When not to Buy

by : Virginia Wherland

While it may be seen as a bad career move for a real estate agent to publish an article advising people not to buy a home, there are a few times when the decision to make a real estate investment should be put on hold.

If you have recently changed jobs, you may have a hard time getting financing for a new home. Rather than wasting valuable time looking for a home, a smarter option at that time might be to continue saving for a down payment while maintaining a regular work schedule. You could also work at building your good credit history by purchasing things on credit and promptly paying them off. Once your current employment history and monthly income has been consistent for at least a year, and you have a healthy down payment saved up, then contact an agent to be shown homes for sale in the area you are wanting to buy in.

Similarly, if you suspect you will need to change jobs soon it is best not to purchase a home. The process of buying a home is expensive even if you don't consider the actual cost of the home. Imagine being laid off or transferred shortly after buying a home. If you are forced to make a quick sale of a home you just purchased, chances are you could lose thousands of dollars. Waiting until there is stability in your life is the best idea.

Let's say you got a promotion, or recently hit your savings goal, and thought it would be a great time to buy a car. You need to decide what you'd rather buy, a house or a vehicle, because chances are good you will be unable to do both. When getting pre-qualified for a loan, the assessor looks not only at your credit history and income stability, but also at your debts. If you have a couple-hundred dollar vehicle payment every month, it will probably compromise your ability to be approved for a loan. A lender needs to see your income as far higher than your debts to know you will not default on their loan to you. While you may be willing to live frugally to make up for having both a mortgage and car payment, the bank isn't going to see it that way. So if you are wanting to get into the real estate market in the near future, either purchase a much older and cheaper vehicle, or do with what you have for the time being. If you have just gotten into a vehicle loan, focus on paying it back as soon as possible before you try to enter the real estate market.

If you are new to an area, it might be a good idea to explore it a little before jumping into purchasing a home there. It can take time for the character details of different neighborhoods to reveal themselves, and buying in the "wrong neighborhood" is a decision that could affect you for life. Renting for at least a few months can seem like a waste of money, but in fact it gives you valuable time to make a wise decision about where you want to live and invest.

Of course no one likes to think about things like divorce or separation, but the reality is that some couples think buying a home together may save a failing marriage. Just like deciding to have a baby under similar circumstances, buying a home with a partner you aren't completely stable with is not a good idea. Separations are never easy, but adding financial negotiations to divide up your assets only makes it more stressful.