Signs You’re Not Ready to Buy a House


There are benefits to owning a property. You don’t have to deal with a landlord raising your rent every year. Homeownership provides a better sense of stability. And as a homeowner, you’re eligible for certain tax deductions.

But despite the benefits, this isn’t a decision to take lightly. Before you embark on this journey, you have to consider whether you’re ready for the responsibility. It can be difficult to assess whether now’s the time, but there are four tell-tale signs that you’re not ready to buy a house.

1.You’re barely getting by

In some cases, buying a home is cheaper than renting. But this doesn’t mean buying is always the right choice. Homeowners are responsible for home maintenance and repairs, which might include getting a new roof, new doors and windows, a new HVAC system and taking care of other minor repairs here and there. To properly maintain a home, you need disposable income to build a cash reserve. And unfortunately, if you’re just getting by as a renter, buying a home isn’t likely to improve your financial outlook—unless the mortgage payment is considerably less than what you’re paying in rent.

2.You don’t have enough saved

Having an excellent credit score makes you a good candidate for a home loan. But if you don’t have money saved up, now’s not the time to get a mortgage.

There are costs with just about every home loan transaction, such as your down payment and closing costs. The good news is that you can purchase with as little as 3.5% down. However, coming up with this case still involves advance preparation and making sure you have a savings plan in place to fund your down payment.

Even if you’re able to qualify for a home loan program with a zero down option, you shouldn’t move forward with a home loan until you have an emergency cushion. Mortgage lenders recommend having at least two or three month’s of mortgage payments in reserves in the event of a hardship like a job loss.

3.Unstable job outlook

You can’t purchase a home unless you have enough income. But having a job and sufficient income isn’t the only thing you need to take into consideration. For example, how’s the stability of the company you work for? If your employer has been cutting back in recent months, or if the company is experiencing financial problems, think carefully before getting a home loan. This is especially true if your gut instinct says your job might be in jeopardy. If you lose your job and you don’t have sufficient income to afford the mortgage, the bank might take your property.

4.You haven’t established credit, yet

If you apply for an FHA home loan, some lenders will approve your application even if you don’t have a credit score. The main problem with getting a loan without credit is that you’ll pay a much higher interest rate than an application with a good credit history, and the lender may require as much as 10% down. Rather than pay more for the property, delay buying for a few years and use this time to build (or improve) your credit score.

A secured credit card is one way to build credit history. These cards don’t require a prior credit history, but they do require a security deposit.