Real Estate and Mortgages – FPU Review # 12

Well, today was our second to last class with Dave Ramsey. He gave us baby step #6 which is to pay off your mortgage early. Let’s just dwell on this for a moment. Paying off your home early. Having a home that you owe nothing for. Can you imagine? I hope so! I sure can! And I think that’s the first step toward making it happen. This is possible! If Dave can do it, you can too, right?

Selling Your Home

Moving right along, he gives some very helpful tips on selling your home. He says to think like a retailer. Make your home look nearly perfect. Make it look like a model home. Only have two appliances out on your kitchen counters. Clean out your closets and make it look much more spacious than when you have it filled with your clothes. Get rid of the dog dishes, get rid of the litter box, put away your children’s toys. If you have a bunch of furniture, clear it out to make the rooms appear more spacious. You get the idea.

He does suggest hiring a┬árealtor. He says they’re worth the money because you’ll end up selling your home for more than you would be able to sell it for on your own. He recommends interviewing agents until you find one that will be good for you. He made an interesting point that kind of crushed my ideas which is that the realtors doing a lot of business won’t be able to give you enough attention. He says on the contrary, they’re giving a lot of people enough attention because they’re selling lots of houses. That’s what counts, right? He’s got me there!

Buying a Home

When buying a home he always recommends to get Title Insurance which will protect you against an unclean title. An unclean title is when your proper ownership is in question. I don’t pretend to know much about this at all, but Dave has had it happen to him and says it is common enough for this to be a good deal.

He brought up a good point that I think we all know, but don’t know that we know it. You know? That is to buy near water or a place that has a view. Great tip, eh? Bob and I bought our house last November and one thing we really love about it is that though it is in a subdivision, our house backs to woods. The sun sets back there and we really love watching it. I never would have thought to look for a place with a great view, but I’m so thankful for it now.

You can get good bargains by buying the ugly house. This is something I had a hard time with. Fortunately we found what we were looking for in our price range, but that’s not always the case. If you find an ugly house and you can save money purchasing it, then you should be able to have enough to replace all the things you hate about it!


Dave recommend that the best mortgage is the 100% down plan. He also mentions that renting is not a bad idea. Bob and I rented for the first 3.5 years of our marriage and we got outselves into such a wonderful financial position because of it. But if you’re going to have a mortgage, he recommends that it be no more than 25% of your take home pay on a 15-year fixed-rate loan, with at least 10% down and have a fully funded emergency fund after closing. May seem like a lot to ask, but just think of how much more comfortable you’ll be if you know that you’re able to cover the costs of moving and everything and if you lose your job in the next week, you’re going to be OK! What a relief!

So do you have any tips for buying, selling, or renting? Are you planning to pay off your home early?

Photo by orvaratli

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  1. Money Smarts

    While we didn’t do the 100% down plan, we did save up a 20% down payment (to avoid PMI). Now that our debt is gone we’re making extra payments on our mortgage and hope to have it paid off early on a 10-15 yr plan instead of the 30 year that our mortgage is. We can’t wait to have the security of a paid off house!

  2. Stephan

    having more than 20% down is pretty important as you avoid PMI that way, so i do think that 10% is a little low. the best part of the post is the last section where you say to not spend too much of your income each month on a morgtage AND to not spend your emergency fund to get that new house and move in. Crazy stuff can happen anytime, and homes constantly break or need fixing. Moving in with no money leftover is a recipe for disaste IMO.

  3. The Happy Rock

    The Happy Rockette are looking to buy and she really has problems with the ugly house tactic. Partly because I am not a perfectionisnt when it comes to remodeling and partly because houses already cost so much that it feels like you should get something nice. We are working through reconciling our divergent opinions…not there yet.

    In our area of NJ(south) a ‘normal’ 4 bedroom house with .25 acres is $400,000. Fixer uppers are $300,000+ and nice houses are $450,000+. Taxes are $8,000 to $12,000 a year too.