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!
I Caught My Kids’ Babysitter Coming Out of the Shower While My Husband Was Home, So I Turned On the Nanny Cam the Next Day
A wife was left shocked when she came home one day and found her children’s nanny wet after stepping out of the shower. What was even more surprising was that her husband was there and he sided with the nanny when his wife showed concern!
A woman with wet hair and body smiling | Source: Pexels
I CAUGHT MY KIDS’ BABYSITTER DOING THIS WHILE I WASN’T HOME! Okay, here’s the backstory, my hubby and I hired a babysitter for our three children as we’re both slammed with work all the time. Everything had been fine until yesterday… I walked in at 6 p.m., and there she was with her hair all wet!
She said she had to shower because my kiddo spilled milk on her. The babysitter was hired and is paid by me to look after mine and my husband’s children, all under six. She tried reassuring me by saying the children were fine while she showered quickly because they were napping.
A woman drying her hair with a towel after showering | Source: Pexels
“I still don’t think it’s appropriate for you to shower in my home though,” I replied in frustration. The 23-year-old brushed my concerns aside and argued that it wasn’t a big deal. As we went back and forth on the matter, my husband suddenly appeared in the living room!
I was more confused that my husband was home and on top of that he sided with the babysitter, but I insisted that I was uncomfortable with what happened. My feelings were dismissed by both parties and the babysitter left to go home. But here’s where it gets totally weird – my husband, who’s supposed to be at work at that time doing the night shift, is right there at home!
Two women having a disagreement | Source: Pexels
My gut told me something totally wrong occurred and I just couldn’t stop thinking that they were having an affair. So, the next day, before leaving for work, I decided to dig out and turn on the dusty old nanny camera that I’d been using when my children were babies. I secretly set it up in the living room before I headed to work.
The day started like any other, with the usual morning rush of getting the children ready, making breakfast, and kissing my husband goodbye as I left first for work with the babysitter passing me at the entrance. Or so I thought. Little did I know, my world was about to turn upside down!
A woman drinking a beverage while looking at something on her laptop | Source: Pexels
Not even an hour later, I checked the camera and saw MY HUSBAND, who’d left for work, walking in the door. My heart just dropped when he approached our nanny. Tears blurred my vision as I watched, unable to comprehend the scene unfolding on the small screen of my phone.
In a daze, I told my boss I felt sick and needed to go home, though the sickness I felt was one of betrayal and heartache. Rushing home, driven by a mix of dread and a desperate need for answers, I expected the worst. Yet, what I found was my husband at the cooker, preparing food.
A man making a meal at a stove | Source: Pexels
The sight left me dumbfounded. Confusion clouded my mind as I tried to reconcile the images from the nanny camera with the man standing before me. Was I cheated on or WHAT?! My husband, sensing my distress, turned to me with a look of worry.
“Why are you home so early?” he asked. I told him they let me go home early because of a power outage that brought the systems down. He seemed to accept my story before saying, “Honey, I have to tell you something,” his voice heavy with guilt. The confession that followed was one I could never have anticipated.
An upset woman talking to a man holding a paper and water | Source: Pexels
He admitted to being afraid to tell me the truth that a week ago he was fired due to downsizing at work. My spouse said he hadn’t wanted to bother me with it and decided to pretend that he was going to work. Instead, he would return home, look for jobs online, and help with taking care of the children, adding:
“Yesterday indeed our daughter spilled milk on our nanny so I told her to go and wash everything while I was there to take care of the kids who were napping.”
A man holding a laundry basket with clothes | Source: Pexels
The incident with the babysitter? “A simple accident,” he explained, that he had handled so I wouldn’t have to worry. He intended to support me by keeping the household running smoothly in the face of his own crisis. As he shared his struggles, I felt a whirlwind of emotions.
Guilt for not noticing the signs of his distress, anger for being kept in the dark, but also compassion for the fear and love that drove his actions. It was a sobering reminder of the unseen battles we each face, hidden behind a facade of normalcy.
A couple having a serious conversation | Source: Pexels
“That’s why I was home yesterday. And why the nanny was… it was an accident, really,” he added, hoping to clarify the misunderstanding. “But why didn’t you just tell me?” I asked, struggling to keep my voice steady.
“I was afraid,” he admitted. “Afraid of how you’d react, and seeing disappointment in your eyes. I wanted to fix it before you had to worry about it too.” We sat down at the kitchen table, in a silent agreement to talk it out.
A couple having a serious conversation | Source: Pexels
“And the nanny?” I finally asked, needing to know more about that day. “She was just as surprised as you are about all this. She’s been really understanding, considering the awkward position we put her in,” he explained.
I nodded, taking in his words, the anger slowly dissipating. “I owe her an apology then. And… thank you, for trying to keep things running smoothly. I just wish you had told me.” He reached for my hand across the table. “I know. I’m sorry. From now on, no more secrets. We’ll get through this together.”
A couple holding hands across a table | Source: Pexels
That night, we had a long-overdue conversation. It was painful, yes, but also cathartic. We discussed the importance of openness and honesty, acknowledging the strain our silence had placed on our marriage. The realization that we had both been trying to shield each other from hardship, at the cost of our connection, was a poignant moment.
A couple arranging an agreement with a woman | Source: Pexels
The babysitter, unwittingly caught in our family drama, became an unexpected catalyst for change. We apologized for the misunderstanding, grateful for her understanding and the care she had shown our family during a confusing time.
Two women and a man having a conversation | Source: Pexels
My husband and I promised to keep her on, not just as a babysitter, but as someone who had demonstrated remarkable responsibility and compassion. In the end, this challenging ordeal brought to light the strength and resilience of our family.
A couple embracing on a couch | Source: Pexels
It reminded us that in times of hardship, the bonds of love and understanding can see us through the darkest times. It was a lesson in the importance of communication, a reminder that the weight of the world is easier to bear when shared with those we love.
A couple holding hands while bonding in the bedroom | Source: Pexels
Here is a quick synopsis of a similar tale that might interest readers:
Kate and her husband, Dan’s nearly a decade-long relationship is put to a brief but intense test. The couple, blessed with three children leads a busy yet fulfilling life, with Dan working as a university professor and Kate as a wedding photographer.
A happy couple playing with a child | Source: Pexels
Their life, filled with the demands of work and family, is supported by their nanny, Ella, whose dedication and affection for the children are unmatched. The story takes a turn one evening when Kate returns home unexpectedly early from a trip, only to find Ella, their trusted nanny, leaving their house at an unusual hour.
This encounter sparks a whirlwind of suspicion in Kate’s mind, especially when Ella’s explanation and Dan’s subsequent, uneasy excuse about borrowing a book feel insufficient and out of place. The seeds of doubt, once sown, grow rapidly, leading Kate to search her husband’s office.
A woman searching through desk drawers | Source: Pexels
She discovers a black box containing what appears to be wedding rings. This discovery further fuels her anxiety, prompting fears of betrayal and a hidden life. Confronting Dan with the box and her fears, Kate demands the truth.
A woman holding a small wrapped box | Source: Pexels
The tension peaks, only for Dan to reveal a heartwarming secret. His intentions, obscured by secrecy and misunderstandings, finally come to light, showcasing his true feelings for Kate. Ella’s involvement, too, is clarified, but you’ll have to click here to read the full and compelling story!
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