“I hope you don’t,” says the radio announcer.
Personal finance personality Dave Ramsey doesn’t mince his words when it comes to giving advice.
Some of the biggest decisions people make financially involve those who want to buy a home.
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For example, a caller who identified herself as Tina in Fort Lauderdale recently spoke with Ramsey about her thoughts on buying a new home.
“My question is about using a HELOC (Home Equity Line of Credit) to get 20% off a new home,” said Tina. Conversation captured Youtube.
Ramsey immediately replied, “No.”
“And then sell the existing house right after the new one closes,” Tina continued.
“Oh, this house. I’m confused,” said Ramsey. “So you’re going to foreclose on another property before yours does. That’s very dangerous.”
“What happens if it doesn’t close?” Asked. “You’ve got two payments on the house. You know what it’s going to be next? We call them hot sellers who sell their house cheap because they get stuck.”
Upon arriving at what he seemed to think was the logical conclusion to that reasoning, Ramsey had a straightforward tip.
“We will close on the second after the first closes,” he said. Then we use the money.
Tina provided a bit more personal history about her past experience buying and selling homes.
“I just did it on my second property now,” she said. “When I sold the first house to get to this new house that I live in now. It was very stressful for me not to have anywhere to live in that period.
Ramsey got a rude response.
“You know what’s more stressful?” Asked. Two payments home.
“I think my idea of doing it this way is, the sale I’ve done now, it was really stressful for me, the move.” Tina explained. “I was, ‘I need to find a house, where am I going to live?'” “I would have preferred to be able to secure myself a house first.”
The radio host proposed a solution to this challenge.
“So write a contract on the property you’re buying, contingent on selling it and setting the closing on the same day,” Ramsey said. “But if your current house doesn’t close, you won’t close the new one.
“Because you’re going to end up with two home payments in a market that has slowed down as interest rates go up,” he added. “And two years from now you’ll be calling me, ‘I did the stupidest thing.'” I’ve had two home payments and it’s killing me. Can you help me Dave? “
Tina had another problem on her mind, too.
She said, “Apart from that, I can get a HELOC enough to pay for the house with cash, because I have enough equity in my current house.
Ramsey expressed some immediate displeasure with the idea of taking out a home loan.
“Sell your stinky house and move, and stop talking to me about stress,” he said. “You’re trading off one kind of stress for another, because you don’t realize the risk.”
“After 30 years of doing what I do, I’ve seen people get on their knees and I’m begging you not to.”
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