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    Dave Ramsey warns homebuyers on mortgage, interest rate blunt truth

    By Jeffrey Quiggle,

    2024-09-08

    https://img.particlenews.com/image.php?url=4dOoIY_0vPGCr9O00

    Many people who are looking at potentially buying a home try to get the latest, most reliable expert advice on the state of the housing market they can before signing on the dotted line.

    But personal finance author and radio host Dave Ramsey explains that real estate market professionals do the best they can to use available data to make guesses about future trends, but no prediction is 100% guaranteed.

    Related: Dave Ramsey bluntly speaks on interest rates and mortgages

    Ramsey also emphasizes one major factor that must be in place regardless of the state of the housing market: The potential buyers of a home must have their own personal finances in good enough shape to make the move. Buying a home, after all, is generally considered to be the largest investment the average American makes.

    So naturally, the largest determinant of one's ability to purchase a home is one's financial readiness. Ramsey advises against, in most situations, placing too much emphasis on housing market conditions.

    That said, Ramsey offers three predictions for the housing market for at least the rest of the calendar year.

    • Interest rates will decrease.
    • A crash in the housing market is not imminent.
    • Housing inventory is likely to stay low through December.

    And he explains further what these predictions, assuming they hold, mean for potential home buyers.

    Dave Ramsey explains mortgages and the interest rate outlook

    Mortgage interest rates increased at a very quick pace between 2021 and 2023, primarily because the Federal Reserve was repeatedly raising the federal funds rate during that time in its effort to combat inflation.

    The rate on a 30-year mortgage has fallen from 8% to 6.3% since October already.

    And the mortgage rate will likely fall even further in the next few months, as the Fed meets on Sept. 17 and 18 with a high expectation it will be lowering the federal funds rate.

    "For the housing market overall, this means buyer demand should pick up throughout the rest of 2024 because more people will be able to afford a mortgage," wrote Ramsey Solutions .

    More on Dave Ramsey

    Ramsey then offers some specifics on what it means to be financially prepared enough to make the purchase.

    https://img.particlenews.com/image.php?url=0xmj9R_0vPGCr9O00
    A man is seen standing in front of a house in a row of them. Personal finance coach Dave Ramsey advises people to have a few financial priorities in place before buying a home.

    David McNew&solGetty Images

    Ramsey clarifies what it means to be financially ready to buy a home

    Because Ramsey said prospective home purchasers should not pay close attention to the housing market as a major factor in the their decisions about when to buy, the personal finance personality took some time to explain the factors to which people should be paying attention.

    Related: Dave Ramsey has major warning on retirement, 401(k), Social Security

    So Ramsey provided a list of requirements potential home buyers should check off before making the big purchase.

    • Being debt-free.
    • Having an emergency fund in place of three- to six-months worth of costs.
    • Having a mortgage payment that is not more than 25% of your monthly income.
    • Having a down payment of 20% or more of the cost of the house.
    • You are able to pay closing costs without taking them out of your down payment.

    "If you don’t meet these qualifications, it doesn’t matter if the market is in your favor," wrote Ramsey Solutions. "Buying a home would be a curse instead of a blessing."

    Related: Veteran fund manager sees world of pain coming for stocks

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    Comments / 29
    Add a Comment
    KK Bradshaw
    30d ago
    So if you make 6K a month, you are only supposed to spend $1500 a month. Where are you going to live for that? What the heck you spending your money on, an Escalade and Molester Alimiminum truck?
    James T. Sterling Jr.
    09-10
    Airbnbs would have to be illegal across the US. It’s already illegal in NY, if that happens on a much wider scale then they would have to sell them for way cheaper than what they are currently asking for. They actually overpaid to acquire them to undercut everyone else. Folks would have to stop buying all together as well because overpaying is not in their favor.
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