How to Own Your Dream Home

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:

  1. Follow the Financial Basics
  2. Find Out How Much Equity You Have
  3. Set Your New Home-Buying Budget
  4. Find the Right Dream Home for You
  5. 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!

I Took in a Young Man Freezing on the Street on Christmas Eve — Later That Night, I Was Struck with Shock as He Crept Toward My Bed

I thought I was doing a good deed on Christmas Eve by taking in a young man shivering in the cold. But later that night, I woke to find him in my doorway, and my breath caught when I saw what he was holding.

Last Christmas Eve pressed down on me, heavy as the thick, relentless snow, the early darkness, and the silence echoing in the wind. I was just returning from the cemetery, where I’d visited my late husband Michael’s grave like I always did since his passing.

A sad woman in a cemetery | Source: Midjourney

A sad woman in a cemetery | Source: Midjourney

I had stood there bundled in my thick coat, staring at his name etched into the cold stone, missing him with an ache that never fully disappeared.

But somehow, the loneliness was sharper that year. My son David had called earlier to tell me they wouldn’t be able to visit because Lily, my seven-year-old granddaughter, was sick.

Girl sleeping | Source: Midjourney

Girl sleeping | Source: Midjourney

He apologized, adding, “Mom, we’ll come as soon as she’s better, I promise.”

“Of course,” I’d said, doing my best not to show my disappointment. I understood his position, but the silence in the house was almost too much to bear.

The streets were quiet as I drove home from the cemetery. That’s when I saw him. At first, I thought he was just a shadow under the streetlamp, huddled up and unmoving.

A quiet, snowy street | Source: Midjourney

A quiet, snowy street | Source: Midjourney

But as I got closer, I realized it was a young man in a worn jacket. He looked frozen, his knees pulled to his chest as he sat on the curb.

And although I should’ve ignored him, and had done so with other people in the past, something told me to stop. I slowed the car and rolled down the window.

“Are you alright?” I called out. “Why are you out here in this weather?”

A woman in a car | Source: Midjourney

A woman in a car | Source: Midjourney

He turned his head slowly, meeting my gaze with striking eyes. They were the kind of light brown that stops you in your tracks, deep and piercing even in the dim light, and accentuated by his tanned skin.

For a moment, he just stared at me, blinking rather slowly. Then he said, almost too softly to hear, “I… I have nowhere else to go.”

I hesitated for only a second. “You’ll freeze out here,” I said. “Get in.”

He looked at me like he couldn’t quite believe what he was hearing, but then he stood up slowly, brushed snow off his pants, and climbed into the car.

A shabby man near a car | Source: Midjourney

A shabby man near a car | Source: Midjourney

“What’s your name?” I asked as I turned up the heat.

“Carlos,” he answered cautiously.

“Well, Carlos,” I said, “you’re coming home with me tonight. It’s Christmas Eve, and no one should be out in this cold.”

He didn’t say anything, but I caught the faintest nod out of the corner of my eye.

When we got to the house, I grabbed some of David’s old clothes from the closet and handed them to Carlos.

“The bathroom is down the hall,” I said. “Take as much time as you need to warm up.”

A woman gesturing towards the side | Source: Midjourney

A woman gesturing towards the side | Source: Midjourney

While he cleaned up and changed, I made hot cocoa, pulling out the marshmallows I usually saved for Lily. By the time Carlos came back into the living room, he looked more human and less like a shadow.

His now-clean hair curled beautifully, and the oversized sweater made him look younger than I’d first thought. He sank onto the couch, clutching the cup of hot cocoa.

A man holding a cup, sitting on a sofa | Source: Midjourney

A man holding a cup, sitting on a sofa | Source: Midjourney

“You remind me of my son,” I said as I settled into the armchair across from him. “That’s probably why I stopped my car.”

It was true, except it wasn’t so much his looks that resembled David, it was his aura. It was hard to describe. David looked just like my late husband, with green eyes and pale white skin. Carlos was obviously of Latin-American descent. But there was still something about him…

He smiled politely, but his eyes remained guarded. “Gracias. I mean, thank you,” he said quietly, correcting himself. “You didn’t have to… but you did. I won’t forget it.”

A man with a deep stare | Source: Midjourney

A man with a deep stare | Source: Midjourney

I smiled back at him. “De nada (You’re welcome),” I replied, though my Spanish wasn’t good at all. “It’s almost Christmas. Everyone deserves to be warm.”

I wanted to ask him more about himself, what had brought him to the streets, why he was alone on Christmas Eve, but when I tried, his face clouded over.

“It’s complicated,” he said, looking down at his cocoa.

“Fair enough,” I nodded, deciding not to push. Instead, I put on a cozy Christmas movie on the TV, and later, I showed him to the guest room and wished him a good night.

A woman in an armchair | Source: Midjourney

A woman in an armchair | Source: Midjourney

“If you need anything, just knock,” I said.

“Thank you,” he said again, and this time, the corner of his lips turned up slightly.

***

Later that night, I lay in bed, staring at the ceiling. I was just starting to drift off when I heard a faint creak of floorboards outside my room.

I scrambled up in bed, every muscle screaming in protest, and turned to the door.

Carlos was standing in the doorway, his face shadowed and unrecognizable in the darkness.

A dark figure standing in a doorway | Source: Midjourney

A dark figure standing in a doorway | Source: Midjourney

My heart quickened, and for one moment, I knew I shouldn’t have been so nice. Bringing a stranger home was a horrible idea.

