You want to purchase a house in 5 years. You estimate it's cost as $150,000 and you want to make a 20% down payment how much do you need to save each month
The down payment is 20% of the house cost which is:
$150,000 x 0.20 = $30,000
You need to save $30,000 over a period of 5 years which is 60 months.
Therefore, the amount to save each month is:
$30,000 ÷ 60 = $500
You need to save $500 each month for 5 years to accumulate a down payment of $30,000 for the house purchase.
If you want to include closing cost of 5% with your down-payment how much additional money must you save per month
Closing costs are typically about 5% of the home's purchase price, so for this case, the closing cost would be 5% of $150,000, which is:
$150,000 x 0.05 = $7,500
To include the closing costs in your down payment, you need to save an additional $7,500. This is in addition to the $30,000 down payment, so the total amount you need to save is:
$30,000 + $7,500 = $37,500
You have 5 years or 60 months to save this amount. Therefore, the additional amount you must save per month is:
$7,500 ÷ 60 = $125
In addition to the $500 savings for the down payment, you need to save an extra $125 per month to account for the closing costs. Therefore, the total amount you need to save each month is $625 ($500 + $125).
Which is not a savings instrument
Savings account
Investment account
Certificate of Deposit
Checking account
A checking account is not a savings instrument. It's a financial account that is typically used for everyday transactions such as paying bills, making purchases, and withdrawing cash. While checking accounts may earn interest, it's usually lower than savings accounts and investment accounts. Savings accounts, investment accounts, and certificates of deposit are all savings instruments used for storing and growing money.
To determine how much you need to save each month for a down payment on a house in 5 years, we can break it down into several steps:
Step 1: Calculate the down payment amount
To calculate the down payment amount, you need to know the estimated cost of the house and the percentage you want to put down. In this case, the estimated cost is $150,000 and the down payment percentage is 20%.
Down Payment = Estimated Cost * Down Payment Percentage
Down Payment = $150,000 * 0.20 = $30,000
Step 2: Determine the time frame
You mentioned that you want to save this amount in 5 years.
Step 3: Calculate the monthly savings required
To determine how much you need to save each month, divide the total down payment amount by the number of months in the time frame.
Monthly Savings Required = Down Payment / Number of Months
Monthly Savings Required = $30,000 / 60 months = $500
Therefore, you would need to save $500 each month for the next 5 years to accumulate a down payment of $30,000 for a house with an estimated cost of $150,000.