Bad Buyer Program
by Dave Ramsey

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Dear Dave,

My husband and I have been married for three months, and we’re debt-free. Right now, we’re trying to save up a 20 percent down payment for a house. I work for a real estate company, and they’re really pushing us to take advantage of a first-time homebuyer deal. The program offers 100 percent financing, no money down and no PMI. They say it’s a great deal. What do you think?

Stacy

Dear Stacy,

You guys are off to a great start! Don’t blow it now. Those people are wrong. I grew up in the real estate world, and this is a bad idea.

Slow down. It’s great that you guys are young and debt-free, but you need to do things that are smart for you. And for you, smart includes a couple of things. First, make sure you have an emergency fund of three to six months of expenses in place. Then, keep saving up for a big down payment.

You know, when I hear the advice you were given I just want to smack somebody. Haven’t the mortgage lenders learned anything from the last several months? Nothing down, interest-only and sub-prime loans are a big part of the reason for the financial debacle in this country. A house is not a blessing when you’re broke, and a bargain is only a bargain when you’re ready to buy!

I always recommend waiting at least a year after you’re married to buy a house. It takes that long to decide how close you want to live to your in-laws! Plus, you want to spend some time getting used to each other, and knowing each other even better, before making what will be your largest asset purchase.

– Dave

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remember that your home is NOT an asset Posted by Leolani from Hawaii Let's be very clear about this...Just a quick definition of Asset - an asset is something that puts money into your pocket. A home -if you live in it does not put money in your pocket...therefore it is NOT an asset. However, if you are an investor and have homes that "cashflow" meaning the rent coming in is more than the monthly mortgage payment -THEN the home is a TRUE asset. I learned this the hard way...we should always be aware of what we are purchasing and if at all possible - pay in cash.