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!
Gordon Ramsay shares update on fatherhood – addition to family comes seven years after couple lost baby
The most well-known aspect of Gordon Ramsay is his reputation as the feisty English chef who rose to prominence in the world of culinary pleasures. By now, the chef’s culinary talents have garnered him decades of attention.
He just shared his thoughts about how his sixth time as a father is going! To learn more about Ramsay’s update, continue reading.
This past weekend, Gordon Ramsay attended the Formula 1 Grand Prix in Las Vegas and was delighted to discuss the newest member of his family, a baby boy called Jesse James.
Ramsay,57, was open about being a father for the first time at his age. “Extraordinary,” he remarked with a sense of humor, “just blessed.” Additionally, I’m positive that I’ll be the oldest father at the school drop-off, so I’ll wear my spectacles and a cap.
Early this month, the couple welcomed their newest child, Jesse James Ramsay, who weighed a whopping seven pounds and ten ounces. To the Ramsay brigade, one more loving bundle! Chef Ramsay posted images of his son on social media, saying, “3 boys, 3 girls…done.”
Tana Ramsay, his wife, also announced the birth of her most recent kid on social media. The Ramsay family is complete, she wrote, adding, “It’s been a nerve-wracking nine months, but we’ve made it and we have been blessed with this little bundle.” We adore you so much, Jesse James Ramsay,” she wrote.
In 2016, the couple lost the child who was supposed to be their sixth. The renowned chef shared a message on the tragic incident at the time. He started by expressing gratitude to the public for their support over the past two weeks for both him and his wife. “We had a devastating weekend as Tana has sadly miscarried our son at five months,” he continued, spilling the beans to them.
Tana Ramsay eventually talked about her experiences four years later. She discussed the event in an interview in November 2020. This occurred following Chrissy Teigen’s 2020 public announcement of her own miscarriage, during which she was candid and open about the whole experience on social media. She received a lot of criticism for being so open about the entire ordeal.
Tana Ramsay went above and beyond to encourage Chrissy Teigen, even praising her candor. “I find it very emotional, and I thought she was amazing,” the woman remarked. I didn’t know all the details when I read about her predicament, but a lot of it sounded a lot like mine.
“I think she was amazing for talking about it and posting the photos that she did,” the woman continued. “It brings it all back.”
She thought back to her own miscarriage and how people would avoid talking about it as if it had never happened. “To be honest, when it happened to me, I found it really difficult when people would talk to me and not bring it up because it seemed like it never happened,” the woman stated.
“It was really difficult, so all I wanted to do was talk about it with friends, family, and anyone else who asked.” “It was a really hard experience—you go from having a baby kicking inside of you to suddenly it’s not there,” she continued.
She also mentioned how incredible Gordon had been during the whole thing. “Gordon was amazing. He’s always talked about everything. He was very good at talking it out of me and never giving me the feeling that maybe we shouldn’t talk about it,” the woman remarked.
Gordon Ramsay eventually spoke about the death of his son in 2016 in September 2023. Rocky was the child’s given name, and they were thrilled to have him in the family.
The 56-year-old famous chef remarked, “It was very difficult to lose Rocky.” You cannot watch or read a book that will help you get over that loss.
He talked about how the entire experience had been “life-changing.” Tana had some health concerns, so they went from celebrating the baby’s health one day to learning the next day that she had miscarried. Everything transpired in a span of one day.
He claimed that the tragic incident strengthened the bonds between their family members.
Oscar, the couple’s fifth child, was later welcomed into the world in 2019. And in 2023, they welcomed their sixth child, declaring that their family was now complete!
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