Becoming a homeowner has long been considered a part of the American dream. But just because you can buy a home now doesn’t mean you should. This will be one of the most important financial decisions you ever make. A real estate agent will be there to help you through every step of the way, but a good agent will be looking out for your best interests. Sometimes it’s better to wait and under the following circumstances, it’s better to hold off on buying a home, at least for now. Here are five circumstances when a good agent would talk you out of buying a home.
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Your credit is bad or could be better
You don’t need perfect credit to buy a home but if there’s room for improvement then it’s definitely better to wait. A poor credit score could mean being refused a mortgage and even if you do secure one you’ll most definitely have a higher interest rate. Mortgage lenders take everything into account when determining how much to approve you for and the details of the loan. This includes your credit history, debt-to-income ratio, and any other loans you may be paying off such as car loans, student loans, and credit card debt.
For an FHA loan, you’ll typically need a credit score of at least 580 while for a conventional one you’ll need a minimum of 620. If you can raise your credit score over the next year by paying off your debts (aim for a score of 700) then you’ll be in a much strong position to secure a mortgage.
You don’t know your timeline
Many first-time buyers overlook how important it is to know your timeline for moving. Until you know exactly when you need to move by its better to put off even making an offer. It frustrates the buyers as it leaves the scheduling for the closing date in question. Perhaps you’re waiting to sell your current home and don’t even have an offer yet. Maybe you need to wait for your current lease to expire. If you don’t have an exact moving date or even a rough estimation, it’s better to wait on making an offer until you’re sure.
You don’t have enough to make home repairs and renovations
If the cost of buying a home is already stretching your home budget, to begin with, you probably won’t have enough to cover the inevitable costs of repairs and renovations. A tight budget will mean limiting your buying options to homes in need of some maintenance. Before you make an offer, you should know what you’re getting into. At the least, you should have a home inspection contingency included in the purchase contract. That way, if the inspection finds that repairs beyond your budget are needed you’ll have a way out of the deal.
Little job security
A prerequisite for buying a home is financial security. If you feel that your job may be in jeopardy then now is not a good time to buy a home. The reason most people go into foreclosure is that they lose their jobs and can no longer keep up with their mortgage payments. Anyone who becomes unemployed tends to prioritize buying groceries and keeping gas in the car rather than keeping up with their monthly payments. Unless you feel your job is secure it’s better to put off buying a home.
There is a declining real estate market
Any agent worthy of the name would advise you against buying a home if the market is facing a potential correction or going through one already. People who buy in a declining market will feel a cold sweat as their equity complete disappears as the market continues to decline. Buying in a falling market means that if you put 20% down on a home and the market declines by 5% you’ve now lost 25% of your investment. The only justification for buying in a declining market is when you’re speculating and predicting that the market will soon rise again. A good agent will generally advise against this as predicting the market is notoriously difficult and risky.
You don’t feel ready
Most importantly, you need to feel ready to buy a home. Becoming a homeowner comes with a lot more commitment and responsibilities than being a renter. if you don’t feel confident that now is the right time for such a huge financial and emotional commitment then it’s better to wait. An unconfident buyer only frustrates the buying process and in turn, makes your agent unconfident when it comes