For most people, their first home isn’t their dream home. It starts off nice enough. But as time goes by and your family grows, starter homes tend to get a little . . . cramped.
But don’t hate on your current home too much. Because while it gave you a safe and dry place to lay your head at night, it was also setting you up to own your dream home someday.
We’ll show you how it all works and walk you through the steps that’ll get you in your dream home—one you can actually afford!
How to Get Your Dream Home in 5 Steps
Here are the steps:
- Follow the Financial Basics
- Find Out How Much Equity You Have
- Set Your New Home-Buying Budget
- Find the Right Dream Home for You
- Be Picky and Patient
Now let’s cover each step in more detail.
Step 1: Follow the Financial Basics
First thing’s first—you have to get out of debt, get on a budget, and build up an emergency fund of 3–6 months of expenses. Sounds pretty basic, right? If you haven’t completed these steps, then you’re not ready to upgrade to your dream home . . . yet.
Now, when you’ve got house fever, it can be hard to focus on paying off debt or saving an emergency fund before you upgrade your home—especially when you’re feeling the pressure of rising home prices and interest rates.
But whether it’s your second or third house, you should only buy a home when you’ve covered the financial basics we mentioned above. Then you’ll be ready to start the journey toward owning your dream house.
And that journey starts with your home equity. What’s equity? Well, we’re glad you asked . . . that brings us to the next step.
Step 2: Find Out How Much Equity You Have
Home equity is a pretty simple concept: It’s your current home’s value minus whatever you still owe on your mortgage.
See, in most cases, your home’s value increases over time. Similar to other long-term investments (like retirement accounts), homes gradually increase in value. There have been periods of ups and downs in the market to be sure, but the value of real estate has consistently gone up. According to the St. Louis Federal Reserve, the average sale price of a home has increased over 2,300% from 1965 to 2023! And in the last ten years (2013 to 2023), there’s been a 68% increase.1 As your home increases in value, so does your equity. In real estate terms, this is called appreciation.
Other factors that increase your home’s equity include:
- Added value: Home improvement projects like adding square footage, updating fixtures and appliances, or even just slapping on a new coat of paint can add value to your home.
- Mortgage paydown: Paying down your mortgage not only gets you out of debt faster, it also builds your equity. The less you owe on your home, the more equity you have.
The amount of equity you have gives you a pretty good idea of how much money you’ll end up with after selling your house. You can use that money to make a hefty down payment and cover the other costs that come with buying a home.
Find expert agents to help you buy your home.
So, how do you determine your home’s value? Well, you can get a ballpark estimate on real estate websites like Zillow, ask a trusted real estate agent to perform a competitive market analysis (which they’ll do anyway if they’re helping you sell your house), or get a professional appraisal.
Finding out your home’s equity will involve a little math, but it’s third-grade-level stuff, so don’t sweat it.
Here’s what we mean. Let’s say your home’s current value is $355,000. When you sell that house, you’ll have to pay for between 1–3% of the sale price in closing costs, another 6% in fees for the real estate agent who helped you sell it, and whatever’s left to pay off on your mortgage.
That means you can estimate clearing over $223,000 from selling your house. That’s a killer down payment on your dream home! And if your home is paid off, that’s even more money to put down and use to pay for things like repairs and moving expenses.
Step 3: Set Your Dream Home Budget
Once you know how much you’ll clear from the sale of your home, you can start making a budget for your dream home.
The key to owning your dream home (instead of it owning you) is to keep your mortgage payment to no more than 25% of your take-home pay on a 15-year fixed-rate mortgage, along with paying a down payment of at least 20% to avoid private mortgage insurance (PMI). Never get a 30-year mortgage even if the bank offers it (and they will). You’d pay a fortune in interest—money that should go toward building your wealth, not the bank’s.
So, let’s say your take-home pay is $4,800 a month. That means your monthly mortgage payment shouldn’t be any bigger than $1,200. By the way, that 25% figure should also include other home fees collected every month with the mortgage payment like homeowners association (HOA) fees, insurance premiums and property taxes.
Plug your numbers into our mortgage calculator to see how much house you can afford.
And don’t forget to budget for all those other costs that come with the home-buying process in addition to your closing fees—things like moving expenses and any upgrades or repairs you might need to make. You don’t want these hidden costs to catch you off guard or drain your emergency fund.
Step 4: Find the Right Dream Home for You
This is where things get real. After all your hard work building up your equity (and doing a lot of math—don’t forget that), you’re finally ready to start the house hunt. Woo-hoo!
