Anyone thinking about buying a home knows it’s a big decision. It’s not just about finding the perfect house, though that's part of it. There’s also the housing market to consider – which can feel as unpredictable as the weather.
Dave Ramsey, the well-known financial guru, has a few things to say about the current market. And his advice is clear: It's less about the market itself and more about ensuring your finances are in order.
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Ramsey believes that while experts can forecast housing trends, no one can say with certainty what’s coming next. “No prediction is 100% guaranteed,” he says. Still, Ramsey isn’t all doom and gloom. He has three key predictions for the housing market through the end of the year.
First up: interest rates. Ramsey is fairly confident they’ll drop. Mortgage rates spiked between 2021 and 2023 as the Federal Reserve raised rates to curb inflation. But things have started to cool off.
Since October, the rate on a 30-year mortgage has fallen from 8% to 6.3%. Ramsey predicts it could drop even more, especially after the Federal Reserve's upcoming meeting in mid-September. “Buyer demand should pick up,” says Ramsey Solutions, “because more people will be able to afford a mortgage.”
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But what about a market crash? Ramsey squashes that fear, saying a crash isn't in the cards. “It's not happening,” he assures. The market may be shaky, but it's not falling apart. Sure, there might be some ups and downs, but nothing like the 2008 crash.
Lastly, he predicts housing inventory will remain tight. That means there won't be a flood of new homes on the market, keeping competition stiff for buyers. Fewer homes available usually mean higher prices, but Ramsey doesn't want people to focus on market conditions too much. His message is clear: financial readiness is what matters.
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Ramsey explains that one thing stays the same whether interest rates go up or down or the market crashes. Buyers need to be in good financial shape before taking the plunge. He spells out exactly what that means.
First, get rid of debt. Buying a home is tough if someone's swimming in credit card bills or student loans. Next, set aside an emergency fund – at least three to six months’ worth of expenses, just in case life throws a curveball. And make sure that monthly mortgage payments don't eat up more than 25% of monthly income.
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Ramsey stresses putting at least 20% as a down payment. It may seem like a tall order, but it helps avoid extra costs like private mortgage insurance (PMI) and makes payments more manageable. It's also important to be ready for closing costs. These can't be pulled from the down payment, so having extra cash on hand is vital.
Ramsey's bottom line? If these financial ducks aren't in a row, it doesn't matter what the market's doing. "Buying a home would be a curse instead of a blessing," Ramsey Solutions warns.
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This article Dave Ramsey's Bold Housing Predictions: 3 Blunt Forecasts That Could Shake Up Your Next Home-Buying Move – Will You Be Ready? originally appeared on Benzinga.com
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