How to Own Your Dream Home

For most people, their first home isn’t their dream home. It starts off nice enough. But as time goes by and your family grows, starter homes tend to get a little . . . cramped.

But don’t hate on your current home too much. Because while it gave you a safe and dry place to lay your head at night, it was also setting you up to own your dream home someday.

We’ll show you how it all works and walk you through the steps that’ll get you in your dream home—one you can actually afford!

How to Get Your Dream Home in 5 Steps

Here are the steps:

1. Follow the Financial Basics
2. Find Out How Much Equity You Have
3. Set Your New Home-Buying Budget
4. Find the Right Dream Home for You
5. Be Picky and Patient

Now let’s cover each step in more detail.

Step 1: Follow the Financial Basics

First thing’s first—you have to get out of debt, get on a budget, and build up an emergency fund of 3–6 months of expenses. Sounds pretty basic, right? If you haven’t completed these steps, then you’re not ready to upgrade to your dream home . . . yet.

Now, when you’ve got house fever, it can be hard to focus on paying off debt or saving an emergency fund before you upgrade your home—especially when you’re feeling the pressure of rising home prices and interest rates.

But whether it’s your second or third house, you should only buy a home when you’ve covered the financial basics we mentioned above. Then you’ll be ready to start the journey toward owning your dream house.

And that journey starts with your home equity. What’s equity? Well, we’re glad you asked . . . that brings us to the next step.

Step 2: Find Out How Much Equity You Have

Home equity is a pretty simple concept: It’s your current home’s value minus whatever you still owe on your mortgage.

See, in most cases, your home’s value increases over time. Similar to other long-term investments (like retirement accounts), homes gradually increase in value. There have been periods of ups and downs in the market to be sure, but the value of real estate has consistently gone up. According to the St. Louis Federal Reserve, the average sale price of a home has increased over 2,300% from 1965 to 2023! And in the last ten years (2013 to 2023), there’s been a 68% increase.¹ As your home increases in value, so does your equity. In real estate terms, this is called appreciation.

Other factors that increase your home’s equity include:

• Added value: Home improvement projects like adding square footage, updating fixtures and appliances, or even just slapping on a new coat of paint can add value to your home.
• Mortgage paydown: Paying down your mortgage not only gets you out of debt faster, it also builds your equity. The less you owe on your home, the more equity you have.

The amount of equity you have gives you a pretty good idea of how much money you’ll end up with after selling your house. You can use that money to make a hefty down payment and cover the other costs that come with buying a home.

Find expert agents to help you buy your home.

So, how do you determine your home’s value? Well, you can get a ballpark estimate on real estate websites like Zillow, ask a trusted real estate agent to perform a competitive market analysis (which they’ll do anyway if they’re helping you sell your house), or get a professional appraisal.

Finding out your home’s equity will involve a little math, but it’s third-grade-level stuff, so don’t sweat it.

Here’s what we mean. Let’s say your home’s current value is $355,000. When you sell that house, you’ll have to pay for between 1–3% of the sale price in closing costs, another 6% in fees for the real estate agent who helped you sell it, and whatever’s left to pay off on your mortgage.

That means you can estimate clearing over $223,000 from selling your house. That’s a killer down payment on your dream home! And if your home is paid off, that’s even more money to put down and use to pay for things like repairs and moving expenses.

Step 3: Set Your Dream Home Budget

Once you know how much you’ll clear from the sale of your home, you can start making a budget for your dream home. 

The key to owning your dream home (instead of it owning you) is to keep your mortgage payment to no more than 25% of your take-home pay on a 15-year fixed-rate mortgage, along with paying a down payment of at least 20% to avoid private mortgage insurance (PMI). Never get a 30-year mortgage even if the bank offers it (and they will). You’d pay a fortune in interest—money that should go toward building your wealth, not the bank’s.

So, let’s say your take-home pay is $4,800 a month. That means your monthly mortgage payment shouldn’t be any bigger than $1,200. By the way, that 25% figure should also include other home fees collected every month with the mortgage payment like homeowners association (HOA) fees, insurance premiums and property taxes.

Plug your numbers into our mortgage calculator to see how much house you can afford.

