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!

She Destroyed Our $3000 Wedding Cake and Paid Dearly

When a $3000 wedding cake and a meddling mother-in-law collide, chaos is inevitable. Today, we explore a story of family conflict, revenge, and the aftermath of hasty decisions. Sarah, the bride, shares her experience of how a ruined cake led to a major showdown on her big day. This tale raises the question: is seeking revenge ever justified in such situations? Let’s break down this sugary disaster and uncover the lessons about family dynamics, forgiveness, and the emotional intensity weddings can bring.

Thank you for opening up about your wedding day troubles. Your tale of revenge against your mother-in-law has sparked intense reactions and brings up some important considerations about family, forgiveness, and what we do when we feel wronged. Let’s dive into your experience and explore the situation from different angles.

A Wedding Day Disaster

Sarah, what was supposed to be a celebration of love turned into a battlefield of emotions and retaliation. Your custom wedding cake wasn’t just a beautiful centerpiece; it was a symbol of your special day. The destruction of that cake was a heartless and inconsiderate act that understandably caused you a lot of pain. Naturally, your anger and need for justice made sense, but the path you chose only seemed to increase the tension and hurt.
Let’s look more closely at what happened and consider how things might have gone differently.

The Cake Sabotage: The Emotional Toll

The loss of your $3000 cake wasn’t just a financial hit—it symbolized a deeper attack on something precious. When your mother-in-law took part in ruining the cake and gleefully snapping photos with her friends, it was a blatant disregard for your feelings and the significance of your wedding. Watching them laugh as they destroyed something so meaningful was no doubt a painful experience.

It’s natural to feel upset, betrayed, and a desire for justice when faced with such cruelty. However, reacting to these powerful emotions doesn’t always result in a positive outcome.

Revenge: A Short-Term Solution with Long-Term Impact

Out of frustration and hurt, you made the decision to retaliate by tampering with your mother-in-law’s outfit. At that moment, it probably felt like payback to see her humiliated just as she had humiliated you. However, this act of revenge only escalated the situation, creating new problems instead of resolving the old ones.

By lowering yourself to her level, you gave her the opportunity to flip the narrative and play the victim, which may have strained your relationship with your husband. It’s always important to think about how our actions can have lasting effects, especially when it comes to family.

Breaking the Cycle: Choosing Dialogue Over Drama

Although your mother-in-law’s actions were unacceptable, there may have been more productive ways to handle the situation. Even though direct communication can be difficult, it often brings better results than silent retaliation. Imagine if you had approached her before the wedding to calmly express your hurt and disappointment.

That conversation could have opened the door for her to apologize or, at the very least, understand how her actions affected you. Taking the higher road would have allowed you to maintain your dignity while possibly improving the relationship in the long run.

The Ripple Effect: How It Affects the Whole Family

Your husband’s reaction to your revenge highlights an essential point—your actions didn’t just affect your mother-in-law. The fallout from your retaliation had a wider impact on your family, casting a shadow over what should have been a joyful occasion.

Consider how your wedding guests, especially those who didn’t know about the cake drama, might have felt witnessing the tension and awkwardness. By seeking justice for yourself, you may have unintentionally made things uncomfortable for others.

Moving On: Healing and Restoring Peace

Sarah, while what happened on your wedding day cannot be changed, there’s still a chance to mend the situation. Start by having an open and honest conversation with your husband about how you felt and why you acted the way you did. Admitting that your reaction was driven by pain can be the first step toward healing.

It could also be helpful to sit down with your mother-in-law for a candid discussion. Allowing both sides to voice their grievances might pave the way for forgiveness and peace. Remember, you’re now part of the same family, and finding common ground will be key to a happier future.

Takeaways: Growth, Communication, and Rebuilding

While your mother-in-law’s behavior was undoubtedly cruel, your response only added to the damage. This experience can teach important lessons about communication, the pitfalls of revenge, and the intricate relationships within families. Going forward, focus on healing, forgiveness, and building better, more respectful connections with your new family members.

In the end, how we respond to others’ bad behavior says a lot about us. It’s not too late to turn this story around and lay the groundwork for a stronger, healthier family dynamic in your married life.

After the cake fiasco, all we could think about was how a Hollywood wedding would have gone. Join us next as we dive into 30 of the most stunning wedding dresses ever seen in movies!

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