We only have one more week of FPU! I cannot believe how much I’ve learned in this short amount of time. It will be invaluable for my future and my family’s future.
This week at FPU we learned about how to buy a house. There is a right way and a wrong way and it is very important to do this the right way, so that you are living the American Dream not the American Nightmare. It can be done the right way with some hard work and dedication. I plan to use some of Dave’s techniques when I purchase my first real house. I currently have a single-wide manufactured home that is completely paid off and I rent the lot it is on for $235/month. WAY cheaper than rent here in Billings.
In the lesson, we learned that you should be through Baby Step 3 before you start saving for a house. Which means you should be debt free and have a full emergency fund of 3-6 months of expenses. He calls saving for a house at this point Baby Step 3b. It’s a great plan. I have told my family that when I go to buy a real house I will have no debt, a fully funded emergency fund and a mortgage of $100k or less.
Dave talks about financing a house with 100% down aka paying cash for a house. This is the ultimate goal, and would be really awesome, however, not always attainable in the time frame we’d like. So he recommends a 15-year, fixed rate mortgage. And if you go through this class he provides awesome examples of why. He also discusses the other types of mortgages available including FHA, Veterans, ARMs, interest only, and so on. He also talks about the Private Mortgage Insurance (PMI) and how if you have 20% down or 20% equity in your home you do not need this insurance. It is for protecting the lender, not you, from default.
Dave also talked about short sales, foreclosure, and willfully defaulting on your mortgage. It was a very enlightening lesson. I really enjoyed this one and will adjust my goals accordingly. Current goal, debt snowball (Baby Step 2).
Are you interested in taking Financial Peace University yourself? Visit www.daveramsey.com/fpu and find a class near you or sign up online!