There are certain signs that you just aren’t ready for a home loan that you should be aware of before filling out an application. Thousands of people apply for these loans each year, but some people just don’t realize that they aren’t ready. If you are interested in buying a house, you will first need to know about some of the signs that getting a home loan isn’t the right call. In the end you will be extremely glad that you decided to get this information because of how much it will benefit you.
Your Credit is Abysmal
If your credit rating is very low, you might want to think about holding off on applying for a home loan. While it’s true that it is possible to get a loan for a house with bad credit, you will most likely end up with a high interest rate that will make paying back the money difficult. Just because you are able to get approved for a loan doesn’t necessarily mean you should take one out. Take the time to look over your credit thoroughly before making a decision.
You Don’t Have the Cash for a Decent Down Payment
A down payment of at least 20% is fairly standard when it comes to getting a home loan, so you will need to consider this when taking stock of your finances. If you cannot afford to put at least this much money down on a house, you should probably wait until you have the cash. The lower your down payment is, the higher your rate will be. If you don’t to be stuck with a very high interest rate for a large portion of your loan term, you will need to consider this. Those who do not put down a decent amount on a home will definitely regret it later.
You Don’t Think You Can Afford the Mortgage Payments
Anyone who wants to buy a house will first need to sit down and take a long hard look at their finances to see if they can afford the mortgage payments with each house. If you don’t think you’ll be able to swing the monthly payments, it’s a good idea to err on the side of caution. You don’t want to move forward unless you are absolutely certain that you will be able to make your payments consistently and on time. There are online calculator tools that you can use to determine this quickly, and it’s highly recommended that you take advantage of them.
You Aren’t Ready to Settle Down
If you don’t feel as though you are ready to settle down and commit to living in one place for the foreseeable future, it’s probably not a good idea to apply for a home loan. This is a huge commitment and responsibility that you will need to be one hundred percent okay with. If you think you might move in less than two years after getting your loan, you should probably rethink getting the loan altogether. Those who get a home loan should plan to be in the house they buy for at least five years or so.
Can You Afford the Move?
It’s also important to factor in the expense of the move when you are determining whether or not you can afford to buy a house. Depending on how far away you are moving and how much you have to transport, the overall cost of the move could be quite substantial. Take the time to figure out how much the move is going to cost as a whole so that you can make the right choice. Get quotes from numerous moving companies, as this will definitely be the biggest expense associated with moving to a new house. The more quotes you get, the more money you will end up saving.
Your Employment is Shaky at Best
If you have some reason to believe that you might become unemployed in the near future, the last thing you should do is take out a home loan. Those who suddenly lose their jobs after getting a home loan can find it difficult to keep making payments. Unless you have a lot of money in your savings account, you should wait until you have stable employment. Loss of job is one of the most common reasons for people defaulting on their home loans.
You Don’t Have Much in Your Savings Account
The more money you have in your savings account for emergencies, the less likely you will be to lose your house if you fall on hard times financially. You don’t necessarily have to have a ton of money in your savings account to get a home loan, but it is a good idea to have a decent amount saved up just in case. You don’t want to find yourself in a bad financial situation without any way to get by until things start getting better.
You Have a lot of Debt You Still Need to Pay Off
Nobody with a significant amount of debt should even apply for a home loan. Most lenders won’t approve your application if you are saddled with a lot of debt, and it’s something you should keep in mind. If you already owe quite a bit of money on your credit cards or in student loans, you don’t want to add yet another debt to strain your finances. Wait until you have taken care of a majority of your debt or eliminated it altogether.
Final Thoughts
A home loan is a very serious thing that you should not take lightly. There are a lot of different angles to consider before you fill out an application to get the process started. Too many people get these loans without really thinking about it first. The more time you spend examining all of these things, the better off you are going to be down the line. Considering these things can save you a lot of frustration and ruined credit later on.