Becoming a homeowner has long been considered a part of the American dream. But just because you can buy a home, doesn’t mean you should.
Purchasing a home is one of the most important financial decisions you will ever make, so it’s crucial to consult an experienced NAEBA real estate agent, one who has your best interests and will stand by your side every step of the way.
An exclusive buyer agent will be there to ensure you understand every commitment and fee, but they will also be honest if they don’t think now is the best time for you to start the homebuying process.
Here are a few common circumstances in which a qualified realtor would likely recommend you put a property purchase on hold:
You Need to Improve Your Credit
While you don’t need perfect credit to buy a home, it may be advantageous to wait if you can easily make improvements.
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 the details of the loan, including the amount you are approved for. This also 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, but for a conventional loan, 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), you’ll be in a much strong position to secure a mortgage with realistic payments.
You’re Locked into a Lease
Many first-time buyers overlook how important it is to tie up loose ends before making an offer on a home. Before you make an offer, you must be prepared to move within a month or two.
While the homebuying process can take several months in certain situations, in others it can move very quickly. After spending a huge chunk of cash on a down payment, you don’t want the burden of continuing to pay for your rental.
You Will Empty Your Account on the Down Payment
If the cost of buying a home is already stretching your budget to begin with, you may find yourself in a dangerous situation if you can’t afford necessary repairs after moving in. A tight budget could mean limiting your quality of life.
Before making an offer, you should at least know what you’re getting into. This is why home inspections and other contract contingencies are highly advised for all homebuyers. If the inspection finds that repairs beyond your budget are needed, you may have a way out of the deal. A NAEBA Exclusive Buyer Agent can help protect your investment in situations like these.
You’re Scared of Job Layoffs
A prerequisite for getting a mortgage through a bank is financial security. If you feel that your job may be in jeopardy, now is not a good time start the homebuying process.
A common reason people suffer home foreclosure is because they’ve lost their job and can
no longer keep up with their mortgage payments. Unless you feel your job is secure, you may want to put off buying a home.
The Real Estate Market is Declining
A real estate agent focused on buyers’ interests might advise you against buying a home if the market is facing a potential correction or current experiencing a decline.
People who buy in a declining market could see their equity quickly diminish as the market declines. Buying in a falling market could mean that if you put 20% down on a home and the market declines by 5%, you’ve now lost 25% of your investment.
One justification for buying in a declining market is that you’re speculating and predicting that the market will soon rise again. However, most NAEBA exclusive buyer agents would generally advise against this as predicting the market is notoriously difficult and risky
Your Heart Isn’t Ready
Most importantly, you need to feel ready to buy a home and your heart should be in the genuinely engaged in the process.
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, it might be better to wait.
Even if you might not be ready to start the homebuying journey now, you can still contact a NAEBA realtor in your area to answer some of the questions you might have. We can assess your situation and provide you a realistic timeline and suggestions for preparing for the homebuying process.