But don’t lose focus. Stay zoned in by making a list of features that make a home fit your budget, lifestyle and dreams—and stick to it throughout your house hunt. Here are a few ideas to get you started.
- Don’t compromise on location and layout. If you plan to be in this home for the long haul, an out-of-the-way neighborhood or a wacky floor plan is a deal breaker. Look for a community and layout that’ll suit your lifestyle now and for years to come.
- Think about how much space your family needs. While your budget has the final say about how much home you buy, you’ll want your dream home to fit your family’s needs through different life seasons.
- Consider the school districts. If you have or want kids, the quality of the nearby school districts is probably already on your mind. But even if you don’t have kids or you’re retired, keep in mind that having good schools nearby could increase your home’s value.
- Look for a house that’ll grow in value. Are home values rising in the area? Is the number of businesses going up? These factors can help you figure out whether your dream home will turn into a good investment.
- Count the costs. Want that fancy master bathroom with the multiple showerheads and the Jacuzzi tub? Be clear on what’s a must-have and what’s nice to have. And don’t forget, upgraded features like that will make your dream home more expensive.
Step 5: Be Picky and Patient
We know you’re anxious to get into those new digs, but be patient. Wait for the right house at the right time. Don’t spend your money on a less-than-ideal home just because you’re tired of looking.
The key is finding a good real estate agent who understands your budget and refuses to settle for “good enough.” They’re as committed to your dream as you are and will have your back throughout the entire process, no matter what it takes.
In addition to teaming up with a great real estate agent, you can take a couple of extra steps to make sure you’re ready to strike as soon as the right home comes up:
- Get preapproved for a 15-year fixed-rate mortgage. Having preapproved financing is a green flag for sellers—especially in multiple offer situations. And because this puts most of your information in the lender’s system, you’ll be on the fast track to closing once your offer is accepted.
- Offer earnest money with your bid. Earnest money is a deposit to show you’re truly interested in a home. Usually it’s 1–2% of the home’s purchase price and it’s applied to your down payment or closing costs. Even if the deal falls through, you can almost always get most of it back.
Find a Real Estate Expert in Your Local Market
Now, you might be thinking you have some work to do before you’re ready to find your dream home. Or you may be realizing your years of hard work are about to pay off! Regardless, if you follow these steps, you’ll find the house you’ve always wanted and avoid a purchase you’ll regret.
Once you’re ready, connect with one of our RamseyTrusted real estate agents. These are high-performing agents who do business the Ramsey way and share your values so you can rest easy knowing the search for your dream home is in the right hands.
Find the only real estate agents in your area we trust, and start the hunt for your dream home!
After 27 hours, his wife gave birth to a baby girl, and the man received the news that caused him to fall to his knees.
This is a love story that is equally lovely and painful. When they first met, fell in love, and had a kid, Liz passed away in childbirth. Matt’s actions following her passing were really inspiring.
High school students Liz Goodman and Matt Logelin first crossed paths at a gas station one sunny afternoon. Both of them were raised in Minnetonka, Minnesota, but their chance encounter marked the beginning of a real love story.
Senior year of high school was when Liz and Matt met. Fireworks sparked when she walked up to Matt after he caught her eye; the two became inseparable… up till the start of college.
As graduation drew near, the high school sweethearts had to face the fact that they were attending colleges in different parts of the country! In contrast to Matt, who remained at the University of Minnesota, Liz was traveling to California.
For this couple, who persisted and stuck together throughout their studies, the distance was nothing. Matt continued on to get his master’s degree at Loyola University of Chicago. He was contemplating getting a Ph.D. when he realized he needed to follow his heart and not his mind.
Matt was aware that he could no longer stand to be so far from his love. In order to be with Liz, he moved halfway across the nation to Los Angeles in 2005, packing his stuff.
From then on, the two proceeded to enjoy their lives to the utmost. While traveling, Liz and Matt explored new places, made memories, and deepened their understanding of one another and the world they lived in. It was just a matter of time until Matt realized that this was it and got down on one knee in Nepal to ask Liz to marry him.
In front of their friends and family, they exchanged vows to love one another forever on August 13, 2005. Seeing these lovers grab life and their love by the horns was exhilarating. For the young couple, everything seems to be going great.
They were not just happier than ever in their romantic relationships, but also in their professional lives. Liz worked as a financial professional at Disney, while Matt was a project manager at Yahoo! in California. The two decided to buy a house jointly to take advantage of their newly discovered financial security. From then, everything just got better.
After two years of marriage in 2007, the couple decided to grow their family, and they were thrilled to find out Liz was carrying their first child!
