With mortgages hovering above 6% and inflation continuing to drive up prices for consumers, many potential homebuyers may feel their savings strained. House hunters may also be unaware of the many hidden costs of home buying.

Ramsey Solutions Master Financial Coach and Debt Elimination Expert Jade Warshaw joins the Live Show to break down the hidden costs potential homebuyers need to consider.

In addition to the hidden costs, Warsha states, "At the end of the day, I always tell people, don't let the market determine if you're ready to buy: you determine if you're ready to buy...The best way to enter into buying a house is to make sure you've got no debt, you've got three to six months of expenses saved, and then as a first-time home buyer, if you can scrounge up 5% to put down, I'm very happy for you."

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Nicholas Jacobino

Video Transcript

BRAD SMITH: Buying a new home in the US is an expensive ordeal, and that certainly won't change anytime soon thanks to higher mortgage rates and sticky inflation beyond the initial down payment-- and mortgage, there's a slew of hidden costs lurking in the shadows of home buying.

For more on the hidden costs of buying a new home, I'm joined by Jade Warshaw who is the Ramsey Solutions master financial coach and debt elimination expert. Great to have you here with us this morning, Jade. Thanks for taking the time.

JADE WARSHAW: Hey thanks, Brad. Thanks for having me.

BRAD SMITH: Absolutely. So, we were just breaking down some of the new home sales data, but what should buyers and sellers in this market be anticipating going into this pivotal spring buying season?

JADE WARSHAW: Yeah, you know, I always tell buyers make sure you go in it's with a stacked D.E.C.K. This is an acronym, right. Of course, D is for down payment. We all know that's coming, and we want to put down somewhere between 5% to 20%. 20% is great because it will help you avoid a hidden cost private mortgage insurance, and so if you want to avoid that, try putting down 20% or more if you can.

And then, of course, E is for earnest money. Yes, we all know we have a down payment, but earnest money is money that we put down-- usually somewhere between 1% to 3% of the purchase price, and this really just shows that we're very serious about buying this property. The only problem is a lot of people aren't ready to fork over that cash. Yes, it will be rolled into the down payment once the deal closes, but you need to have that money ready to present before closing.

And then, of course, you want to come through with your closing costs. That can be anywhere between 3% to 5%. And you want to keep in mind other hidden costs like appraisals, inspections, even putting up several months of your property tax ahead of time.

BRAD SMITH: So, for those who are expected to enter into this housing market-- there's a lot of focus this time on first time home buyers, and where they could potentially be looking whether that's at new homes or whether that's existing. Where are we kind of expecting that to net out going into this season?

JADE WARSHAW: You know, at the end of the day, I always tell people, don't let the market determine if you're ready to buy. You determine whether you're ready to buy. And so that might be a new build a lot of them are offering. They have the ability to offer incentives, right, whether it's a slightly lower mortgage fee or interest rate, but just be careful because a lot of times it's only for a limited time. And then as time goes on, that interest rate goes up to a normal level, so be careful with that.

But at the end of the day, I want to make sure everybody understands the best way to enter into buying a house is to make sure that you've got no debt, you've got three to six months of expenses saved, and then as a first time homebuyer if you can scrounge up 5% to put down, I'm very happy for you.

BRAD SMITH: For those who are considering selling their home in order to get into a new home, what are the important things to remember about that settlement and then the purchase towards the next shelter, or the next domicile, or home, or the pad, whatever they're calling it. It's just new new.

[LAUGHTER]

JADE WARSHAW: The crib.

BRAD SMITH: Yes. Love it.

JADE WARSHAW: That's right, that's right. So, Brad, what I would tell people is-- as tempting as it is, when we're looking at new houses on the market and we're ready to sell our house, I would always say if you're going to sell your house and buy another house, make sure you do it on a contingent offer. I do not want people saying, "I know that my house will sell eventually. I'm just going to jump into this new house. And if for a while I have to float two mortgages, no problem."

That is such a scary position to be in. So, make sure that you have sold and closed on your previous home before you buy another home. Or if you are going to make an offer on a new home, make sure that it is contingent on the sale of your previous home.

BRAD SMITH: Jade, as we're looking across the country right now and evaluating some of the data and where the hotspots are, where are the hot locations that are seeing the most bids, seeing the most flow into the market as well that you're tracking?

JADE WARSHAW: Well, listen, we know that South Florida is popping off. I'm a native of South Florida and those property rates have gone through the roof. People have doubled the worth of their house. And, of course, for the sellers this is a great time, but-- especially if you're a seller and you're moving out of South Florida into a less expensive market, but if you're in South Florida at the moment, it's very tough for you because properties are so, so expensive.

Here in the Nashville area, we're seeing the exact same thing, but I like to tell consumers, there's a lot of factors that go into this. And I don't want people to get frustrated just because they live in a very expensive market. Think of the market as concentric circles. And as long as you are willing to go into a wider radius, you can always find less expensive properties. The further out of that radius you go, the more affordable properties that you're going to find in that area, so keep searching.

BRAD SMITH: Jade, just lastly while we have here. I always do a kind of Command F-- or Control F for those who are on Macintosh systems, when we hear from Home Depot and Lowe's in their earnings calls and their transcripts come out, I do a Control F for DIY. The do it yourselfers out there because they might be looking to spend a little bit more right now to beef up their existing home so that they can list it on the market. What are some of the hacks to make sure that you get more value when you get that home appraised?

JADE WARSHAW: Listen, I think it's so important to make sure that your house is ready for sale. The key thing to remember here though, Brad, is not to go in debt in order to do so. Try to do these upgrades at the speed of cash. And at the end of the day, if you are a homeowner, the best thing that you can do-- remember, home is an asset. It's a way to build wealth. It's a vehicle for you to build wealth. So do your very best not to pull that equity out in the form of home equity lines of credit, HELOCs, that sort of thing because all you're doing is robbing from your future self.

And trust me, when you go to sell, the last thing you want to realize is that you pulled out all of your equity because you needed to, I don't know, give yourself a new bathroom that did not give you the rate of return that you thought it was.

BRAD SMITH: Jade Warshaw, Ramsey Solutions master financial coach debt elimination expert and debt free entrepreneur. All things with the keys of the crib there. Appreciate it, Jade.

JADE WARSHAW: Thanks, Brad.

BRAD SMITH: Talk soon.