this up because most people always have some need for short-term savings as they go about their lives.

[Stacey Daprile – Ambassador]

Lisa, this situation, while different, sounds similar to my daughter saving money for medical school. In the thread, Helping My Adult Child Navigate Savings, I wrote about how she is using CDs as a short-term investment option. They pay a little bit more interest than a traditional savings account. We have found that the online institutions pay the best. Good luck! It is hard to wait when you feel that you are ready.

I have not very used a short-term treasury fund, but I am going to look into that as a option as well! Thanks, Carla.