How to Buy a Home the Dave Ramsey Way

Dave Ramsey is a well-known financial advisor that has helped many people to climb out of debt and become more financially independent. In many cases, the goal is to live completely debt-free. When it comes to purchasing a home, it might seem impossible to do so with the goal of owning all of your possessions outright.How to Buy a Home the Dave Ramsey Way

While many aspects of Dave Ramsey’s advice are about living without owing money on anything there are small baby steps to take to get there. When it comes to purchasing a house, his advice is more so about making sure you’re purchasing when you can truly afford it and will help you to build wealth over time.

When it comes to purchasing a home that you can be confident about Dave Ramsey suggests 10 steps to the homebuying process.

The first step is to decide if you truly are ready to buy

Before purchasing a home Ramsey recommends that other debts are paid off. He also suggests that you have about 3 to 6 months of living expenses in an emergency savings fund. These things will help you to be more stable and ready to make the giant investment of purchasing a home.

Another thing to consider when asking if you’re ready to purchase a house is if you are planning to settle down and live in the same place for a longer period of time. If you were planning to move within the next year or two you might want to hold off on this purchase. The process of buying and selling is expensive so turning around and selling your home will build little wealth to your portfolio.

The second step is to know how much house you can truly afford

Once you know you are ready to settle down in one area and are financially stable in all of your other financial areas you will want to ask yourself how much home you truly can afford.

The Ramsey method suggests that you spend no more than 25% of your monthly take-home income on housing expenses. This will help to allow plenty of money to accomplish other things like saving for retirement and living a more comfortable day-to-day life. This is more strict than other financial advisors, but it is well worth being more conservative to help you in other areas of life.

You want to save for a significant down payment

Once you know you’re in a good place to purchase a home and you have a budget set it can be tempting to go out on a shopping adventure. Instead, you want to make sure you have saved up enough money for a significant down payment. This will allow you to better secure financing and not have to carry the extra cost of private mortgage insurance.

Talk to a lender and get a mortgage preapproval

In the pre-approval process, the lender verifies financial information and submits it for preliminary underwriting. A preapproval letter helps you to know what a lender would be willing to potentially lend you which helps your home search as well as helps you to provide a stronger offer when you find a home you like. Including your preapproval letter copy with your offer communicates to the seller that you are a serious buyer and a strong candidate for mortgage approval.

Work with an agent that has your goals in mind

Right now, the real estate market is a crazy place for homebuyers with a lot of competition. In any real estate market conditions, it is always best to have an expert real estate agent on your side who knows your goals and mindset and is focused on helping you to make the smartest investment possible. Someone that truly focuses on what is best for you and not what is best for their commission. This is why Dave Ramsey has a system of recommended Dave Ramsey realtors around the nation who agree with the Ramsey financial plan and will help you to stick with your investing goals.

Now it’s time to shop for a home

Now that you know you have all of your finances straightened out and that you are ready to make the commitment to home and have found the right help it is time to go look for a home you will love.

Make your offer

There is a lot of buyer competition in the market right now so you want to make sure that you have a Dave Ramsey realtor on your side that can help you make the strongest offer possible that is still aligned with your financial wants and goals as well as gets into a home that you truly love.

Home inspection and an appraisal are important

Right now, in the highly competitive market, many buyers are waiving the inspection contingency. It is a good idea to ask the advice of your real estate agent to see if this would be a good plan. Remember that if you waive this contingency, you still are able to have an inspection performed you just won’t hold the homeowner to what the inspector finds.

You also want to make sure you obtain a professional appraisal this most often is mandatory if you are using your mortgage. If you are not, you still want to have one done to make sure you’re not overpaying for the property.

Stay patient during the mortgage process and be readily available

The underwriting process of the mortgage that leads to final approval can take a long time. Most often an underwriter is going to dig through a lot of fine details that feel almost invasive to find more information about you before approving the loan. To help this process go more smoothly and quickly make sure you are readily available to answer questions as soon as possible and provide any needed documentation as quickly as you can.

It's time to close on your home and become a homeowner

The final step in the home buying process is signing all the paperwork and getting the keys as well as bringing a check for any needed closing costs and per diem costs. You will get a closing statement a few days before signing these papers to let you know exactly what you need to do. Once you have crossed every T and dotted every I, you are now the official legal property owner of your new home!

For more information on how we can help you to purchase a home while sticking to all of your financial goals please contact us anytime.

Flatwater Realty offers real estate services for buyers, sellers and investors for Nebraska and Colorado with an emphasis in Omaha real estate, Denver and Fort Collins Colorado homes for sale

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