3 Scenarios Where Buying a Home Is a Terrible Idea

Don't buy a home just yet if these things apply to you.

Many people are eager to buy homes these days. Even though property values are high, mortgage rates are sitting at attractive levels, and that's pushed a lot of people to go out and make offers.

But before you move forward with home buying plans, you'll need to make sure you're really in a good place to take on the financial aspects involved. And if these three situations apply to you, it could really pay to wait.

1. You don't have any money in emergency savings

You may have enough money to put down 20% on a home or to make another down payment that a mortgage lender will accept. But if making that down payment will leave you with little or no money in emergency savings, then buying a home could end up being a dangerous move.

When you own a home, you could face a host of unplanned expenses, like sudden repairs, extra maintenance costs, and rising property taxes. It's important to have an emergency fund with at least three months' worth of living expenses before taking that leap.

2. You don't have a stable job

You don't necessarily need to have the highest-paying job to get a mortgage. But what you really should aim to have before buying a home is a steady job -- one you're not worried about losing in the near term. If that's not the case, then you may want to consider holding off on purchasing a home until you're able to secure a better job or until things settle down where you work now.

Imagine if you were to sign a mortgage, only to lose your job a few months later. At that point, you might struggle to keep up with your payments and put yourself at risk of losing your home, all the while damaging your credit score in the process.

3. You're really stretching your budget to afford a mortgage

Maybe you can technically afford to pay a mortgage every month, plus cover the additional costs associated with owning a home. But if doing so will really strain your budget and leave you with little room left over for other expenses, then you may want to put your plans on pause.

Generally speaking, your housing costs, including your mortgage payment, property taxes, and homeowners insurance premiums, should not exceed 30% of your take-home pay. Now there's a tiny bit of wiggle room with this formula. If you're really able to keep your remaining bills low, then you may be okay to go above that 30% threshold. For example, perhaps you don’t need a car where you live because you can walk everywhere or take public transportation. But for the most part, try to stick to that rule.

And if you can't manage to do so, you may want to save up more of a down payment and then move forward with home buying plans. The more money you put down, the less of a mortgage you'll have to take out, and the lower your monthly home loan payments will be.

Buying a home is clearly a huge undertaking -- one that you really need to be ready for. It may be the case that you're set with money for a down payment as well as a solid emergency fund, you have a steady job, and you've run the numbers and can comfortably afford a home in the neighborhood you're looking at. But if you're unsure about any of these factors, waiting to buy could be a better choice for you.