Dave Ramsey Says This Aspect of Buying a Home Is 'Kind of a Bummer.' Are You Prepared to Cope With It?

Would-be home buyers need to be ready for this downside of purchasing.

If you're thinking about buying a house, you're probably considering all the fun parts of purchasing a property. You may be dreaming about how you'll make the place your own or give your children a place to set down roots and grow in a place that will become their family home.

But, the purchase process isn't necessarily all gorgeous kitchens and gleaming hardwood floors. In fact, some aspects of it can be costly and kind of a pain to deal with. Finance guru Dave Ramsey has warned about some of these downsides of homeownership, including one key part of the purchasing process you absolutely need to be prepared for. 

Ramsey warns of a big cost that's not fun to pay

When it comes to the purchasing process, Ramsey highlighted one key step that many homeowners don't find very fun. It's a part of the process that can be very expensive, and comes as a shock to many people who are buying a house for the first time. 

"It's kind of a bummer, but you should plan to pay 3%–4% of the cost of your home for buyer's closing costs," Ramsey explained. 

He said that although some sellers may be willing to kick in a little bit of cash to help you with this big expense, that doesn't always happen. "That's not as common as it was years ago," he said. 

Coming up with this much extra money is probably going to seem like a huge hassle -- especially since you have already had to save thousands of dollars for a down payment and will incur moving costs as well. Sadly, it's a part of the reality of home buying for just about everyone. 

"Buyer's closing costs cover things like inspection and appraisal fees, loan origination and processing fees, property taxes, title insurance, and homeowners insurance," Ramsey explained. Since your mortgage lender is going to require you to cover these costs, you'll need to make sure you have the funds for them before you move forward with making an offer on a home. 

How can you cover closing costs?

Ramsey is absolutely right that it's a bummer to be faced with huge additional costs when purchasing a home. But you have a few options for covering these expenses.

In some cases, lenders will allow you to borrow for closing costs, rolling this debt into your mortgage. In others, lenders may cover them but charge you a higher interest rate to make up for the expenses you aren't paying. Neither of these approaches are great since you end up increasing the cost of your loan for decades. 

The best option is to save for them and pay them out of pocket. You can do this in a number of ways, including:

• Buying a slightly cheaper house than you can afford, knowing you'll have to pay a percentage of the purchase price in closing costs
• Saving a little longer before moving forward with your purchase so you have time to save for closing costs
• Getting a side job or doing extra work to save up the money for closing costs
• Reducing your budget for fun expenses temporarily to quickly save up the money for closing costs

Remember, you don't have to rush into a home purchase -- be sure you're ready to cover all the costs, including closing expenses, before moving forward so you don't end up with regrets.