And don’t forget to budget for all those other costs that come with the home-buying process in addition to your closing fees—things like moving expenses and any upgrades or repairs you might need to make. You don’t want these hidden costs to catch you off guard or drain your emergency fund.

Step 4: Find the Right Dream Home for You

This is where things get real. After all your hard work building up your equity (and doing a lot of math—don’t forget that), you’re finally ready to start the house hunt. Woo-hoo!

But don’t lose focus. Stay zoned in by making a list of features that make a home fit your budget, lifestyle and dreams—and stick to it throughout your house hunt. Here are a few ideas to get you started.

• Don’t compromise on location and layout. If you plan to be in this home for the long haul, an out-of-the-way neighborhood or a wacky floor plan is a deal breaker. Look for a community and layout that’ll suit your lifestyle now and for years to come.
• Think about how much space your family needs. While your budget has the final say about how much home you buy, you’ll want your dream home to fit your family’s needs through different life seasons.
• Consider the school districts. If you have or want kids, the quality of the nearby school districts is probably already on your mind. But even if you don’t have kids or you’re retired, keep in mind that having good schools nearby could increase your home’s value.
• Look for a house that’ll grow in value. Are home values rising in the area? Is the number of businesses going up? These factors can help you figure out whether your dream home will turn into a good investment.
• Count the costs. Want that fancy master bathroom with the multiple showerheads and the Jacuzzi tub? Be clear on what’s a must-have and what’s nice to have. And don’t forget, upgraded features like that will make your dream home more expensive.

Step 5: Be Picky and Patient

We know you’re anxious to get into those new digs, but be patient. Wait for the right house at the right time. Don’t spend your money on a less-than-ideal home just because you’re tired of looking.

The key is finding a good real estate agent who understands your budget and refuses to settle for “good enough.” They’re as committed to your dream as you are and will have your back throughout the entire process, no matter what it takes.

In addition to teaming up with a great real estate agent, you can take a couple of extra steps to make sure you’re ready to strike as soon as the right home comes up:

• Get preapproved for a 15-year fixed-rate mortgage. Having preapproved financing is a green flag for sellers—especially in multiple offer situations. And because this puts most of your information in the lender’s system, you’ll be on the fast track to closing once your offer is accepted. 
• Offer earnest money with your bid. Earnest money is a deposit to show you’re truly interested in a home. Usually it’s 1–2% of the home’s purchase price and it’s applied to your down payment or closing costs. Even if the deal falls through, you can almost always get most of it back.

Find a Real Estate Expert in Your Local Market

Now, you might be thinking you have some work to do before you’re ready to find your dream home. Or you may be realizing your years of hard work are about to pay off! Regardless, if you follow these steps, you’ll find the house you’ve always wanted and avoid a purchase you’ll regret.

Once you’re ready, connect with one of our RamseyTrusted real estate agents. These are high-performing agents who do business the Ramsey way and share your values so you can rest easy knowing the search for your dream home is in the right hands.

Find the only real estate agents in your area we trust, and start the hunt for your dream home!

Inside the love story of Hasnat Khan and Princess Diana

Princess Diana was known for her heartfelt visits to hospitals, where she brought joy and hope to those in need.

However, one visit turned into something far more — a passionate love affair that remained shrouded in secrecy for years.

It’s 1995 – just two months prior to the infamous Panorama interview that would forever alter Diana’s life. You might remember that interview, when Princess Diana came clean about her struggles with mental health and the trials of her marriage, capturing the world’s empathy.

Two months before that interview, Diana crossed paths with a handsome doctor, a Muslim whose dark good looks were compared to the charming actor Omar Sharif.

The dashing heart surgeon, Dr. Hasnat Khan, worked at the Royal Brompton Hospital in London. But how did this unlikely pair end up together?

Well, that’s because Joe Toffolo, the patient who underwent surgery, was married to Oonagh Shanley-Toffolo, an Irish nun and acupuncturist who was a close confidante of Princess Diana.

After the initial visit, Diana returned to the hospital almost daily for three weeks, eager to pursue the handsome surgeon. The connection was electric.

Smoked cigarettes and loved KFC

Today, when we look back at countless photos of Diana visiting the hospital, it’s officially stated that she went to cheer up sick children or raise awareness for cystic fibrosis.

