For most people, their first home isn’t their dream home. It starts off nice enough. But as time goes by and your family grows, starter homes tend to get a little . . . cramped.
But don’t hate on your current home too much. Because while it gave you a safe and dry place to lay your head at night, it was also setting you up to own your dream home someday.
We’ll show you how it all works and walk you through the steps that’ll get you in your dream home—one you can actually afford!
How to Get Your Dream Home in 5 Steps
Here are the steps:
- Follow the Financial Basics
- Find Out How Much Equity You Have
- Set Your New Home-Buying Budget
- Find the Right Dream Home for You
- Be Picky and Patient
Now let’s cover each step in more detail.
Step 1: Follow the Financial Basics
First thing’s first—you have to get out of debt, get on a budget, and build up an emergency fund of 3–6 months of expenses. Sounds pretty basic, right? If you haven’t completed these steps, then you’re not ready to upgrade to your dream home . . . yet.
Now, when you’ve got house fever, it can be hard to focus on paying off debt or saving an emergency fund before you upgrade your home—especially when you’re feeling the pressure of rising home prices and interest rates.
But whether it’s your second or third house, you should only buy a home when you’ve covered the financial basics we mentioned above. Then you’ll be ready to start the journey toward owning your dream house.
And that journey starts with your home equity. What’s equity? Well, we’re glad you asked . . . that brings us to the next step.
Step 2: Find Out How Much Equity You Have
Home equity is a pretty simple concept: It’s your current home’s value minus whatever you still owe on your mortgage.
See, in most cases, your home’s value increases over time. Similar to other long-term investments (like retirement accounts), homes gradually increase in value. There have been periods of ups and downs in the market to be sure, but the value of real estate has consistently gone up. According to the St. Louis Federal Reserve, the average sale price of a home has increased over 2,300% from 1965 to 2023! And in the last ten years (2013 to 2023), there’s been a 68% increase.1 As your home increases in value, so does your equity. In real estate terms, this is called appreciation.
Other factors that increase your home’s equity include:
- Added value: Home improvement projects like adding square footage, updating fixtures and appliances, or even just slapping on a new coat of paint can add value to your home.
- Mortgage paydown: Paying down your mortgage not only gets you out of debt faster, it also builds your equity. The less you owe on your home, the more equity you have.
The amount of equity you have gives you a pretty good idea of how much money you’ll end up with after selling your house. You can use that money to make a hefty down payment and cover the other costs that come with buying a home.
Find expert agents to help you buy your home.
So, how do you determine your home’s value? Well, you can get a ballpark estimate on real estate websites like Zillow, ask a trusted real estate agent to perform a competitive market analysis (which they’ll do anyway if they’re helping you sell your house), or get a professional appraisal.
Finding out your home’s equity will involve a little math, but it’s third-grade-level stuff, so don’t sweat it.
Here’s what we mean. Let’s say your home’s current value is $355,000. When you sell that house, you’ll have to pay for between 1–3% of the sale price in closing costs, another 6% in fees for the real estate agent who helped you sell it, and whatever’s left to pay off on your mortgage.
That means you can estimate clearing over $223,000 from selling your house. That’s a killer down payment on your dream home! And if your home is paid off, that’s even more money to put down and use to pay for things like repairs and moving expenses.
Step 3: Set Your Dream Home Budget
Once you know how much you’ll clear from the sale of your home, you can start making a budget for your dream home.
The key to owning your dream home (instead of it owning you) is to keep your mortgage payment to no more than 25% of your take-home pay on a 15-year fixed-rate mortgage, along with paying a down payment of at least 20% to avoid private mortgage insurance (PMI). Never get a 30-year mortgage even if the bank offers it (and they will). You’d pay a fortune in interest—money that should go toward building your wealth, not the bank’s.
So, let’s say your take-home pay is $4,800 a month. That means your monthly mortgage payment shouldn’t be any bigger than $1,200. By the way, that 25% figure should also include other home fees collected every month with the mortgage payment like homeowners association (HOA) fees, insurance premiums and property taxes.
