Having a mortgage is pretty bittersweet. On one hand, you finally own your own home and have the freedom to do whatever you want with it. It’s a major life accomplishment and is definitely something to strive for. On the other hand….you have to pay a mortgage every month. So how do you know if you are ready for the added responsibility? Should you get a mortgage? Scott Sheldon at ABC News lists five times when you should probably hold off:
Your Debt Is Too High If more than 10% of your monthly income goes to liability payments (car loans, credit cards, other debts), not only will these liabilities hurt your ability to qualify, they limit how much house you qualify for.
Your Income Is Too Low. Maybe your income is just not high enough to support a house payment for the price range you desire.
You Don’t Have a Down Payment or Closing Costs. You’ll need at least 3.5% of the purchase price for a down payment.
Your Employment is Not Stable. Possible change of careers? How about a job gap? These situations not only can hurt your potential ability to qualify for the loan, but it raises the question of whether or not you can support a house payment.
Your Credit is Less than Stellar. Do you have derogatory items on your credit, like a bankruptcy or short sale, or even a foreclosure? It’s an automatic 2- to 3-year wait to re-enter the market.