Save for a house or take out a mortgage?

Make text smaller Make text larger

  • Dave Ramsey

    Dave Ramsey


Dear Dave,

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?

ó Kathryn

Dear Kathryn,

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!

ó Dave

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

You must be registered or signed-in to post comment or to vote.

Published May 19, 2018 at 8:00 am (Updated May 18, 2018 at 7:38 pm)

Save for a house or take out a mortgage?

What you
Need to
Know
1. For a smooth experience with our commenting system we recommend that you use Internet Explorer 10 or higher, Firefox or Chrome Browsers. Additionally please clear both your browser's cache and cookies - How do I clear my cache and cookies?
2. Please respect the use of this community forum and its users.
3. Any poster that insults, threatens or verbally abuses another member, uses defamatory language, or deliberately disrupts discussions will be banned.
4. Users who violate the Terms of Service or any commenting rules will be banned.
5. Please stay on topic. "Trolling" to incite emotional responses and disrupt conversations will be deleted.
6. To understand further what is and isn't allowed and the actions we may take, please read our Terms of Service
7. To report breaches of the Terms of Service use the flag icon

  • Take Our Poll

    • "Cup Match 2018 is in the record books. Who is your favourite for MVP?"
    • Onias Bascome (StG)
    • 46%
    • Chris Douglas (SCC)
    • 7%
    • Terryn Fray (SCC)
    • 15%
    • Stephen Outerbridge (SCC)
    • 9%
    • Dion Stovell (SCC
    • 23%
    • Total Votes: 1869
    • Poll Archive

    Today's Obituaries

    eMoo Posts