Three Signs You Should Rent For Another Year Before Buying
Owning a home can be a blessing, or it can be a curse. This largely has to do with when you buy. If you buy a home too early, you may experience financial challenges and other challenges that make the purchase seem like a mistake. If you buy at the right time, it's easy to fall in love with your home as a source of stability. To ensure you don't buy too soon, take a look at these three signs that you should wait another year before pursuing the real estate listings again.
Sign #1: You are anticipating a change in employment.
If your company is on the verge of restructuring, you're considering a change of career, or you're bracing yourself for a possible layoff, now is not the time to buy. You don't want to be stuck with a reduced income or loss of income when you're just getting used to making payments on your home. Figure out your job situation, make sure you're confident you'll be employed for at least another two or three years, and then make moves towards homeownership.
Sign #2: Your account will be empty after you make the down payment.
If you go with an FHA mortgage, you'll need to save up 3.5% of the home's cost as a down payment. With a conventional mortgage, you need 20% of the home's cost as a down payment. However, just having this amount of money set aside is not enough. You'll also want to have at least a few thousand dollars more set aside in a savings account to cover "surprise" expenses that pop up shortly before or after you buy a home. For instance, the bank may require that you replace some railings or add some steps before you buy the home--you need to have cash on hand to pay for such alterations. If the down payment will empty your bank account, save up for another year before buying.
Sign #3: You have a lot of debt.
There's a fine line between having a manageable amount of debt and having overwhelming debt. The difference is highly dependent on your income and job stability. However, if you feel like you're overburdened by debt payments already, it's not the right time to buy. Work on paying down your debt over the next year. Try to eliminate a loan or two so that when you do buy, you have fewer payments to make each month.
