A NEW homeowner was closing on a $330,000 home, which would leave her bank account depleted and her new home unfurnished.
She turned to financial expert Dave Ramsey, who offered three steps to get her money back on track.
Amy from Charlotte, North Carolina recently called the Dave Ramsey Show for advice on how to approach your mortgage situation.
At the episodethe caller explained that he was about to close on a $330,000 house and put down 18%, or $60,000.
However, the house did not have all the furniture and appliances and whoever called needed to buy all new household items.
Amy also shared financial details, noting that she earned about $75,000 a year and had $20,000 saved in an emergency fund.
She questioned how she could furnish her home without going into debt.
THREE STEPS
Dave Ramsey and co-host Jade Warshaw were shocked that the woman left so little financial space with her decision.
“You pushed everything to the limit. I mean, you left no room in this deal. You can’t breathe the way it’s so tight,” Ramsey said.
Amy planned to use her emergency fund to pay for furniture, but her hosts advised against spending the money on anything non-emergency in case something happened.
“You will have to move very slowly and methodically,” Warshaw said.
Ramsey offered Amy three steps to help furnish her home without breaking the bank.
- Buy the essentials
The host suggested that Amy take $5,000 from her emergency fund to spend on a new mattress and a good, used refrigerator.
two. Save
After purchasing the essentials, he advised Amy to use a laundromat until she could save enough to buy a washer and dryer.
He noted that if she wanted a washer and dryer sooner, she could buy used ones and then sell them on Craigslist, using the money to buy new ones.
3. Cash flow the rest
The third step Ramsey suggested Amy take was to have the cash flow supply the rest of her household with her income.
He said every month or two she should buy an additional appliance or piece of furniture and pay cash as you use it.
The host suggested that Amy purchase her household items at garage sales in wealthy neighborhoods to save money.
LIVING TOGETHER
Amy also questioned how much rent she should charge her boyfriend who would live with her.
However, Ramsey was against the idea of moving in with someone you’re not married to due to the financial implications.
“This does not go well for women in these situations economically. You manage your own life and if he is a man and wants to perform and serve his wife, then yes, he can come on board here,” he said.
Different Types of Mortgages
A conventional loan typically requires a 20% down payment and a credit score of at least 620.
A fixed rate mortgage offers a loan term typically of 15 or 30 years, during which the interest rate does not change.
On the other hand, a adjustable rate mortgage (ARM) has a variable interest rate range.
A popular type of adjustable rate mortgage is the 5/1 ARMwhich offers a fixed interest rate for the first five years and an adjusted annual interest rate thereafter.
O FHA loan is a government-backed loan for first-time buyers that only requires a 3.5% down payment.
It can be a great option for less qualified buyers, but it requires the borrower to get private mortgage insurance.
Military service members, veterans and eligible spouses may qualify for a Veterans Affairs (VA) Loan.
The VA loan does not require a down payment in most cases.
“It doesn’t bode well statistically for your future wealth building in this scenario.
“People who are married have an economic advantage over those who are not.”
In related news, a woman’s mortgage increased by $400 – no one told her about the hidden fees and now she’s stuck at home.
Furthermore, a debt-free man has money to pay his mortgage, but instead an expert gave him an “intentional” move.
This story originally appeared on The-sun.com read the full story