Plug your numbers into our mortgage calculator to see how much house you can afford.
And don’t forget to budget for all those other costs that come with the home-buying process in addition to your closing fees—things like moving expenses and any upgrades or repairs you might need to make. You don’t want these hidden costs to catch you off guard or drain your emergency fund.
Step 4: Find the Right Dream Home for You
This is where things get real. After all your hard work building up your equity (and doing a lot of math—don’t forget that), you’re finally ready to start the house hunt. Woo-hoo!
But don’t lose focus. Stay zoned in by making a list of features that make a home fit your budget, lifestyle and dreams—and stick to it throughout your house hunt. Here are a few ideas to get you started.
- Don’t compromise on location and layout. If you plan to be in this home for the long haul, an out-of-the-way neighborhood or a wacky floor plan is a deal breaker. Look for a community and layout that’ll suit your lifestyle now and for years to come.
- Think about how much space your family needs. While your budget has the final say about how much home you buy, you’ll want your dream home to fit your family’s needs through different life seasons.
- Consider the school districts. If you have or want kids, the quality of the nearby school districts is probably already on your mind. But even if you don’t have kids or you’re retired, keep in mind that having good schools nearby could increase your home’s value.
- Look for a house that’ll grow in value. Are home values rising in the area? Is the number of businesses going up? These factors can help you figure out whether your dream home will turn into a good investment.
- Count the costs. Want that fancy master bathroom with the multiple showerheads and the Jacuzzi tub? Be clear on what’s a must-have and what’s nice to have. And don’t forget, upgraded features like that will make your dream home more expensive.
Step 5: Be Picky and Patient
We know you’re anxious to get into those new digs, but be patient. Wait for the right house at the right time. Don’t spend your money on a less-than-ideal home just because you’re tired of looking.
The key is finding a good real estate agent who understands your budget and refuses to settle for “good enough.” They’re as committed to your dream as you are and will have your back throughout the entire process, no matter what it takes.
In addition to teaming up with a great real estate agent, you can take a couple of extra steps to make sure you’re ready to strike as soon as the right home comes up:
- Get preapproved for a 15-year fixed-rate mortgage. Having preapproved financing is a green flag for sellers—especially in multiple offer situations. And because this puts most of your information in the lender’s system, you’ll be on the fast track to closing once your offer is accepted.
- Offer earnest money with your bid. Earnest money is a deposit to show you’re truly interested in a home. Usually it’s 1–2% of the home’s purchase price and it’s applied to your down payment or closing costs. Even if the deal falls through, you can almost always get most of it back.
Find a Real Estate Expert in Your Local Market
Now, you might be thinking you have some work to do before you’re ready to find your dream home. Or you may be realizing your years of hard work are about to pay off! Regardless, if you follow these steps, you’ll find the house you’ve always wanted and avoid a purchase you’ll regret.
Once you’re ready, connect with one of our RamseyTrusted real estate agents. These are high-performing agents who do business the Ramsey way and share your values so you can rest easy knowing the search for your dream home is in the right hands.
Find the only real estate agents in your area we trust, and start the hunt for your dream home!
An arrogant customer threw fresh juice at me – but I’m not someone to be walked over, so I gave her a lesson she’ll remember.
When an entitled customer humiliated me and hurled her drink at my face in front of everyone, she thought I’d take it lying down. What happened next was a lesson in why one should never underestimate someone in an apron.
The moment I stepped into the health food store that morning, the scent of fresh produce and herbal teas hit me like a wave. I breathed it in, savoring the familiar aroma that had become a part of my daily routine over the past year. As I tied my apron around my waist, I couldn’t shake the feeling that today was going to be different somehow…
“Hey, Grace! Ready for another exciting day of juice-making?” My coworker, Ally, called out from behind the counter.
I laughed, shaking my head. “You know it! Gotta keep those entitled customers happy, right?”
But as I said those words, a knot formed in my stomach. There was one customer in particular who always seemed to go out of her way to make our lives miserable.
We called her “Miss Pompous” behind her back, a fitting name for someone who acted like she owned the place every time she walked through the door.
