![]() ![]() Knowing how much house you can really afford is the difference between making a house a home or a financial nightmare. You won't be able to save and pay cash for furniture, cars and education. But it's not wise to spend more on a house because then you will be what Dave calls "house poor." Too much of your income will be going out in payments, and that will put strain on the rest of your budget. You can probably qualify for a much larger loan than what 25% of your take-home pay will give you. Save a down payment of at least 10% on a 15-year (or less) fixed-rate mortgage, and limit your monthly payment to 25% or less of your monthly take-home pay.ĭave Ramsey recommends one mortgage company. Sounds weird, doesn't it? But think how much fun that would be! No mortgage! No payments! If paying cash for a house seems too far out of reach, you can still buy a house if you make wise choices. The ideal way to buy a house is the 100% down plan-pay cash for the whole house. The FDIC says that 97.3% of people don't systematically pay extra on their mortgages. Sick children, bad transmissions, prom dresses, high heat bills and pet vaccinations come up, and you won't make the extra payments. If you say, "Cross my fingers and hope to die, I promise, promise, promise I will pay extra on my mortgage because I am the one human on the planet who has that kind of discipline," you are kidding yourself. Myth: "I'll get a 30-year mortgage, but I'll pay it like a 15-year mortgage, so if something goes wrong I'll still have wiggle room. ![]()
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