Home Savings vs. Mortgages

Maybe we’re all just being a little paranoid here... thinking this is some massive conspiracy orchestrated by big bank owners who hang out on this forum just to tear you down... and honestly, I’m one of them, so I’ve been scrubbing your posts... no comment.

I reckon you pretty much laid it all out in this PDF.

Jacob Miller2 said:The reason I'm asking is that I feel like I might be missing something, or maybe the info out there is just a bit confusing.
To be clear, I'm not actually looking for a loan; I'm just curious about how it works.

For instance, my savings plan hit its five-year mark recently. I put in two installments of $25,000 each $0.00. Based on those savings, it looks like I'd qualify for an $11,000 loan at a fixed rate.

I actually set this up way back when I was still in college. I probably wouldn't mess around with it like that anymore.

I don't need the credit, so I won't be taking it. It just seems odd to me—like there's an $11,000 cap on my end, but it doesn't seem to apply to others.
I'm just trying to wrap my head around it.

It seems pretty obvious that Austine isn't being totally upfront about all the fine print.
I actually have a home savings account that’s set to mature in four months, and based on my contract, I think it should be around ten thousand dollars—just enough to cover some new windows.
Beyond that, I just can't wrap my mind around why they’d hide the truth like this; it feels like people might be getting swayed by certain interests behind the scenes.

Can I get a serious answer here? My monthly income is $3267 and my spouse makes $2300. Would I be able to secure a mortgage for $120,000 with a monthly payment that doesn't completely break the bank?

Gerald Lopez6 said:It seems pretty obvious that Austine isn't being totally upfront about all the fine print.
I actually have a home savings account that’s set to mature in four months, and based on my contract, I think it should be around ten thousand dollars—just enough to cover some new windows.
Beyond that, I just can't wrap my mind around why they’d hide the truth like this; it feels like people might be getting swayed by certain interests behind the scenes.

Can I get a serious answer here? My monthly income is $3267 and my spouse makes $2300. Would I be able to secure a mortgage for $120,000 with a monthly payment that doesn't completely break the bank?

I'm pretty sure you can pull it off.
Just assume you can put about a third of your income toward the mortgage payment.

So, take that 9800 + 6900, divide it by three, and see what the numbers look like over a 20 or 30-year term. Depends on how much you want to grind, I guess.

Jacob Miller2 said:It feels like we aren't exactly dealing with facts here. I’m looking at that one post where someone claims they pulled a $100,000 loan at a fixed 4.5% rate without any collateral, a co-signer, or anything else. I mean, if that's actually true, fine—but I'd love to see where and how that happened. It seems more likely to be a bit of an exaggeration.

To give some context, I have two different savings accounts over at Chase. One of my wife's accounts at another bank is set to expire in about a month, and the terms are almost identical. So, I suspect these claims might not hold much water.
Maybe I'm off base here... but I don't think so. There might be a 1% or 2% difference somewhere, but certainly nothing as drastic as what's being described.

The only thing I've noticed is how certain facts seem to really rattle people. I'll state something that is objectively true, and for some reason I can't quite wrap my head around, people just start getting upset. I honestly don't get why.🙂

Regular folks like us probably can't even get those kinds of loans anymore.
I'd love to grab a loan with a fixed interest rate.
Is anyone else seeing that?

If there's a financial advisor out there willing to work for a fee, let me know. I need help setting up a fixed-rate loan so I can pay off my variable one. I don't want to deal with the nonsense people are talking about. If the Dollar takes a dive... then... yeah, I'm screwed.😉

Look, we’re talking about standard loans backed by home savings accounts here... 😉

Bankei said:Let me give you a real-world example from my own experience—after spending two years tucking money away into a housing savings account at Wells Fargo with a measly 1% interest rate (on top of what the Democratic Party provides), I ended up taking out a mortgage with them at a fixed 3% rate. My savings covered about 30% of the total amount—meaning the loan itself was twice that size.

