If you are considering buying your first home and just in the planning stages, you are in the best position. Many people wait to plan months even weeks before they need to be in a home. You do not
Five Reasons You May Not Be Ready to Buy, Yet
Dated: July 18 2021
Everyone wants to own their own home one day. Some of us are totally qualified - on paper. We have a good credit score and history, some assets, and a solid income. Having these qualify you to buy, but should you?
Some housing professionals May differ in their opinion, but not everyone needs to own a home right now. The reality is being qualified, initially May not mean that owning a home is right for you at the current time.
Most people, however, will eventually buy a home and be perfect homeowners. Some of us May need to ask ourselves some real questions.
Whatever your situation, here are five reasons you might consider waiting.
1: You May relocate for work or life
Most of us do not know what is just around the corner in our lives. You can be offered your dream job in another state, or you May find yourself moving to be with that one true love. There are impacts to your home ownership.
Commissions, closing costs, and other fees will cost you around 5-7% when you sell. If you held the home less than two years you will also have to pay capital gains tax. Hold it more than two years and you avoid that burden.
Of course, you could always rent the property when you move, but do you want to be a landlord? Most people would love the income this could provide, but it does come with additional burden of finding and dealing with tenants.
2: Your Job (or Income) Is Not Secure
As we have seen with 2020 and the outbreak of COVID-19, many things can and will impact your job. The state of the economy is also subject to changes.
Self-employed or working for a Fortune 500 company, it doesn’t matter. If you lack the wiggle room needed to absorb a slow year or a few months off then you need to consider that heavily.
Be especially cautious if you have a lack of security with either of the next two reasons you might want to wait.
3: You’re in a Ton of Debt
Heavy-debt makes it harder to qualify for a mortgage. It throws your debt to income ratio into the red-zone, makes it difficult to save for a down payment and lowers your credit score.
In other words, it takes the decision to buy out of your hands because it is simply not a possibility.
Another piece of having a lot of debt is your money management skills. Be realistic - are you good at managing money ?
4: You have little Assets for a Down Payment
We do not always need to save 20% for a down payment. Most Mortgage loans require Private Mortgage Insurance (PMI) if you cannot put 20% of the sale price down at closing. However, that does add to your mortgage payment.
Remember that there’s more to buying a home than down payments and closing costs. You have an inspection, appraisal and the cost of moving to consider. You might want to make changes to the home as well.
If you have to put any of those expense on a credit card you should pause and consider your decision. Don’t let the closing process wipe you out, you need money for additional expenses.
5: No Budget for Additional Expenses
Don’t fall into the trap of thinking your mortgage will be your only expense. While you were a renter, your rent May have been your only home-related expense, but as a homeowner, you need to pay the plumber, electrician, handyman, roofer, HVAC company and more.
If the home is located in an HOA-governed area, you’ll also need to pay associated fees. Make sure you have enough wiggle room in your budget for these bills.
Hello - I am one of the Sales Agents for RJ Williams & Co LLc. I have been living in Fort Worth, Tx since 2009 also a retired Marine MSgt.....
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