Should you take out a 15-year mortgage? Here’s what Dave Ramsey thinks

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Here’s what Dave Ramsey has to say about getting a mortgage.


Important points

  • Dave Ramsey believes the best way to buy a home is with cash.
  • For those who need credit, he suggests taking out a 15-year mortgage.
  • He also urges homebuyers to keep their mortgages at 25% of their income or less.

If you’re looking to buy a home, Dave Ramsey believes the best way to pay is cash. The financial expert has called paying cash for a home a 100% down plan.

However, Ramsey acknowledges that this may not be financially achievable for many people interested in becoming a homeowner. Because of this, he also spoke about the type of mortgage loan he recommends when a home loan is absolutely necessary.

For Ramsey, there’s only one clear answer when it comes to which mortgage to buy a property with: It’s a 15-year mortgage. This is an alternative to the 30-years recommended by other financial experts, including Warren Buffett.

Here’s what Ramsey has to say about borrowing for a home so you can decide if you want to take his advice and limit your payback period to just 15 years.

Here’s Ramsey’s thoughts on 15-year mortgage loans

Ramsey is known to speak out against borrowing money. He has taken a strong anti-debt position, arguing that debt is a barrier to getting rich in almost all situations.

“The shortest route to riches is no debt,” he told his show to a caller asking about a home loan or cash payment. He stated that even if a loan was required to buy a home, loans just weren’t an option for him personally.

However, unlike other forms of borrowing — like credit card debt — Ramsey isn’t categorically against taking out a mortgage. The only catch is that he holds a 15-year loan for that just Type of loan you should consider.

“Even so, I don’t yell at people for getting a mortgage — a 15-year fixed-rate mortgage, and paying it off as soon as possible,” Ramsey told the caller. However, he continued with another caveat, reiterating that “among us, the shortest path to wealth is being debt-free.”

Ramsey has also reiterated his belief that a 15-year mortgage is the best choice, both on Twitter and in several blog posts. He tweeted, “Never buy a home with a mortgage longer than 15 years,” and explained on his blog that there are three main reasons he recommends a 15-year loan, including the opportunity to save tens of thousands of dollars in interest , a faster way to build equity and the opportunity to become debt free 15 years sooner.

Why Ramsey’s Advice May Not Be Right For You

Although Ramsey believes a 15-year loan is the best option, the reality is that many borrowers would be better off with a loan with a longer payback period. The simple reason is that you can often get better returns on your money by investing it in other things instead of paying off your loan sooner.

That’s because mortgages have very low interest rates – usually well below what you could earn from investing – and the interest cost is subsidized by the government for those who claim and are entitled to the mortgage interest deduction.

Although Ramsey believes a 15-year mortgage is clearly the best option, homebuyers should do their research carefully before taking his advice.

A historic opportunity to potentially save thousands on your mortgage

Interest rates are unlikely to remain at multi-decade lows much longer. That’s why it’s crucial to take action today, whether you’re refinancing and cutting your mortgage payment or ready to pull the trigger on a new home purchase.

The Ascent’s in-house mortgage expert recommends this company find a low interest rate – and in fact he’s used them to refect himself (twice!). Click here to learn more and see your plan. While this doesn’t influence our opinions about products, we do receive compensation from partners whose listings appear here. We are always by your side. Here is The Ascent’s full advertiser disclosure.

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