@ Bankei

Come on, don't talk nonsense. You didn't actually land a 3% mortgage; what you got was bridge financing—and if you've only put down 30% of your own cash, that effectively pushes your interest rate closer to 5.5%. The idea that our local banks would offer those rates while operating at a loss is unrealistic—it's a completely different story when you look at how other major US banks operate. Honestly, the government should just insist that banks offer decent interest rates on housing savings—around 4-5%—rather than a pathetic 2% if they expect the state to subsidize those savings.

Keith Cruz3 said:@ Bankei

Come on, don't talk nonsense. You didn't actually land a 3% mortgage; what you got was bridge financing—and if you've only put down 30% of your own cash, that effectively pushes your interest rate closer to 5.5%. The idea that our local banks would offer those rates while operating at a loss is unrealistic—it's a completely different story when you look at how other major US banks operate. Honestly, the government should just insist that banks offer decent interest rates on housing savings—around 4-5%—rather than a pathetic 2% if they expect the state to subsidize those savings.

And here comes the genius 😁 I actually took out a LOAN at a fixed 3% rate and that's what I'm paying back. This whole bridge financing thing is totally irrelevant.

http://www.wellsfargo.com/savings

Hey, Benjamin Rodriguez2—could you let me know how much you were putting into that mini savings plan and what kind of credit limit you ended up getting?

Benjamin Rodriguez2 said:And here comes the genius 😁 I actually took out a LOAN at a fixed 3% rate and that's what I'm paying back. This whole bridge financing thing is totally irrelevant.

http://www.wellsfargo.com/savings

Hmm... correct me if I'm wrong 😛
You keep depositing into savings and then expect to roll that loan over at 3% once the term ends? That won't happen. You'll end up signing a new contract at whatever the current market rate is. That 3% was just a promotional teaser to get people to park their cash. Once the promo period hits, you're stuck with the prevailing rates ☕

Unless your savings term already expired and you actually locked in that 3% loan, in which case, I'm talking nonsense and you're winning. 😂

Keith Cruz3 said:Hey, Benjamin Rodriguez2—could you let me know how much you were putting into that mini savings plan and what kind of credit limit you ended up getting?

Direct answer to you and wiredotter12

- total contract amount was about $30,000
- my own cash after saving for 2 years was roughly $10,000
- after those two years, I got my savings back plus the loan payout
- loan was around $20,000, fixed at a 3% interest rate, monthly payments were about $180 over a 12-year term

I mean, sure, it’s peanuts in the grand scheme of things, but that $30,000 was exactly what I needed to pay off my old mortgage and finally breathe easy. With this kind of setup, you can't just pull out the cash whenever you feel like it; you have to spend the whole damn pile on specific stuff, like buying a house, fixing it up, or clearing old debt. You can always pay the loan back faster than 12 years if you want, but honestly, why would I rush when I'm paying such a pathetic, rock-solid fixed rate?

The thing that really screwed most people over with those traditional savings plans is that you usually have to save for years before you even see a dime in credit, whereas a regular bank will just hand you a loan right now. That’s why these places started offering all these "bridge financing" or "pre-financing" schemes where you get the money upfront, and then your monthly payments cover both the savings contribution and the loan repayment all at once—it’s a whole mess of fine print, and I won't bore you with the technicalities. I didn't even use that option myself, though I guess the ladies working the counters at the local branch could probably walk you through the specifics better than I can.

Benjamin Rodriguez2 said:Direct answer to you and wiredotter12

- total contract amount was about $30,000
- my own cash after saving for 2 years was roughly $10,000
- after those two years, I got my savings back plus the loan payout
- loan was around $20,000, fixed at a 3% interest rate, monthly payments were about $180 over a 12-year term

I mean, sure, it’s peanuts in the grand scheme of things, but that $30,000 was exactly what I needed to pay off my old mortgage and finally breathe easy. With this kind of setup, you can't just pull out the cash whenever you feel like it; you have to spend the whole damn pile on specific stuff, like buying a house, fixing it up, or clearing old debt. You can always pay the loan back faster than 12 years if you want, but honestly, why would I rush when I'm paying such a pathetic, rock-solid fixed rate?

