15 Signs Buying a House Could Turn Out to Be a Big Mistake

There are many benefits to investing in a property of your own. Becoming a homeowner enables you to set down roots and start building equity that can grow your wealth.

But it's not the right choice for everyone. In fact, in certain situations, taking the plunge into purchasing a property could end up being a financial disaster.

If you aren't sure whether this could happen to you, be on the lookout for these 15 signs that buying a house would be a big mistake.

5 Stocks Under $49

Presented by Motley Fool Stock Advisor

We hear it over and over from investors, "I wish I had bought Amazon or Netflix when they were first recommended by The Motley Fool. I'd be sitting on a gold mine!" It's true, but we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Click here to learn how you can grab a copy of "5 Growth Stocks Under $49" for FREE for a limited time only.

You absolutely do not want to buy a home if there is any chance you won't be able to pay your mortgage on time. Not only is this really stressful, but you could also end up getting foreclosed on if you don't pay.

Foreclosure is very damaging to your finances. You'll lose most or all of the money you put into your home, and your credit will be reduced for years to come. You can't take the risk of this happening, so don't buy a home if you aren't confident you can make the payments for the life of the mortgage loan.

ALSO READ: The 4 Costs That Make Up Your Monthly Mortgage Payment

Mortgage rates have skyrocketed in recent months, and the average rate on a 30-year fixed-rate mortgage is now well above 5.00%. This can make it harder to qualify for a loan since more expensive payments require a higher income.

Some people are being pushed into adjustable-rate mortgages (ARMs) because their lower starting interest rate means payments are initially lower. But these are very high-risk loans. That's because once the rates begin adjusting -- after the introductory period when the starting rate is guaranteed -- the rate, monthly payments, and total costs could increase.

If you can't afford to qualify for a mortgage without getting an ARM, you can't afford a home and shouldn't be buying one now.

Sometimes, lenders will determine that your financial credentials are not good enough to get a loan without a cosigner. If that's the case, you likely shouldn't move forward.

Lenders are usually good at assessing who can pay for a loan over time. If your finances are such that the mortgage loan provider doesn't think a loan is a good idea, you should think seriously about whether they might be correct. If you can't make payments, your cosigner could be held responsible for the loan, and you don't want to put someone in that position.

ALSO READ: Do I Need a Cosigner for a Mortgage?

Some mortgage lenders are willing to give expensive loans even to people who aren't in a good position to buy a property. These lenders are often referred to as subprime lenders.

If you are being offered a loan only at a very high rate, it's probably because the lender is concerned you'll default -- and that should be a concern for you, too. The high rate also means your monthly payments and total costs will be more expensive, creating unneeded financial stress.

Most experts recommend limiting housing costs to between 25% and 30% of your income. If you go above this threshold, you could find yourself house poor. That's a term used to describe a situation in which so much money is committed to making the monthly mortgage payment that you cannot afford to do other important things.

5 Stocks Under $49

Presented by Motley Fool Stock Advisor

We hear it over and over from investors, "I wish I had bought Amazon or Netflix when they were first recommended by The Motley Fool. I'd be sitting on a gold mine!" It's true, but we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Click here to learn how you can grab a copy of "5 Growth Stocks Under $49" for FREE for a limited time only.

If you're not certain your employment situation will remain the same, you could end up regretting buying a home. If your income falls, making payments could become incredibly difficult, if not impossible. Or if you lose your job, you might have to relocate to find another one. Neither of these things is ideal when you've just bought a house.

ALSO READ: 6 Questions Mortgage Lenders Ask About Your Income

It generally doesn't make sense to buy a home if you don't plan to be there for a minimum of two to five years. Buying a home only to turn around and sell it can cost you a lot of money due to transaction costs. You may also struggle to find a buyer, which means you won't be able to move on as planned. And taxes you owe on any profits from the sale could be higher if you were a short-term owner.

Although it is sometimes possible to get loans requiring $0 down from a limited number of lenders, it's not a good idea. Without money for a down payment, your choice of lenders will be limited and your loan will often be much costlier.

You also risk finding yourself in a situation where you owe more than your home's value. If that occurs, selling or refinancing wouldn't be available options unless you can bring the extra cash to the table to reduce your loan balance to below the property's current market value.

ALSO READ: Should You Raid Your Retirement Account to Buy a Home?

Closing costs are typically between 2% and 5% of the home loan amount. They can total several thousand dollars. If you can't afford to pay closing costs up front, you might have to borrow to cover them. But this means you get stuck paying interest on these transaction fees for decades, making them much more expensive. You'll want to make sure you have the cash to cover closing fees before moving forward with a home purchase.

Homeowners need an emergency fund much more than renters do. You are responsible for repairs and maintenance, so this fund could be invaluable if surprise expenses crop up. An emergency fund can also help you avoid foreclosure so that you don't have to worry about the devastating financial impact of losing your home for nonpayment.

5 Stocks Under $49

Presented by Motley Fool Stock Advisor

We hear it over and over from investors, "I wish I had bought Amazon or Netflix when they were first recommended by The Motley Fool. I'd be sitting on a gold mine!" It's true, but we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Click here to learn how you can grab a copy of "5 Growth Stocks Under $49" for FREE for a limited time only.

If you owe a lot of money to other creditors, you may not be able to qualify for a home loan at an affordable rate. That's because lenders look at your debt-to-income (DTI) ratio when deciding whether they should let you borrow and, if so, what rate to charge. DTI takes all your debts into account, including the new home loan expenses.

Taking on the financial responsibilities of homeownership may also not be a good idea if you want to become debt-free ASAP by paying extra to your loans.

ALSO READ: Debt-To-Income Ratio: What It Is and Why It Matters

Homeownership brings a lot of added responsibilities. For instance, you must either maintain your property or pay someone to do it for you. That means taking care of routine tasks, such as gutter cleaning and snow removal, but it also means addressing bigger problems such as a leaky roof.

In some areas, buying a property is costlier than renting a comparable one. If that's the case, you may not want to tie up a ton of your money in a mortgage when your home might not be as good of an investment as buying other assets.

ALSO READ: 3 Reasons Rental Property Investing Is Getting Stronger Than Ever

If home prices are very high, buying a house could be a decision you regret because you could find yourself facing serious financial trouble if the market declines. Your home could lose a lot of its value, sometimes leaving you owing more than it's worth.

It can be difficult to predict how the real estate market will trend or to know whether housing prices are in a bubble. But if properties are selling very quickly, especially with bidding wars involved, you may want to sit back and wait a bit to see if the market cools.

Finally, if you are buying a house because of public or family pressure to become a homeowner, you may find yourself very unhappy. It's a bit of a commitment to agree to pay a mortgage for decades and to take care of a property on your own. You should take on this responsibility only if you believe homeownership is really the choice that's right for you.

5 Stocks Under $49

Presented by Motley Fool Stock Advisor

We hear it over and over from investors, "I wish I had bought Amazon or Netflix when they were first recommended by The Motley Fool. I'd be sitting on a gold mine!" It's true, but we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Click here to learn how you can grab a copy of "5 Growth Stocks Under $49" for FREE for a limited time only.

Homeownership is not a decision you should rush into. It's a major financial commitment. If you spot any of these 15 red flags that suggest your purchase could be a mistake, make sure you take the time to think twice about moving forward and confirm that you're really ready to get on the property ladder.