You'll hear a lot of people say that "not everybody should own a house", which is partly true, but could be a bit more correct if phrased as "not everybody should own a house right now." There's always a good timing for everything, and that includes when to invest on real estate. Some people who search homes for sale in the hopes of buying real estate property without determining a few things in their personal and financial situation may be in for a rude awakening. Conversely, people who sit the fence when they are, in fact, ready to buy a house, may be missing out on great opportunities for real estate investment.
So how exactly do you determine whether you're ready for this great financial commitment or not? There are many indicators. Some are easy to spot right off the bat. Some require a bit more research, proactively finding out for yourself where you stand. Here are a few examples:
1. Bad credit history - People with bad credit history rarely understand how long it will take for them to repair their credit score, let alone what they have to do to repair it. Most of these people are misled into trusting predatory lenders with their hard-earned money just because they really want to buy a house. If you checked your FICO score and find out that it's at least 620 and above, then it's one piece of the puzzle in the right place.
2. Paying off too much debt - How much of your income goes to debt payment? If you have a lot of debts to deal with, it's probably a good idea to finish dealing with them first and get them under control before considering buying a house. Not only will this improve your ratio (which will be important to lenders), it would also make sure that you don't end up in a tight spot someday because most of your monthly income goes to debt payment.
3. Planned changes in the near future - Are you planning to relocate or make a career change soon? Such big decisions would affect not just your credit score but also how you'll handle the stress of taking on a mortgage. You may be thinking that you're doing yourself a favor by following a line of work that's more aligned to your "dream job", but lenders will look at it differently. When paying off a mortgage, the real favor you'll do for yourself is giving your self some stability by sticking to some important things until you get your bearings.
4. Ready for some elbow grease - All homes need maintenance. Some need more maintenance than others. Are you ready for this reality that home owners face every day? If you are not sure that you're the type of person who can be bothered with home repairs and checking stuff around the house to make sure everything's well-maintained, home ownership may be a difficult path to take.
5. When you have enough money for downpayment and more - Some people stop counting at the downpayment when in reality, home ownership entails a lot more than just that. From the time that you pick a home to the time you move in, there are upfront costs to be considered. If you're not prepared for this, it's best to wait a little while and save more money for these.