The thing that really screwed most people over with those traditional savings plans is that you usually have to save for years before you even see a dime in credit, whereas a regular bank will just hand you a loan right now. That’s why these places started offering all these "bridge financing" or "pre-financing" schemes where you get the money upfront, and then your monthly payments cover both the savings contribution and the loan repayment all at once—it’s a whole mess of fine print, and I won't bore you with the technicalities. I didn't even use that option myself, though I guess the ladies working the counters at the local branch could probably walk you through the specifics better than I can.

Fine, sounds like a solid plan. 👍

So, I spent two solid years grinding and saving up, and once I hit my mark, I went out and grabbed a mortgage with a fixed 3% interest rate. The catch with playing it that way is you really need a fat paycheck if you want to squirrel away 30% of your target amount in just two years before the loan kicks in—and even then, you're capped at a 12-year term, which is how things work with Wells Fargo housing loans. That’s why most people end up saving for five years instead; it stretches out the repayment period, maybe up to 20 years, but you end up eating a slightly higher interest rate, probably closer to 4%. Either way, the interest stays fixed for the life of the loan. If you want to dive into the weeds, there are plenty of threads on here dedicated to this exact thing, or you could just Google it; most major lenders have pretty decent websites these days. There are all sorts of different savings plans and loan structures out there, including some options where you don't even have to save beforehand...

Thanks for the reply...

Can you confirm if I have these points right:
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The amount for that fixed-rate loan is capped. It’s not exactly a huge sum.

If you save for five years, you get a maximum loan of about $12,000—though they just lowered that limit to roughly $10,500.

That $10,500 includes your own $8333 which you're required to deposit over that five-year stretch.

Plus, the loan is tied to specific purposes. There are headaches during processing, you don't actually get the cash in hand, and contractors end up charging more because they know they have to wait on the paperwork.

So, if you get $10,500 = $23633/ and you need $27,000 total, that means you have to shell out 35% of your own money... makes zero sense.
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Otherwise—could someone please tell me why certain posts were deleted? Or at least point me toward who I should be asking.

Thanks.
Basically, if you need $32,000, you need three savings accounts and have to put down $11,000.

Keith Morgan9 said:Thanks for the reply...

Can you confirm if I have these points right:
----------------------------------------------------
The amount for that fixed-rate loan is capped. It’s not exactly a huge sum.

If you save for five years, you get a maximum loan of about $12,000—though they just lowered that limit to roughly $10,500.

That $10,500 includes your own $8333 which you're required to deposit over that five-year stretch.

Plus, the loan is tied to specific purposes. There are headaches during processing, you don't actually get the cash in hand, and contractors end up charging more because they know they have to wait on the paperwork.

So, if you get $10,500 = $23633/ and you need $27,000 total, that means you have to shell out 35% of your own money... makes zero sense.
----------------------------------------------------------

Otherwise—could someone please tell me why certain posts were deleted? Or at least point me toward who I should be asking.

Thanks.
Basically, if you need $32,000, you need three savings accounts and have to put down $11,000.

Look, loans are purpose-driven—that’s just how it works. And this whole idea that there's a hard cap at 10 million dollars? Total myth. You can write a contract for 100 million if you want to. What people get wrong is that 10 million is the sweet spot where you actually get the full government incentive. Once you go over that threshold, the perks start drying up. Like, maybe Exxon offers 7% on a 10 million deposit, but if you push it to 15 million, they might drop that rate to 4%. Nobody's stopping you from taking the bigger loan, but why would you?

Take me, for example... I'm eyeing a much larger place in a few years, so right now I've got four separate contracts for 10 million each since I've got the connections to open them up for others, but honestly, I could have just gone with one massive 40 million contract if I felt like it...

If you're actually curious about the weeds of this stuff, there are entire threads dedicated to it. It’s definitely not as simple as just walking into a Wells Fargo branch and asking for a bag of cash...

Quick question here... say I sign up for a home savings plan for $10,000, but after five years, I’ve only managed to save $5,000. Would I still be able to withdraw the difference between the target amount and what I actually saved—meaning that $5,000 gap? Or would my $5,000 savings just count as 40% of the total, perhaps bumping the agreed amount up to $12,500 so I could eventually qualify for a $7,500 loan?

