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!
My Wedding Planner Said I Canceled My Own Wedding but I Didn’t – The Truth Left Me Speechless
My Wedding Planner Said I Canceled My Own Wedding but I Didn’t – The Truth Left Me Speechless
Chelsea is all set to marry Rasmus, the man of her dreams. But when the wedding day arrives and no guests show up, Chelsea has to figure out who canceled her wedding and whether her groom is right for her or not.
A coffee bar and bakery | Source: Pexels
I’ve always wanted that ‘Happily Ever After’ kind of romantic life. So, when I met Rasmus, I thought I had finally gotten it. But as my wedding day began to unravel, it seemed I had gotten the nightmare version instead.
Rasmus and I met at a bakery. It was a sweet little meet-cute situation — where I was convinced he was the perfect person for me. We exchanged numbers over rye bread.
“I’ll be seeing you around, Chelsea,” he said, holding onto a loaf of artisanal bread.
He called me just as he left the bakery, wanting us to have dinner that night.
Two short years later, we were waking up to our wedding day.
That morning, I showered early, eagerly awaiting my hair and makeup appointments. I remember sitting at the edge of the hotel bed, looking at my dress and holding my breath.
I couldn’t wait to marry Rasmus. I couldn’t wait to begin our lives together.
A person pouring wine at a restaurant | Source: Pexels
So, the day went on — my maid of honor, my sister Jess, was with me, and we continued to get ready.
“Where’s Mom?” Jess asked. “Shouldn’t she be getting dressed with us?”
“No, we decided it would be best for her and Dad to meet us at the venue. You know she doesn’t get along with Rasmus.”
Jess shook her head.
“You’d think that Mom would have sorted out her feelings by now.”
It was true, my parents loved me — but they just couldn’t see Rasmus and me together.
Bride getting her makeup done | Source: Unsplash
“There’s just something off about him,” my father would say. “But we respect your wishes to marry him.”
Closer to the time, Jess called for the hotel car, and we made our way to the wedding venue.
“Where is everyone?” Jess asked, echoing my thoughts.
It was an entire wedding venue with literally not a soul in sight. There was no welcome sign for the guests, no welcome drinks, no décor, no staff, and absolutely no guests.
Not even Rasmus.
“Get Brenda on the phone,” I said, talking about my wedding planner.
An empty wedding venue | Source: Pexels
I was beginning to panic. I was all dressed and ready to go. It was supposed to be my special day.
“Brenda, where is everyone?” I asked when Jess handed me the phone.
“What do you mean?” Brenda’s calm voice came through the speaker.
“I’m at my wedding venue, and there’s nobody here!” I exclaimed, the panic evident in my voice.
“Chelsea, honey,” Brenda said. “The wedding was canceled. The directive came through your email address just three days ago.”
My heart almost stopped beating.
A person using a laptop | Source: Pexels
How could I have canceled my own wedding? I went through my emails, and sure enough, there it was.
Dear Brenda,
Due to unforeseen circumstances, the wedding is off. Please notify all the guests and the vendors.
But it made no sense. It was from my corporate account — an account that my family had access to because we all worked at the family business together.
My mind raced — did Mom and Dad? Could they really…? No, they couldn’t have.
They always said that it was my life and my choices. Even if they didn’t approve of Rasmus, they wouldn’t hurt me like this.
I needed to hear it from them.
An older couple holding white ceramic mugs | Source: Pexels
But my parents were just as shocked as I was.
“We were on a flight, honey,” my father said. “I had a business meeting, and your mother tagged along with me. We had nothing to do with it. We did get the cancellation from Brenda and just wanted to give you your space.”
“I didn’t see any email,” Jess said. “But you know how bad I am at checking my mail.”
That’s when it hit me — the only other person who would have access to my email accounts, work and personal, was Rasmus.
The same man who was supposed to be waiting for me at the other end of the aisle.
I asked Jess to take me home, ready for answers. I needed to know what was happening and how it all unfolded without my knowledge.
A man with a gray t-shirt and arms crossed | Source: Unsplash
I walked into our little apartment, and there he was. Rasmus, sitting on the couch eating a bowl of cereal. He had no intention of leaving the house because he was in his sweatpants, wearing glasses, and his hair was wavy.
His usual armor of being well-dressed, contacts in, and hair swept into his signature hairstyle was all missing.
A bowl of cereal | Source: Pexels
“You canceled our wedding?” I asked before he could say anything.
Rasmus didn’t even try to hide it. He had canceled the wedding because, three days ago, he realized that as much as he loved me, he wasn’t ready for marriage.
So, he panicked.
“I didn’t have the courage to tell you,” he said. “I figured that you’d think the wedding was on, and then when the slip-up happened, you would want to investigate it. I thought it would take the heat off me.”
As I stood there, my wedding day in ruins around me, I realized that my parents were right. Rasmus wasn’t the person for me. And as much as it hurt, a part of me was relieved he did it.
So, here I am, looking at my wedding dress and wondering what to do with it.
A woman holding her head | Source: Unsplash
What would you have done?
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