Dave Ramsey says: Tips for first-time home buyers include putting 20% down

Dear Dave,

I’m 20 years old, and I’m planning to buy a home in the next year. Besides having a 20% down payment, what other tips do you have for a first-time home buyer?

Also, is there anything I need to guard against when it comes to buying a house?

– Jacob

Dear Jacob,

I’m glad you’re planning on making a down payment of at least 20%. That’s a smart move, because it’ll help you avoid the added expense of private mortgage insurance (PMI). Also, remember to get a 15-year fixed-rate mortgage loan, one where your payments are no more than 25% of your monthly take-home pay.

Now, the next pieces of advice are for you, Jacob, and anyone else who’s planning to buy real estate. Always get title insurance. Always! If you’re buying a piece of property that’s not a traditional subdivision-type lot, have a survey done.

This isn’t as much of a worry with a standard subdivision lot, something that’s pre-platted and has changed hands three or four times. But you don’t want to buy a piece of land under the impression that it’s 3 acres and then find out the hard way it’s only 2.25 acres. Get a home inspection too. Unless you happen to be an electrician, contractor or something like that, you’re probably not an expert on things relating to home construction.

This last piece of advice may sound funny, but don’t buy a house with a great, low price if it looks ugly from the street.

I did that with the very first house I bought, and it’s a bad idea.

No matter what you think, when it comes to houses, you can’t fix ugly. You can change out carpet, and you can put up new shutters or gutters and stuff like that. Those things aren’t a ton of work. But there’s a reason you can get a screaming deal on an ugly house — it’s ugly. And the guy you sell it to down the road is going to get a great deal on the house. Why? Because it’s just an ugly house.

If you’re not careful, you can get a little too excited on your first home purchase. So stay smart, look at everything involved, and don’t let a case of house fever push you into a big, expensive mistake!

— Dave

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