That’s going to depend entirely on which bank you're using—assuming they even approve something like that in the first place.

I managed to negotiate a few things myself, even though nothing was explicitly laid out in the fine print... you really have to ask questions and basically pitch your own terms if you want results (which is what I had to do). Just a heads-up: most of the low-level clerks you deal with don't actually know much about the inner workings. In my case, I ended up negotiating directly with a director over at JPMorgan Chase, and that's ultimately what made the difference...

Brian Murphy32 said:Quick question here... say I sign up for a home savings plan for $10,000, but after five years, I’ve only managed to save $5,000. Would I still be able to withdraw the difference between the target amount and what I actually saved—meaning that $5,000 gap? Or would my $5,000 savings just count as 40% of the total, perhaps bumping the agreed amount up to $12,500 so I could eventually qualify for a $7,500 loan?

Yeah, you can definitely do that; I actually bumped up my targets right toward the end of my own savings term. Just keep in mind you'll get hit with a 1% fee for increasing the agreed amount, which is basically the same fee you'd be paying if you had just committed to the higher number from day one anyway.

Quick question!

I’ve got this home improvement savings plan open at Citibank with a two-year term. That period just wrapped up, and I still have about $1667 left to put in. This is based on what the lady over at Citibank told me. My contracted amount was $8,900, but apparently, I’ll only actually see $6,230. I’m planning to use the money to renovate my apartment, and according to them, I need to show receipts totaling $46,158.26 to justify the loan and actually get the funds. I can handle $20,000 on my own (you know, keeping things strictly "official" within reason... that's the only amount that guy can really vouch for), but I have no clue where to find invoices for the rest of that total. Every person I ask is clueless, and besides, the bills have to be in my name specifically. Also, I'm wondering what happens to the leftover part of that $8,900 contract, especially since I wasn't exactly consistent with my monthly payments like the agreement required. The repayment term is five years, and my interest rate is 4.88%.

Anyway, thanks in advance. Any help would be huge... 😉)

Where exactly do you think you’re going to pull an invoice from for the rest of it? From whoever’s handling your renovation? I mean, you’d probably prefer to just settle things under the table, but what, you think you can just hand some fake receipts to the bank? That’s straight-up illegal 🙂 I honestly don't know which company would even touch that, since they’d have to eat the sales tax and corporate tax on top of everything else, right?

Look, just hire a legitimate contractor for the renovation and boom—you’ve got your invoices, plus you actually get a warranty on the work 🙂

Or, if you're feeling adventurous, pay the handymen in cash and then just use the money that needs covering to buy all your materials

As for the total amount agreed upon, it doesn't matter if you weren't hitting your payment dates perfectly; what matters is that you paid EVERYTHING you owed, and once you do, the full amount belongs to you. Being punctual only affects your credit score when they decide how much to grant you, so yeah, being late might drag out the approval process for a month or two—you should probably ask your folks at Wells Fargo about that. They likely suggested a lower amount upfront just because of those delays (and the incomplete payments, though you can always settle those up later) so you wouldn't be stuck waiting indefinitely

Benjamin Rodriguez2 said:So, I spent two solid years grinding and saving up, and once I hit my mark, I went out and grabbed a mortgage with a fixed 3% interest rate. The catch with playing it that way is you really need a fat paycheck if you want to squirrel away 30% of your target amount in just two years before the loan kicks in—and even then, you're capped at a 12-year term, which is how things work with Wells Fargo housing loans. That’s why most people end up saving for five years instead; it stretches out the repayment period, maybe up to 20 years, but you end up eating a slightly higher interest rate, probably closer to 4%. Either way, the interest stays fixed for the life of the loan. If you want to dive into the weeds, there are plenty of threads on here dedicated to this exact thing, or you could just Google it; most major lenders have pretty decent websites these days. There are all sorts of different savings plans and loan structures out there, including some options where you don't even have to save beforehand...

Could you share some specific numbers? Like, how much did you manage to save, and what was the total loan amount?
And what about all the closing costs and fees you had to pay?

If you get, say, a $10,000 loan and you put 30% down, what exactly is that 4% interest rate calculated on?