Save for a house or take out a mortgage?
Iím 28, single, and I just became debt-free. In addition, I make $70,000 a year and have the equivalent of six months of expenses set aside for emergencies. Should I save up to pay cash for a house, or is mortgage debt okay? Iíd like to keep the price of a new home between $200,000 and $225,000. Since I currently live in a nice apartment, I think I can save about $20,000 a year. What do you think?
It sounds like youíre in great financial shape. Congratulations on becoming debt-free!
Letís take a look at both scenarios. If you can save $20,000 a year, that means youíre about 10 years away from a nice, paid-for home, and youíre still debt-free. Thatís one option.
At the same time, I donít yell at people for taking out a 15-year, fixed-rate mortgage, where the payments are no more than 25 per cent of their monthly take home pay.
In this situation, you could save like crazy for a couple of years and make a big down payment on a home in the price range youíre talking about.
Then, you could pay off that house in just 15 years.
I honestly donít have a problem with either solution, Kathryn, but think about this. Wouldnít it be great to have your own home, and still be completely debt-free, at 40?
Itís something to think about!
ē Dave Ramsey is CEO of Ramsey Solutions. He has authored seven best-selling books, including The Total Money Makeover. The Dave Ramsey Show is heard by more than 13 million listeners each week on 585 radio stations and multiple digital platforms. Follow Dave on the web at daveramsey.com and on Twitter at @DaveRamsey
Tennis pro denied posts by overseas coaches
Woman, 64, fights off two handbag snatchers
Ashleyís Lemonade proves a hit in Hamilton
Defendant told police he did not see boat
The secret to 68 years of happy marriage
HSBC introduce chip and pin debit cards
Your moneyís not good here Ė locals only
Builders eye pay rates for trades
Belco ordered to pay back solar users
Caddy Shack Grill opens at Fun Golf
Jones refuses to walk after first-ball duck
Experts: we face hard choices on pensions
Cryptominers dig deeper as bitcoin sinks
Take Our Poll
- "Cup Match 2018 is in the record books. Who is your favourite for MVP?"
- Onias Bascome (StG)
- Chris Douglas (SCC)
- Terryn Fray (SCC)
- Stephen Outerbridge (SCC)
- Dion Stovell (SCC
- Total Votes: 1869
- Poll Archive