That’s definitely true. However, she also had personal reasons. Beneath the surface, her motivations were deeply personal. Because at 35, Diana had discovered a reason to smile once more.

When Diana and Khan started seeing each other, it marked Diana’s most serious involvement since her separation from Prince Charles three years earlier.

But it came shrouded in secrecy. Few knew about their budding romance, a bond that seemed improbable at first glance. Dr. Khan, then 37, was a heart surgeon
that was running fat and smoked a pack of cigarettes a day,

He had penchant for late-night jazz clubs and Kentucky Fried Chicken — an unconventional match for the Princess of Wales.

But this didn’t stop Diana.

”He’s drop-dead gorgeous,” Diana reportedly told Oonagh Toffolo.

Secret messages

To keep their love under wraps, Diana cleverly disguised her messages for Khan, using the alias ”Dr. Armani.” They met in secret, often in unconventional spots to avoid prying eyes.

On one occasion, Diana donned a black wig to sneak into Ronnie Scott’s, a famous jazz club in Soho. In another instance, Khan hid in the boot of a car to slip into Kensington Palace, aided by Diana’s loyal butler, Paul Burrell.

Their romance flourished even during casual outings.

One day, when Diana was feeling low, Khan whisked her away to a pub near Harefield Hospital where he had worked. The name? The Prince of Wales.

”She thought it was hilarious,” he recalled with a chuckle.

Diana was so enamored that she even asked her butler to find a priest who could marry them, despite Khan’s Muslim faith. Their love deepened as they spent time together, sharing laughter and discovering each other’s worlds.

Diana reportedly read books on Islam and cherished a photograph of “my dishy doctor.” She even visited Khan’s family in Lahore, Pakistan, where she embraced their culture and enjoyed a delightful afternoon tea.

Met William and Harry

This whirlwind romance took a more serious turn when Diana introduced Khan to her sons, William and Harry.

She described him as “Mr. Wonderful” and, according to her butler Burrell, she referred to Khan as her soulmate. Friends of Diana stated that he was ”the love of her life” and that she expressed distress when their relationship ended.

Yet, as love stories often go, their fairytale faced obstacles.

The mounting pressure from the media began to take a toll on their relationship. While Diana was accustomed to the limelight, for Khan, the intense scrutiny was daunting.

He feared that pursuing their relationship publicly could jeopardize his career.

They discussed possible solutions, including moving to Pakistan — a plan that nearly came to fruition. Talks of relocating to Australia or South Africa were also on the table, but nothing materialized. According to The Guardian, Diana’s desire for public acknowledgment clashed with Khan’s reluctance, leading to a heartbreaking conclusion: the romance ended in July 1997.

Khan finds out about Dodi

Just a month later, tragedy struck. In the early hours of August 31, 1997, Diana died in a car crash in Paris, alongside her partner Dodi Fayed and their driver, Henri Paul.

Khan was blindsided by the news of Diana’s relationship with Dodi, discovering it only after it became public. ”When I found out, I was really mad; mad as hell,” he confessed in a 2012 interview.

Khan attended her funeral at Westminster Abbey.

The shadow of her tragic death looms over him still. “Sometimes I feel like screaming,” Khan shared, reflecting on the emotional turmoil. “There have been very bad times. I have moved on, but it keeps coming back.”

Despite the heartbreak, Khan fondly remembers Diana: ”We all have our drawbacks, but I found her a very normal person with great qualities and some personal drawbacks, like bad habits.”

Hasnat Khan today

In 2006, Khan married Hadia Sher Ali, a 28-year-old woman descended from Afghan royalty, but the couple divorced two years later.

He now lives in the UK, continuing his work as a heart surgeon and engaging in humanitarian efforts in Pakistan and Saudi Arabia.

Reflecting on his life, Khan shared: ”It is very good to be home. I am quite relieved to be home. My blood pressure is stable—I go fishing, I go for walks. It feels like a sanctuary. It’s very peaceful.”

Though the romance between Princess Diana and Dr. Hasnat Khan was short-lived, it remains an interesting chapter in her life, a testament to the complexity of love in the face of royal duty and public scrutiny.

As we remember the Princess, we celebrate not just her legacy, but also the love she shared with a man who saw her for who she truly was—a normal person with extraordinary qualities.