Getting a Mortgage? Dave Ramsey Says to Do This 'Before You Step Foot in a Lender's Office'

Don't start shopping for a mortgage until you've read Ramsey's advice.

Getting a mortgage is a monumental life decision. It's most likely going to be the biggest financial commitment you make throughout your lifetime and the payments will be with you for decades after you sign on the dotted line and buy your home. 

Before you go into a lender's office to start the process, finance expert Dave Ramsey says there's a crucial task you need to do first. Here's what it is, as well as some advice on whether he's right. 

This is a must-do step before applying for a loan, according to Dave Ramsey

Ramsey advised that the first part of the process of buying a home is to do a deep dive of your finances.

"Before you step foot in a lender's office, look at your finances and make sure you're ready to buy a home," Ramsey advised. "For many people, this is the hardest hurdle to jump. But if you have car loans, student loans or credit card debt, the last thing you want to do is take on owning and paying for a home." 

Ramsey advises you to take this step even though lenders have their own process of evaluating your credentials. That's because lenders are focused only on making sure you aren't likely to default on a loan. They'll let you borrow as much as they think you could reasonably pay back -- but they don't necessarily care if you're a financial success at anything but paying off your home loan. 

By contrast, you obviously want to accomplish all your goals and be successful at every stage of your financial life -- so you want to make sure you're in the right place to buy given the big picture. 

"You should be out of debt with an emergency fund of 3-6 months of expenses, and you should have at least a 10% down payment saved," Ramsey said. He believes you're only ready to purchase a home if you've accomplished these milestones since taking these steps first can help you avoid borrowing for surprise costs later on or paying more on your home loan and other debts than you should. 

Should you follow Ramsey's advice?

Ramsey is absolutely right that you shouldn't rely solely on a lender to make your home-buying decisions for you. After all, lenders benefit when you borrow more money because they collect more interest from you. And they don't care if they give you a loan that leaves you "house poor" or without the funds to save for things like retirement and vacations. 

While you don't necessarily have to listen to Ramsey's advice to be entirely debt-free before buying, you should make sure you're well-positioned to qualify for a loan with favorable terms and that whatever mortgage you're taking out will have monthly payments you can easily make.

If you follow Ramsey's advice and assess how a mortgage will fit into your overall budget and financial plan, you're much less likely to end up with regrets. If you don't want to spend decades lamenting the fact you got the mortgage you did to buy the home you're living in, it's well worth the effort to pause and consider your situation before a lender fills your mind full of pictures of all the wonderful houses you could buy with the too-big loan it's willing to offer.