I tried to push thoughts of her aside as I started my shift. I needed this job, not just for me, but for my family.
My widowed mother’s medical bills weren’t going to pay themselves, and my younger sister was counting on me to help with her college expenses. This job was my lifeline, and I couldn’t afford to lose it.
As I wiped down the juice bar, Ally leaned in close. “Heads up,” she whispered. “Miss Pompous just pulled into the parking lot. Brace yourself.”
My heart sank. “Great! Just what I needed to start my day.”
The bell above the door chimed, and in she walked, her designer heels clicking against the floor like a countdown to disaster.
Miss Pompous strutted up to the counter, her nose so high in the air I was surprised she could see where she was going. Without so much as a “hello,” she barked her order at me.
“Carrot juice. Now.”
I bit my tongue, forcing a smile. “Of course, ma’am. Coming right up.”
As I started juicing the carrots, I could feel her eyes boring into me, watching my every move like a hawk. The pressure was so intense that my hands started to shake slightly as I worked.
Finally, I handed her the freshly made juice. “Here you go, ma’am. Enjoy your drink!”
She snatched it from my hand and took one sip. Her eyes widened in disgust and her mouth curled into a sneer.
“Uh-oh, looks like someone’s about to unleash their inner drama llama!” I thought.
Before I could even react, Miss Pompous THREW the entire contents of the cup directly AT MY FACE.
The cold liquid splashed across my cheeks, dripping down my chin and soaking into my apron. I stood there in stunned silence, unable to process what had just happened.
“What is this watered-down garbage?” she screeched, her voice echoing through the store. “Are you trying to poison me?”
I blinked, wiping juice from my eyes. “I… I don’t understand. It’s the same recipe we always use.”
“It’s disgusting! Make it again, and this time, use your brain!”
My cheeks burned with humiliation as I felt the eyes of every customer in the store on me. Tears threatened to spill over, but I refused to let her see me cry.
“Is there a problem here?” My manager, Mr. Weatherbee, suddenly appeared beside me, his brows furrowed in concern, though I couldn’t tell if it was for me or for the prospect of losing a customer.
Miss Pompous turned her venom on him. “Your incompetent employee can’t even make a simple juice correctly! I demand a refund and a free replacement!”
To my horror, Mr. Weatherbee immediately began apologizing profusely. “I’m so sorry for the inconvenience, ma’am. Of course, we’ll remake your juice right away, free of charge.”
He then turned to me. “Grace, please be more careful next time. We can’t afford to upset our valued customers.”
My jaw dropped. “But sir, I—”
He cut me off with a sharp look. “Just get the carrots from the fridge, Grace, and help me remake the juice.”
Miss Pompous smirked at me, her eyes gleaming with satisfaction. In that moment, I felt smaller than the carrot peelings in the compost bin.
For a split second, I contemplated ripping off my apron and storming out, never to return.
But then, like a snapshot, my mom’s tired smile and my sister’s hopeful eyes flashed through my mind. I needed this job. I couldn’t let them down, not when they were counting on me.
So, with a heart hardening like steel, I stood my ground.
I forced myself to meet Miss Pompous’s gaze, refusing to buckle under the weight of her contempt. This entitled woman thought she could buy someone’s dignity with her money, that she could stamp out someone’s self-worth just because she was rich.
Well, not this time.
I wasn’t going to let it slide anymore. I wasn’t a doormat, and I sure as hell wasn’t going to let my dignity be trampled on without consequence.
You know how they say you fight fire with fire? Well, this was it. A plan began to brew in my mind, bold and risky… but oh so satisfying!
As Mr. Weatherbee turned his back to the juicer and stepped away, answering a call on his cell phone, I made my move.
I casually reached into the fridge behind the counter, my fingers bypassing the neat, uniform carrots until they closed around the biggest, ugliest carrot I could find.
It was gnarled and tough… exactly what I needed.
I locked eyes with Miss Pompous, making sure she was watching.
“One moment, please,” I said, my voice sickly sweet. “I’ll make sure this juice is “perfect” for you.”
