8 Key Signs You’re Not Actually Ready To Buy a House
Written by
Jordan Rosenfeld
Edited by
Molly Sullivan
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
Buying a home can be one of the most exciting and terrifying moments in a person’s adult life. A home provides stability and a legacy to pass on to heirs, but it’s also an enormous financial commitment.
Because of that, you never want to rush into making such a purchase. Even if you think you’ve got what it takes on paper, you want to be absolutely sure.
Real estate experts offered some key signs that suggest you’re not actually ready to buy a home.
You Don’t Have a Down Payment
While there are certainly programs that can help first-time homebuyers fund a down payment, in general, not being able to put one down, or a significant enough one, is typically a red flag, according to Walter Johnson, the founder and CEO of Sonos Capital, a real estate investment firm.
“When, for example, I see a buyer who does not even have enough money to put up the down payment and cover the closing costs, it tells me they may have underestimated the financial requirements needed to purchase a property, or perhaps they have no idea what they need,” he said.
You’re Struggling To Get Preapproval
Preapproval is the first step to receiving a mortgage loan — a way for the bank to determine if you’re financially capable of paying back your mortgage, and to also let you know how much you can reasonably afford to pay.
Johnson said, “If you are struggling to get preapproved for a mortgage then it may suggest that you do not have nearly enough money from your income to afford the house, including mortgage payments.”
Your Career Isn’t Stable
It may also be a good idea to look at your career, Johnson recommended. Is it something stable that can guarantee consistent long-term income? If not, then how much in down payment can you raise?
“If you are not anticipating staying in your job or retaining your current income over the long term, you may need to raise a much higher down payment compared to someone who has a stable job,” he said.
Your Income Is Inconsistent
Another red flag that a person may not be ready to buy a home is if they don’t have a steady, reliable income, according to Adam Hamilton, CEO of REI Hub.
Whether a person has lost their job, job hops or is self-employed and has unpredictable income, those can all be signs that having a large monthly mortgage payment may not be feasible.
“It may even mean that they can’t qualify for a mortgage in the first place or lenders won’t offer great terms,” Hamilton said.
You’re Rushing To Get a ‘Deal’
Another sign that you may not be ready is if you’re buying just because you believe you may never get a better deal than the one you have, Johnson said.
“Buying a house is a big investment and should only be determined by your finances,” he said.
You Don’t Know What You Want
If you’re waffling over a condo or a three-bedroom home, don’t know if you want a backyard or a front yard or neither, this could be a problem. When a buyer can’t pinpoint what they want in a home, they’re probably not ready to buy, Johnson explained.
“I prefer to work with some level of information. However, you find some buyers who are not even sure which neighborhoods they want, their budget, what they are looking for in a house, etc.”
You’re Not Financially Mature
Buying a home isn’t just about having your down payment and preapproval in place, it requires what Marc Van Steyn, a real estate agent and owner at EasySell Cash Homebuyers, called “financial maturity.”
Due to the pressure that society puts on people to purchase homes, he said, ” I’ve experienced people who are basically living paycheck to paycheck with little or no financial safety net wanting to purchase properties. While financially it’s possible, a job loss or medical issue can cause a tailspin.”
Additionally, he said that many buyers just don’t truly grasp the financial responsibilities and upkeep that goes into owning a home. “Many young people are more interested in traveling and experiencing life than being tied to a home and mortgage.”
You’re Too Focused on ‘How Much House’ You Can Buy
Van Steyn also pointed out a common misconception for new homebuyers is to seek out the “highest” preapproval amount, rather than focusing on a comfortable monthly payment.
When he works with buyers, he makes sure they calculate a comfortable monthly payment including taxes and insurance and take into consideration other expenses like car payments and food.
“Then [we use] that number, factoring in the current mortgage rates, and come up with a price range to purchase in, rather than just going to a lender and seeing how much they could buy,” he said.
While buying a home can be a great investment, rushing into it or not having all your financial pieces fully in place can lead to devastating outcomes. Do your research, connect with a real estate professional and be prepared before you make this big step.
More From GOBankingRates
