Owning a house is certainly a smart financial move, but are you ready to make the biggest purchase of your life?
Just because your friends are sharing their new home purchase on social media doesn’t mean you should jump on the bandwagon. You may not be ready to buy a house.
Pay heed to these 5 clear warning signs that you might not be ready yet to buy a house.
1. You Don’t Have Enough Money In Savings
Great, you’ve saved up enough money for a down payment. That’s a good first step. But you’re going to need much more than that in your bank account. After buying a house you’re going to need money for moving costs, furniture, decor and minor repairs.
Then there’s emergencies. What if a powerful storm causes a leak in your roof? What if you find out that termites are gnawing your house down? Do you have enough money in your savings account to take care of these unexpected emergency repairs? When it comes to unexpected emergency repairs, expect the unexpected. If you don’t have enough saved up you are just one major catastrophe away from being in major debt.
2. You Are Still In Debt
You really can’t be expected to buy a house if you still have debt. You’re going to need to pay off your credit card debt first. I mean, if you can’t handle credit cards, how do you think you’re going to be able to handle a mortgage payment?
To improve your chances of being able to handle a monthly mortgage payment, change your spending habits and reduce your debt load.
3. You Don’t Make Enough Money
You may feel like you make enough money to purchase a new house, but you probably aren’t considering all of the costs.
You’re going to need money upfront for the down payment, closing costs and your emergency savings. Then there’s ongoing money for the mortgage payments, taxes and homeowners insurance. Do you make enough to cover all of that comfortably?
4. You Have No Credit
You might have thought that being cautious to avoid debt is a good idea. But if you want to buy a house, you’re going to need to have a very personal relationship with credit.
Before you start looking for a house you should look at your credit report. If it looks empty, that’s just as bad, if not worse, than having bad credit. If you lack credit, consider getting a credit card and using it responsibly.
Some lenders can take into account other bills to peer at your credit worthiness such as utility bills, cellphone bills, rental payment history and car insurance payments. But it’s best to have your credit history show up on your credit report.
5. You’re Not Sure What You Want
Uncertainty should kill your dreams of owning a house. If you’re not sure – you’re not ready.
Are you sure what community you want to live in? Will you stay there for the long term? If you don’t, you’ll have to sell your house and possibly lose money on the transaction.
Do you want a small home, a duplex, a condo or a two story home? If you’re not sure what type of home you want to buy, then you’re not ready to buy a house.