Miss Pompous watched with narrowed eyes as I fed it into the juicer.
The machine groaned and sputtered, struggling with the oversized vegetable. Juice began to spray everywhere across the counter, onto the floor, and most satisfyingly, all over Miss Pompous’s designer purse that she’d carelessly left too close to the danger zone.
Her shriek of horror was music to my ears.
“My bag!” she wailed, snatching it up and futilely trying to wipe away the orange stains. “You stupid girl! Look what you’ve done!”
“Oh no! I’m so sorry, ma’am. It was an accident, I swear.”
Her face turned an impressive shade of purple. “Accident? You deliberately ruined my three-thousand-dollar purse! I demand compensation! Where the heck is your manager?”
I could feel laughter bubbling up inside me, threatening to burst out. Struggling to keep a straight face, I gestured vaguely towards a group of customers browsing the aisles.
“I think I saw him helping someone over there,” I said, my voice wavering slightly with suppressed mirth.
As Miss Pompous turned to look, I took the opportunity to slip away, ducking behind the stockroom door.
From my hiding spot, I watched as she gave up waiting and stormed out of the store, clutching her dripping bag close to her chest, leaving a trail of carrot juice in her wake.
The bell above the door jangled violently as she slammed it behind her.
I let out a sigh of relief, but the knot in my stomach told me this wasn’t over. Miss Pompous wasn’t the type to let something like this go. I knew she’d be back, and next time, she’d be out for blood.
The next morning, I arrived at work with a swirl of dread churning in my stomach.
Barely an hour into my shift, Miss Pompous burst through the door like a storm cloud, making a beeline for the counter.
“Where is the owner?”
Before I could answer, Mr. Weatherbee emerged from the back room, his face pale. “Mrs. Johnson? Is there a problem?”
“I want to speak to the owner. Now!” she snapped.
As if on cue, the owner, Mr. Larson, appeared. He was a kind-faced man in his sixties.
“I’m the owner,” he said calmly. “What seems to be the problem?”
Miss Pompous launched into a tirade, her voice growing shriller with each word. “Your incompetent employee ruined my expensive purse yesterday! I demand she be fired immediately, and I expect full compensation for my loss!”
Mr. Larson listened patiently. When she finally ran out of steam, he simply said, “I see. Well, let’s take a look at the security footage, shall we?”
My heart skipped a beat. I’d forgotten about the cameras. Oh no.
We all gathered around the small monitor in Mr. Larson’s office. As the footage played, showing Miss Pompous throwing juice in my face and my subsequent “accident” with her purse, the room fell silent.
Finally, Mr. Larson turned to Miss Pompous. “Ma’am, I’m afraid I can’t offer you any compensation. What I see here is an unfortunate accident that occurred after you assaulted my employee. If anyone should be considering legal action, it’s us.”
Miss Pompous’s jaw dropped. “But… but my purse!”
“I suggest you leave now, Mrs. Johnson. And please don’t return to this establishment. We reserve the right to refuse service to anyone who mistreats our staff.”
With a final glare of pure hatred in my direction, Miss Pompous stormed out, the bell over the door clanging violently in her wake.
As soon as she was gone, Mr. Larson turned to me, his eyes twinkling. “Well, Grace, I hope it was just an accident.”
“Yes, sir. It was! Why would I intentionally ruin a customer’s belongings?” I lied.
Mr. Larson nodded and walked away. As I hurried back to the juice bar, Ally gave me a high five. “Way to go, Grace! You stood up to the wicked witch!”
I laughed, feeling lighter than I had in months. “Yeah, I guess I did.”
Well, that was justice served, with a side of carrot juice! Sometimes, what goes around comes around in the most unexpected ways. And let me tell you, it tastes pretty sweet.
That night, as I recounted the story to my mom and sister over dinner, I realized something important: standing up for myself hadn’t just taught Miss Pompous a lesson, it had reminded me of my own worth.
So, have you ever dealt with entitled people like Miss Pompous? I’d love to hear your stories in the comments. After all, we’ve all got to stick together against the “Karens” of the world, right?
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