Personal finance personality Dave Ramsey told one of his followers about a key strategy.
When buying a home for the first time, there are many things to consider.
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A young questioner asked Ramsey about how much he should put down for a payment on a home.
"Dear Dave," he wrote, according to KTAR News in Arizona. "I’m 20 years old, and I’m planning to buy a home in the next year. Besides having a 20% down payment, what other tips do you have for a first-time home buyer?"
He signed his name as Jacob.
Ramsey told him he was on the right track with the significant down payment.
"I’m glad you’re planning on making a down payment of at least 20%. That’s a smart move, because it’ll help you avoid the added expense of private mortgage insurance (PMI)," Ramsey wrote. "Also, remember to get a 15-year fixed-rate mortgage loan, one where your payments are no more than 25% of your monthly take-home pay."
Then Ramsey offered a tip about title insurance that not everyone thinks about with enough urgency.
"Now, the next pieces of advice are for you, Jacob, and anyone else who’s planning to buy real estate," he wrote. "Always get title insurance. Always! If you're buying a piece of property that’s not a traditional subdivision-type lot, have a survey done."
"This isn’t as much of a worry with a standard subdivision lot, something that’s pre-platted and has changed hands three or four times," Ramsey continued. "But you don’t want to buy a piece of land under the impression that it’s 3 acres and then find out the hard way it’s only 2.25 acres."
"Get a home inspection too," Ramsey urged. "Unless you happen to be an electrician, contractor or something like that, you're probably not an expert on things relating to home construction."
The next statement the radio host gave involved some insight from his own experience:
This last piece of advice may sound funny, but don’t buy a house with a great, low price if it looks ugly from the street.
I did that with the very first house I bought, and it’s a bad idea.
No matter what you think, when it comes to houses, you can’t fix ugly. You can change out carpet, and you can put up new shutters or gutters and stuff like that. Those things aren’t a ton of work. But there’s a reason you can get a screaming deal on an ugly house -- it’s ugly. And the guy you sell it to down the road is going to get a great deal on the house. Why? Because it’s just an ugly house.
If you’re not careful, you can get a little too excited on your first home purchase. So stay smart, look at everything involved, and don’t let a case of house fever push you into a big, expensive mistake!
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