Since many of Liz and Matt’s friends and family members reside in Minnesota, they were unable to accompany them on their amazing journey to parenthood. The soon-to-be parents made the decision to take action and launched a blog to inform their loved ones of Liz’s pregnancy progress.
The journey appeared bright and joyful for the happy couple as they anticipated their first child, but Liz had a tough pregnancy. The doctors advised her to spend a few weeks in bed since she had excruciating morning sickness.
Matt kept a close eye on her since he was anxious about his wife carrying his child. It was distressing to see Liz, who is often active and energetic, confined to her bed. After that, she was taken to the hospital and told to stay in bed for a few more weeks. Matt monitored their newly launched blog about being pregnant throughout the entire incident. He had no clue what he would soon publish on that specific website.
Since Liz’s pregnancy was considered high risk, she was brought to the delivery room twice, each time at least 7 weeks early owing to false alarms. The doctors kept a careful eye on her since they didn’t want to take any chances.
The baby’s arrival into the world was finally ready. Liz was still two months early, necessitating an urgent C-section. The lives of Matt and Liz Logelin were about to undergo a significant change on March 24, 2008.
The couple welcomed Madeline (Maddy) Logelin into their family after the surgery proceeded without a problem. When she was born, she weighed barely 3 pounds, 14 ounces. Since the new parents were thrilled, Liz only had a brief opportunity to see their beautiful baby girl (photographed). The medical workers hastened to get her to the newborn critical care unit since she was born early.
Due to Liz needing to be kept under observation for a further 24 hours after giving birth, she was unable to hold their daughter straight away. Once everything was through, Liz was prepared and eager to meet her baby girl who was now awake and well. She started to ride in a wheelchair to the ward.
Matt couldn’t wait to have both of his girls in his arms, so he was there to assist his wife in their stroll around the room before they entered the ward. They were about to have the mother-child quality time they had all been looking forward to. Disaster then struck.
When his wife slouched in his arms and muttered, “I feel light-headed,” Matt gently and tenderly helped her into the wheelchair. In an effort to calm Matt, the nurses explained that it was common for women to faint after giving birth.
Matt patiently recalled, “All of a sudden, there’s this ‘code blue,’ and people are running by me.” He broke down in tears. She would never be able to hold her kid since she would pass away in this hospital that day.
Only 27 hours, or slightly more than a day after giving birth to their daughter Madeline, doctors learned that a deadly clot had gone to Liz’s lungs and caused a rare, fatal pulmonary embolism. Liz passed away at the young age of 30, only hours after giving birth to a child, from a fatal embolism. Matt was left a widower one day after becoming a parent.
In only one day, Matt went from feeling on top of the world to fearing for his life. He was devastated. The pregnancy blog was meant to be filled with images of the growing family, but instead, his subsequent essay was only about melancholy.
The first several weeks were the worst Matt had ever experienced. Every Tuesday at exactly 3:11 p.m., his thoughts would return to that fateful moment when his life changed irrevocably because he couldn’t bear to take off his wedding ring. At times, he openly questioned how he would manage in his new life without Liz at his side.
There were challenges in getting back home. There were sour reminders of Liz everywhere Matt turned. When guests asked about the baby’s mother, Matt would frank and openly reply, “She passed on the day after the kid was born,”. Even leaving the house was tough.
The only consolation Matt felt in those early days as a widower was the knowledge that his young daughter needed him and the notion that a portion of his cherished wife lived on in Madeline.
Matt was determined that he would give his daughter the finest upbringing possible despite his sadness. He’s seeking for a way to express his feelings of dread and anguish. He started posting on a parenting discussion board hosted by his hometown newspaper, The Minnesota Star Tribune. But it didn’t end there.
Maddy Logelin turned 10 years old on March 24th, 2018. Ten years had passed since her mother Liz’s terrible death at the same anniversary. Her father, family, and friends have done all in their can to encircle her with love and happiness despite her horrific history.
Matt has made his blog’s details more private as Maddy has aged. The instant Madeline shouts “stop,” it is over. “The plug will be pulled,” he would always guarantee. Over the years, Maddy has learned about her mother via stories and pictures, and her interest in her has only increased.
One day she naively questioned, “Daddy, did you grasp my mommy’s hand when she died?” She frequently asks her father questions about the activities he and her late mother used to do
Despite his best efforts to be honest and explain things to his little daughter, Matt remarked, “What I said will never take away what happened that day.” After the talk, Maddy remarked, “Daddy, I love you,” which Matt later said she understood precisely what he needed to hear. I also love you, Maddy,” he said.
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