When to Say No to Buying a House

Depending on your financial status and your goals in life, you may be better off renting for a while longer and buying later, or maybe not buying at all.

When you buy a house; you are locked into a payment - you're kind of stuck there. If you get into the wrong situation at the wrong time, it is very easy to loose your house.

Remember, buying a home is the biggest financial commitment you'll ever make. Caring Realtors and lenders will urge people to approach home buying very cautiously.

Problems with job security, personal goals, financial resources and credit history can all wreak havoc on a home purchase. So rather than jump right in, you should see if your situation matches one or more of those outlined below. If it does, you might be better off putting your purchase off for a while. You can get into financial difficulties very quickly by over-extending yourself.

Job Uncertainty? Don't buy!

Workers on shaky ground with their employers or those who don't think they'll be able to find jobs nearby if the plant goes belly up might want to wait on buying a home. The same goes for people who plan on jumping ship soon.

Your monthly payment isn't the only issue. There are also the required closing costs and other home-buying fees that may tap into your reserve funds. And, if you have to sell shortly after buying, the fees associated with selling your home can actually leave you in the hole, especially if property values have been flat or even dropped.

Thinking of Flipping? Don't buy

Trouble can also pop up for you if you enter the home-buying process with unreasonable expectations. If you think a house will earn you a lot of money as a short-term investment, you might be better off renting, and investing your cash elsewhere.

With home-value appreciation averaging less than 3 percent a year locally, your chances of getting a real deal and turning around and selling in a short time period are not real positive.

Champagne Appetite on a Beer Budget? Don't buy

To some, a home is the only thing they've ever wanted in life. Unfortunately, that can lead people to throw every penny at the down payment and forget about the cost of fixing leaky pipes or painting the baby's nursery and painting it again when it turns out the ultrasound was wrong.

Buyers in this situation are taking big risks because they haven't built up any reserves. That can lead to serious financial difficulties when they're hit with a major home repair. Replacing the heating and cooling system or repairing a damaged roof can cost thousands of dollars.

Shaky Credit? Don't buy

If you have a shaky credit history, you might want to hold off on buying. Even though you may be able to get a sub-prime loan in today's easy-credit environment, doing so can sometimes just make things worse.

Rates and terms on sub-prime mortgages run much higher than they do on conventional loans. That makes it tougher to come up with the monthly payment. Some sub-prime loans have substantial prepayment penalties which make it costly to refinance at a lower interest rate.

The Reward is in Waiting

This may not be what you want to hear; but it can help you in the long run. When the time is right, you will find that home ownership is truly better with an improved financial foundation.

Just remember, there will be other houses.

From an article by Michael D. Larson - Bankrate.com - May 16, 2005

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