Can't Afford to Buy in Your Local Housing Market? Dave Ramsey Has This Advice
- If you love the neighborhood you're renting in, you may want to buy a home there.
- But it may be that your neighborhood is particularly overpriced, and if so, you may need to make some compromises.
- These can include putting off buying until you have more money saved, and looking at other similar neighborhoods.
It's advice worth taking to heart.
These days, home prices are up on a national level. But in some markets, they're even more elevated than others. And that could prove problematic, depending on where you're looking to buy and the budget you have.
It may be the case that you've been renting a home in the same neighborhood for a few years, but you're ready to take the leap into buying a place of your own. But what if prices in that specific neighborhood are sky high?
At that point, you may need to be willing to make some compromises, says financial guru Dave Ramsey. Here are some of his tips for navigating a situation where your local housing market is out of reach.
1. Delay homeownership and boost your down payment funds
Ramsey insists that one of the worst mistakes you can make is buying a home you know you can't afford from the start. If you're eager to stay in your neighborhood but can't swing buying a home there right now, keep renting for a while and work on ramping up your savings efforts for a higher down payment.
If you've found a neighborhood you enjoy living in, and it suits your family's needs, it's understandable that you wouldn't want to leave it. And so rather than force yourself to settle for a different corner of town, Ramsey says you can instead be patient and give yourself time.
2. Reset your expectations
Maybe you can't afford a four-bedroom home in your neighborhood with a fully finished basement and formal dining room. But if you can afford a smaller three-bedroom home with an eat-in kitchen, it may be worth buying it.
Think about the things that are most important for you to have in a home, says Ramsey. If you can find a less-expensive property that checks off those essential boxes, then it may be worth giving up a few amenities you would've liked if that's what makes it possible to stay in your neighborhood.
Remember, too, that if you're a first-time buyer, you don't necessarily have to purchase your dream home. You can buy a starter home and work your way up to a larger, more upgraded property once you're able to afford that.
3. Broaden your search
You may be in love with your neighborhood for its cafe and clean parks. But if home prices there are truly out of hand, then Ramsey says you may want to consider broadening your search and looking at neighborhoods nearby. After all, there's really no sense in stretching your budget to take out a $400,000 mortgage when you can buy a comparable home a few blocks over that will only require you to borrow $330,000.
In an ideal world, you'd be able to buy a home in the area you really want. In reality, some neighborhoods have gotten so pricey that that's very difficult. You don't necessarily have to give up on buying a home in your local market. You may just need to make some adjustments to your plans.
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