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Dave Says

Dave Says
Dave Ramsey is America's trusted voice on money and business, and CEO of Ramsey Solutions. He has authored seven best-selling books, including The Total Money Makeover. The Dave Ramsey Show is heard by more than 12 million listeners each week on 575 radio stations and multiple digital platforms. Follow Dave on Twitter at @DaveRamsey and on the web at daveramsey.com.

We Can Afford It On a 30-year Mortgage

We Can Afford It On a 30-year Mortgage

Dear Dave,

My husband and I have been saving, and we're ready to buy our first home. We found a place we both love and can afford if we do a 30-year mortgage instead of a 15-year mortgage. Should we wait and save more for a down payment so we can afford a 15-year mortgage, or go ahead and do the 30-year deal?

Faith

Dear Faith,

Good financial decisions can be defined as things that help you win with money over the long-term. Thirty-year mortgages are a trap. They don’t help you build wealth, and they keep you in debt. On the other hand, 15-year mortgages get you out of debt a lot faster, and being out of debt frees up your largest wealth-building tool — your income.

I would never take out a home loan where the payments are more than a fourth of your monthly take-home pay on a 15-year, fixed-rate mortgage. My advice is to either wait and save more money, or maybe look for a less expensive home in a different area.

I know you want a home, Faith. There’s nothing wrong with wanting your own house. But I don’t want your home to have you. When you get house fever, it’s easy to lock yourself into a bad deal that will follow you around and drain your wallet for decades!

- Dave


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Dave Ramsey is America's trusted voice on money and business, and CEO of Ramsey Solutions. He has authored seven best-selling books, including The Total Money Makeover. The Dave Ramsey Show is heard by more than 12 million listeners each week on 575 radio stations and multiple digital platforms. Follow Dave on Twitter at @DaveRamsey and on the web at daveramsey.com.
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