3 scenarios where buying a house is a terrible idea

Don’t buy a house right away if these things apply to you.

Lots of people are impatient to buy homes these days. Even though property values ​​are high, mortgage rates are at attractive levels, which has prompted a lot of people to go out and make offers.

But before you go ahead with any home buying plans, you’ll need to make sure you’re really in a good position to take on the financial aspects involved. And if these three situations apply to you, it might really pay off to wait.

1. You have no money in emergency savings

You may have enough money to put 20% on a house or to make another down payment that a mortgage lender will accept. But if paying that down payment leaves you with little or no emergency savings money, then buying a home could turn out to be a dangerous decision.

When you own a home, you could face a host of unexpected expenses like sudden repairs, additional maintenance costs, and increased property taxes. It’s important to have an emergency fund with at least three months of living expenses before you take the plunge.

2. You don’t have a stable job

You don’t necessarily need to have the highest paying job to get a mortgage. But what you should really aim for before buying a home is a stable job – one that you don’t mind losing in the short term. If not, you may want to consider putting a stop to buying a home until you are able to find a better job or until things work out there. where you are currently working.

Imagine if you were to sign a mortgage and lose your job a few months later. At this point, you might have a hard time keeping up with your payments and put yourself at risk of losing your home, while damaging your credit score in the process.

3. You are seriously over budget to afford a mortgage

Maybe you can technically afford to pay a mortgage every month, on top of the extra costs associated with owning a home. But if it’s really taking a toll on your budget and leaving you little room for other expenses, then you might want to put your plans on hold.

Generally speaking, your housing costs, including your mortgage payment, property taxes and home insurance bonuses, must not exceed 30% of your net salary. Now there is very little leeway with this formula. If you are really able to keep your remaining bills low, then you can exceed that 30% threshold. For example, you might not need a car where you live because you can walk everywhere or take public transportation. But for the most part, try to stick to this rule.

And if you don’t, you might want to save more on a down payment and then move forward with home buying plans. The more money you deposit, the less mortgage you will have to take out and the lower your monthly mortgage payments will be.

Buying a home is clearly a huge business – one that you really need to be prepared for. You may have money for a down payment as well as a strong emergency fund, have a stable job, have managed the numbers, and can comfortably afford a home in the neighborhood you want. search. at. But if you are unsure about any of these factors, then waiting to buy might be a better choice for you.

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