My heart began to pound in my ears as I noticed something in his hand. I couldn’t make out what it was before he started walking toward me in slow and deliberate steps.

Panic surged through me. “STOP! WHAT ARE YOU DOING?!” I shouted, my voice cracking with fear.

A woman screaming in bed | Source: Midjourney

A woman screaming in bed | Source: Midjourney

Carlos froze, his eyes widening in alarm. “Wait!” he said quickly, holding up the object in his hand. Relief washed over me as I realized what it was: a small orange bottle with my heart medication.

“You didn’t take this,” he said, his voice calm but firm. “I saw it on the counter and thought you might need it. My abuela (grandmother) used to take it every night right before bed.”

A man holding a medication bottle | Source: Midjourney

A man holding a medication bottle | Source: Midjourney

The fear drained out of me, replaced by embarrassment. But my hands were still trembling. “Oh,” I said weakly. “I… I forgot. Thank you.”

He nodded and placed the bottle on the nightstand before backing out of the room. “Good night,” he said softly, and then he was gone.

My body slumped back onto the bed, and I stared at the bottle for hours, feeling foolish yet grateful. I had assumed the worst about him, and all he had wanted to do was make sure I was okay.

A bottle of medication on a nightstand | Source: Midjourney

A bottle of medication on a nightstand | Source: Midjourney

The next morning, I made pancakes, using the last of the blueberries I had stashed in the freezer. Carlos came into the kitchen, looking unsure of himself, and sat down at the table.

“Merry Christmas,” I said, sliding a small box across.

“What’s this?” he asked, looking genuinely surprised.

“Open it.”

He unwrapped the present slowly, pulling out the scarf I had knitted years ago. It was red and white, nothing fancy, but it was warm.

A man with a present | Source: Midjourney

A man with a present | Source: Midjourney

“Thank you,” he said again, running his fingers over the soft yarn. He wrapped it around his neck immediately and smiled.

We ate in mostly silence while I wondered how to bring up the subject of last night. I wanted to thank him and apologize for having been scared.

But after Carlos finished his pancakes, he stood up. He walked to the door where he’d left his duffel bag and slung it over his shoulder.

“Where are you going?” I asked, frowning.

A woman at breakfast table | Source: Midjourney

A woman at breakfast table | Source: Midjourney

“You really helped me last night, ma’am,” Carlos said, licking his lips. “Thank you. But I should go now.”

“Where will you go?”

He hesitated with one hand on the doorknob. “I don’t know,” he admitted. “I’ll figure something out.”

“Wait,” I said, standing. “Why don’t you stay? Help me around the house, make sure I take my pills. I could use the company.”

“Really?” he asked, hope flickering in his eyes.

A man looking hopeful | Source: Midjourney

A man looking hopeful | Source: Midjourney

“Of course,” I said. “You shouldn’t be out there on Christmas day, either. You can also work around the house as your way of paying for room and board. What do you say?”

Carlos simply smiled and set down his duffel bag again.

***

Over the next few weeks, we settled into a rhythm. Carlos was quiet and respectful, always making sure to keep his space tidy and never overstepping.

A man smiling | Source: Midjourney

A man smiling | Source: Midjourney

We even had a great New Year’s Eve together. And although I didn’t push, I was happy when he started to open up.

One night, in January, as we sat by the fire, he finally told me about his past. His troubles began when his parents kicked him out.

“They didn’t understand me,” he said hesitantly. “They thought I was wasting my life with art. They wanted me to study something practical, like engineering or medicine. When I said no, they told me I wasn’t welcome in their house anymore.”

A man sitting by the fireplace | Source: Midjourney

A man sitting by the fireplace | Source: Midjourney

So, he’d been ousted for pursuing his passion, of his dream of becoming an artist. Then life had dealt him another cruel blow.

A roommate had stolen everything he owned, like his few meager savings, and even items belonging to the landlord, before disappearing. He was later evicted for being unable to replace the stolen items. Finally, he lost his job simply for being homeless.

“I probably would’ve frozen out there if it weren’t for you,” he said with a soft sigh.

A man smiling while sitting by a fireplace | Source: Midjourney

A man smiling while sitting by a fireplace | Source: Midjourney

How could this world be so cruel?

I reached over and put my hand on his. “You don’t have to worry about that anymore. You’re safe here.”

***

Now here we are. It’s a year later, and here’s what has happened.

With my help, Carlos found a new job and a small apartment nearby. He became a regular visitor, bringing laughter back into the house. He even charmed my son, daughter-in-law, and granddaughter.

As we decorated the Christmas tree together, I realized how much my life had changed. Carlos was no longer a stranger I’d taken in; he was family.

A woman decorating a Christmas tree | Source: Midjourney

A woman decorating a Christmas tree | Source: Midjourney

And while he always says I saved his life, the truth is that he’d saved mine.

This work is inspired by real events and people, but it has been fictionalized for creative purposes. Names, characters, and details have been changed to protect privacy and enhance the narrative. Any resemblance to actual persons, living or dead, or actual events is purely coincidental and not intended by the author.

The author and publisher make no claims to the accuracy of events or the portrayal of characters and are not liable for any misinterpretation. This story is provided “as is,” and any opinions expressed are those of the characters and do not reflect the views of the author or publisher.

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