How to Own Your Dream Home

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:

  1. Follow the Financial Basics
  2. Find Out How Much Equity You Have
  3. Set Your New Home-Buying Budget
  4. Find the Right Dream Home for You
  5. 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!

My daughter and Son In Law shamed me for getting a tattoo at 75. I decided to give them a lesson

It was a sunny morning in New Orleans, and Elis, at 75, decided to do something bold and unexpected. The idea of getting a tattoo had been bubbling in her mind for a while. She wanted to feel young again, to embrace life with a fresh sense of vigor. So, she walked into a tattoo parlor, chose a delicate design that symbolized her resilience and love for life, and got inked. She felt a rush of excitement and satisfaction as she admired the artwork on her arm. This was her statement to the world: age was just a number.

The Unexpected Backlash

Excited to share her new tattoo, Elis invited her family over for a small gathering. She imagined their surprise and hoped for a positive reaction. However, the moment her daughter saw the tattoo, her face twisted in disapproval.“Mom, what on earth were you thinking?” she exclaimed. “At your age, getting a tattoo is not just inappropriate, it’s downright embarrassing. You’re supposed to be a dignified grandmother, not some rebellious teenager. It looks ridiculous, and people will laugh at you.”For Illustrative Purpose OnlyElis felt a pang of hurt, but what followed was even worse. Her son-in-law, whom she had always treated like her own son, burst into uncontrollable laughter. He laughed so hard that he could barely stand, tears streaming down his face.“That’s hilarious, Mom! Seriously, a tattoo at your age?” he managed to say between fits of laughter. Elis’s heart sank. It wasn’t just the words; it was the cruel mockery that hurt the most. She felt humiliated and deeply wounded by their reactions.

Planning the Perfect Payback

Determined not to let their harsh words and laughter define her, Elis decided to turn her pain into power. She recalled how her son-in-law, a man who did nothing but dream of becoming a millionaire while relying on her daughter for everything, had hurt her deeply. This was the final straw. Elis resolved to teach him a lesson he would never forget.Over the next two days, Elis meticulously planned her revenge. She decided to expose her son-in-law’s laziness and lack of ambition in a way that would be both humiliating and eye-opening for him. She reached out to a few of her friends who were skilled in various trades, including one who was an excellent actor.

The Day of Reckoning

Two days later, Elis put her plan into action. She invited her family over again, this time under the pretense of needing help with some household repairs. Her son-in-law, always looking for an excuse to avoid real work, reluctantly agreed to come.When they arrived, they found Elis waiting with a toolbox and a list of chores that needed to be done. She handed the list to her son-in-law, who looked bewildered.“What’s this?” he asked, confused.“I thought you could help out with these tasks,” Elis said sweetly. “After all, you’re always talking about how handy you are.”For Illustrative Purpose OnlyHe glanced at the list, which included tasks like fixing the leaky faucet, repairing a broken fence, and rewiring a lamp. He looked around, realizing there was no way he could do any of these tasks.Just as he was about to protest, Elis’s friend, the actor, arrived dressed as a professional contractor. He introduced himself and began to demonstrate how to tackle each task, making it look easy. The son-in-law watched, flustered and embarrassed, as he fumbled with the tools, unable to keep up.

A Lesson Learned

As the day progressed, – it became clear that the son-in-law was utterly incapable of completing even the simplest tasks. Elis watched with a mixture of satisfaction and pity. Her daughter, seeing her husband’s incompetence, began to realize how much she had been enabling his laziness.Elis’s plan worked perfectly. By the end of the day, her son-in-law was exhausted, humiliated, and forced to confront his lack of practical skills. Elis pulled him aside and, with a calm but firm voice, said, “You laughed at me for wanting to feel young and alive again. But look at you now. Maybe it’s time you grew up and started taking responsibility for your life.”Her words struck a chord. The son-in-law, humbled by the experience, apologized for his behavior. He promised to make a real effort to improve and become more self-reliant. Elis accepted his apology but made it clear that she would not tolerate any more disrespect.

Moving Forward –In the weeks that followed, Elis noticed a change in her son-in-law. He began taking on more responsibilities and actively sought to better himself. Her daughter, too, started to appreciate her mother’s strength and independence.As for Elis, she continued to embrace life with the same youthful spirit that led her to get the tattoo. She joined a local fitness class, started attending social events, and even began dating again. She proved to herself and everyone around her that age was no barrier to living life to the fullest.Elis’s bold step had not only rejuvenated her spirit but also brought about a much-needed change in her family. And every time she looked at her tattoo, she smiled, reminded of the strength and courage it took to stand up for herself and teach a valuable lesson in the process.

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