What a simpler world it would be if Morris County home buying could be reduced to anything like a simple 4-Step process. Even better if those were four easy steps. Actually, without actually coming out and saying so, that’s the tantalizing prospect hinted at on radio financial guru Dave Ramsey’s web site’s “Home Buying Process Made Easy.”
Ramsey is the likable media expert in household budgeting and financial planning. A good deal of his guidance could be summed up in just 2 steps:
1) get out of debt (except for mortgage debt) as soon as humanly possible; then,
2) stay out.
Since that’s not bad advice, the promise of home buying in 4 steps seems almost reasonable. After all, his millions of listeners have undoubtedly benefitted greatly through the years (once they’ve figured out a way to act on the advice).
And in fact, his 4 easy home buying steps are actually not far off-target—although I think they’re out of order:
- Put your finances in order before home buying; IOW, know what you can afford.
- Do the cash flow Ramsey thinks your Morris County home’s monthly mortgage payments should be no more than a quarter of your net income.
- Get a home loan. Make this a 15-year fixed rate mortgage to minimize total interest paid.
- Find a good real estate agent to “help make sure you don’t pay too much” and deal with any “unexpected home buying hurdles.”
Realistically, Morris County home buying involves a bit more involvement than that. Also, Step 4 should actually come after Step 2, and Step 3 (getting a mortgage) should come after that—and after you and your good real estate agent have zeroed in on your target Morris County home.
One more practical alteration: the 15-year mortgage structure automatically results in a higher monthly payment that, when combined with a 25% of net income budget cap, could yield an unrealistically limited budget target. Being financially conservative also means being realistic. A growing family, for instance, might find that they have wasted money if they have to move to a larger home after only a few years.
That’s where your good real estate agent can save the day. Call me at any step in the process: I’ll be your sounding board on today’s practical short and long term Morris County home buying trade-offs!