This Is the Most You Should Borrow When Buying a House

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Dave Ramsey, host of a well -known dialogue program and founder of Ramsey Solutions, has some long tips about home ownership.

For those who did not know, Ramsey warned his followers for decades of entering debt. He is a strong defender for using money only for purchases and incredibly recognizing what you can only tolerate.

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It makes a simple exception to buy a house. This is probably because if you can maintain a mortgage to be sufficiently low, then it is worth seizing this debt because it becomes an investment. In addition, this money will pay for rent if it is not a mortgage, so you do not spend money that you can save anyway.

To this end, here is how Ramsay explains his philosophy when it comes to buying a house:

The most important note that Ramsey wants to make sure we understand is that it prefers that we do not borrow at all.

Most of Ramzi’s followers will understand that he grew up with blue collar and created a wealth portfolio of $ 4 million by time at the time when 26 were through the traditional means of buying real estate and investment. However, it is sad that this traditional method involves a lot of borrowing, which led to Ramezi immersed and unable to pay his loans to banks.

In 1986, he applied for bankruptcy, and people advised how to avoid this type of financial disasters since then. The basis for his education is to stay outside the debt.

Yes, even when it comes to buying a house. Why?

Because when it comes to payment, if you have debts you cannot bear fruit, you may end up in financial ruin, just like Dave.

In an ideal world, you will save enough money to buy a house directly. But few of us live in this ideal world, especially as housing prices continue to rise.

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So, as Ramsey said, if you have to borrow, most of us must, your goal should be to maintain a mortgage less than a quarter of your salary at home. This means that if you bring $ 4,000 per month, your mortgage should be above $ 1,000.

It may seem crazy for some, but this approach guarantees that you still have a lot of money to provide emergency situations, spending on home needs such as grocery stores, gas, basic necessities and investment.

In order to get your mortgage this low, you will need to think outside the box. The average monthly mortgage payment in the United States is about 2200 dollars, which means that you will need at least $ 8,800.

Or you can save up to a longer period and put out a larger first batch. You may also want to consider the offices of the installed sitting on the market for a longer period, making them cheaper. If you can live at home while repairing it, you can likely tolerate the mortgage and repairs that you can make over time.

Another option is to move to a less expensive area, especially if you can work from home and keep an income higher than a more expensive area.

The goal, always, is to make sure that you do not excel that you have a “lot of home”. This puts you in a position that enables it to lose this house if you lose your job or some other strikes.

Finally, Dave does not want to pay your mortgage. He also wants to pay it quickly.

Therefore, not only you should borrow at a quarter of your salary at home, but you must also have a 15 -year -old mortgage. What this means for most people is that the mortgage batch of $ 1,000 makes you much less than you think.

Why?

Since the traditional mortgage is 30 years old, a monthly batch of $ 1,000 will hover, about 5 %, somewhere around the loan mark amounting to $ 200,000. But in 15 years, you look at approximately $ 150,000 – if not closer to $ 100,000 – because you pay it at half the time most people do.

In this case, you will need to find a nice small house in a reasonable area and provide enough to put a huge first batch on the mortgage. After that, you can withstand the monthly payment costs on time, or pay the house in 15 years, or sooner if you can add more to the payment every month, and be free and have an investment.

This scenario will win, according to Ramzi. Then, if you want, you can sell the house you paid and buy a larger house you can bear.

The keyword here is “carry”.

In the end, the amount of the house you can bear, according to Ramsay, will depend on your income.

If you can buy a house directly, this is the best option. If not, take your total salaries at home and divide it by 4. This is the mortgage pushing you can bear.

From there, you will need to know the total mortgage price, including benefits, property taxes, and home owners, to a 15 -year real estate loan that will get the mortgage payment that you can bear.

It will be difficult, but if you are ready to think outside the box and become creative, this is possible!

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This article was originally appeared on Gobankingraates.com: Dave Ramsey: This is what you should borrow when buying a house

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2025-04-13 23:03:00

0 4 minutes read