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!
With heavy hearts, we report the sad news about the beloved singer Cyndi Lauper.
The pixie-like Cyndi Lauper, whose 1983 hit song “Girls Just Want to Have Fun” became a global anthem and encouraged women of all ages to follow its advice, has a certain allure.
Lauper epitomizes style. Her message of self-empowerment stems from her colorful hair, unique fashion, and funny, carefree personality.
But the performer is really dealing with a serious skin ailment called psoriasis, which at one point was so aggressive that “it looked like someone threw boiling water on me.” This is hidden behind the comical voice that makes her listeners feel happy.
The 69-year-old pop icon recently talked about how she has been fighting psoriasis, an incurable chronic skin ailment, since her diagnosis in 2010.
The symptoms of psoriasis might include scaly patches, extreme pain, itching, and discomfort. The skin condition affects an estimated 125 million people globally and 8 million people in the United States.
When Lauper first started experiencing symptoms, such as general pain and scalp irritations, these got worse with time.
The celebrated performer experienced both physical and mental distress as a result of the outbursts, which she initially blamed to her frequent hair dyeing.
The singer of “Time after Time” is an activist, a touring music sensation, and a busy mother.
As an advocate for human rights, motivated by her lesbian sister Ellen, Lauper dedicates her life to helping the LGBT community.
“Above the Clouds,” a song she wrote in 2005, was dedicated to Matthew Shepard, a gay student who was killed by beating in Wyoming in 2005. Additionally, she started the “True Colors” concert tour in 2007–2008, which raises money for LGBT foundations and charities in the community and beyond.
Apart from her advocacy work, Lauper has a strong background as an actor, singer, and songwriter. Over the course of her four-decade career, Lauper won multiple accolades, including the Tony Award, two Grammy Awards, an MTV Music Video Award, and an Emmy Award for her 1995 cameo in a Mad About You episode.
In 2013, she was invited as a special guest to U.S. President Barrack Obama’s second inauguration for her humanitarian endeavors. She also has a star on the Hollywood Walk of Fame and is inducted into the Songwriters Hall of Fame.
Despite her illness, Lauper is a true force to be reckoned with. The True Colors singer is learning how to control her stress, which can cause a flare-up, in order to prevent her psoriasis from taking control of her life.
She composed the music and lyrics for the Broadway hit musical Kinky Boots, which won her a Tony Award for Best Original Score, while suffering from severe attacks of psoriasis at the time of her diagnosis. Lauper is the first female Tony winner in that particular category. Five further Tony Awards were won by the production, including Best New Musical.
In an effort to assist others, Lauper shares her honest story of living with an autoimmune skin disorder in an interview with the American Academy of Dermatology (AAD).
“I’ve never been very good at handling stress.” She continued, saying that she has healed and reduced stress both at home and while traveling using a holistic approach. She researched reiki, a Japanese method of relaxation and stress relief, and stated, “That helps me.”
Apart from reiki, Lauper deliberately tries to maintain her groundedness through yoga, meditation, and outdoor walks with her dog and/or husband, David Thornton, whom she wed in 1991. Born in 1997, the couple has one son.
“Taking care of oneself is not a bad thing,” Lauper declared, urging others to “make a little time for you every day.”
You can begin modestly. She went on, “How about five minutes for you?”
Resiliently, Lauper states that “it’s really hard to get up again when psoriasis gets really bad.” She occasionally had chills due to an inability to control her body temperature, which can result in hypothermia. Even when she rested, the pain persisted, and the discomfort was exacerbated by others who downplayed the severity of the issue by stating that it was merely a rash.
You don’t have to go through pain, Lauper stated. Psoriasis can be treated with topical, oral, or injectable medications to decrease its often-intense effects. Lauper claims to be “four years clear” after using Novartis’ Cosentyx, which provided her great relief.
In 2017, Lauper discussed her psoriasis management with HealthDay.
It’s strange how you start wearing gloves or other items in the hopes that your psoriasis won’t show, but it doesn’t. I didn’t wear it with a sense of excitement or admiration. Everyone hides it, don’t they? The number of people who have it but keep it a secret could surprise you. It’s a topic worth discussing because it’s one of those things that is somewhat invisible.
She discusses it on her podcast, PsO in the Know, where she interviews psoriasis sufferers, advocates, and celebrities who share their experiences with the disease.
Currently in its third season, the show may be downloaded from Stitcher, Pandora, Google Podcasts, Spotify, Apple Podcasts, and Pandora.
Not all celebrities, including Lauper, have psoriasis. Kim Kardashian, 42, was given a diagnosis at the age of 30, and she is candid about her difficulties. Kris Jenner, her mother of 67 years, experienced her first breakout in her late 20s and described it as “life-changing.” A few more well-known people with psoriasis are musician Art Garfunkel, 81, actor Jon Lovitz, 65, and Jerry Mathers, 74, also known as “The Beaver.”
We are really lucky to have role models like Cyndi Lauper who use their platform to support others in overcoming obstacles. We can’t fathom a world without her gifts and journey—what a courageous woman she is!
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