Back in March we posted an article about 7 signs that you are ready to buy a house. This list is great to reference when you are thinking about purchasing a home. However, what if you aren’t ready to take that step yet? Buying a home is one of the biggest purchases that someone will make in their life. This investment can pay off if you are financially and emotionally prepared for the responsibility that homeownership brings. However, the American Dream can quickly turn into a nightmare if you are not ready to buy a house.
Here are 7 signs That You Are Not ready to Buy a House:
1- You aren’t sure where you want to live
Before you buy a home you need to be certain about where you want to live. If you are in a career that may result in a relocation or if you are considering a big move in the impending future it is wise until you feel like you can settle in one area before purchasing a house. You can change many things about a home, but location is not one of them.
2- You don’t have stable employment
Without stable employment it would be very difficult to pay for a mortgage. There is one thing you can depend on with buying a home and securing a mortgage, and that is making a large payment every single month for the next 15-30 years. If you aren’t confident in the tenure and sustainability of your job wait until you feel more secure before purchasing a house.
3- You have no money saved up.
Buying a home is expensive and before beginning the purchase process you should have a substantial amount of money saved. From the moment you make your earnest money deposit to the moment you pay for closing costs and down payment you are responsible for very large expenses. Having a large cushion within your savings account will allow you to make these payments with ease.
4- You’ve never lived on a budget.
Before buying a home it is wise to start living on a monthly budget. You should have a good sense of how much money is coming in and how many bills are paid each month. Being aware of every dollar spent will also help keep a budget in check. Budgeting before buying a house will allow first time homeowners to have a handle on their monthly finances before throwing in the responsibilities of homeownership.
5- Your credit is not in good standing.
Life happens and sometimes your credit score can suffer from this. It is understandable that someone may not have great credit but want to buy a house. However, you do not want to be locked into a terrible rate with a subprime lender because your credit was not in a good place to buy a house. Take time to start repairing your credit and in a few years you can have money saved and a decent credit score that will give you the home loan you need to buy the house you want.
6- You just want to stop renting.
One of the biggest arguments for buying a house before someone is ready is that you are sick of renting. Many people use the analogy of “flushing their money down the toilet” each and every month to rent. While it may feel this way, renting does have a time and a place. If you are not financially ready to buy a house, renting is a great alternative. Some tips to make the transition from renting to buying would be to rent a smaller space in an affordable neighborhood, live below your means, and think of creative ways to save money.
7- You are just trying to impress others
Purchasing a home in the efforts to impress others is a big sign that you are not ready to buy a house. Don’t purchase just because you see your fellow classmates doing so on Facebook. What others think of your living situation should not sway your decision of whether or not to buy. Let’s face, they may have opinions on their own, but the only person who will be paying your mortgage every month is you. Don’t let others opinions or actions determine your readiness to buy a house.
Before making the leap into homeownership reflect on whether or not you are truly ready for the financial commitment of homeownership. Buying a house can be a great investment if it is done at the right time. Be sure that your American Dream does not turn into a nightmare.