![]() When it comes to loans, the most popular product is the 30-year-mortgage, but Cruze told GOBankingRates that she will always recommend a 15-year-mortgage.Ĭutting your repayment period in half has multiple benefits, she said. The mortgage calculator will have you enter your desired purchase price, interest rate, down payment amount and loan term. In her blog post, Cruze advised using a mortgage calculator to find this value. Use a Mortgage CalculatorĪfter determining the monthly mortgage amount you can afford, you’ll need to figure out the home prices this equates to. This includes all fees wrapped into your monthly payment, such as principal, property taxes, homeowner’s insurance and HOA dues. Therefore, if your net pay - or you and your partner’s combined net pay - is $7,500 per month, you wouldn’t want a mortgage greater than $1,875 per month. She said sticking to this rule will keep you from taking on more than you can handle and “ending up house poor.” You might get approved for a mortgage that equates to more than 25% of your net income, but Cruze advised against it in a Ramsey Solutions blog post. Don’t Spend More Than 25% of Your Net Income If you meet this criteria, keep reading to learn her five-step plan to determine exactly how much house you can afford. However, if you’re a first-time homebuyer, she said it’s okay to use a 5-10% down payment. “At Ramsey Solutions, we teach people they can’t afford a house until they are completely debt free, have an emergency fund of three-to-six months of expenses and have a down payment of 20% or more,” she told GOBankingRates. In fact, she only recommends starting the home-buying process if you have zero debt. $2,000 Quarter? Check Your Pockets Before You Use This 2004 Coinĭiscover: 3 Things You Must Do When Your Savings Reach $50,000Ī two-time number-one national bestselling author, financial expert and host of “ The Rachel Cruze Show,” Dave Ramsey’s daughter definitely knows a thing or two about making wise money moves. Before making any moves, stop everything and calculate exactly how much you can afford with an easy-to-follow guide from Ramsey Solutions expert, Rachel Cruze. You want to buy a house, but you’re not sure where to set your budget. ![]()
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