8 Signs You're Ready To Buy A House (and 5 Signs You're Not), According To An Expert

To rent or buy, that is the question.

Buying a home will likely be the biggest purchase you ever make — and knowing when to buy and when to sit tight and rent can be tricky.

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Chances are you have at least one regret in your back pocket, a "why didn't I buy back in 2019" moment.

But here's the reality: If you didn't, the only thing you can do is not make the mistake going forward. And rather than rushing out and buying something you can't afford out of desperation, slow down and consider where you're at, where the market is at, and make a plan based off the facts.

To get a better idea of when you should go for it (and when you shouldn't), we talked with an expert at Realtor.com.

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BuzzFeed world, meet Clare Trapasso, executive news editor for Realtor.com, a real estate listings website.

Signs you should buy:

1. Houses in your area are on the market for a long time and their sale prices are dropping.

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It's been a seller's market since the pandemic, but Trapasso says, "Now, it’s shifting a bit. There are more homes for sale than there were a year ago." That said, she notes that the "demand for housing still outstrips the supply of it. So, it’s not a buyer’s market quite yet, but it is coming more into balance."

Signs the real estate market in your area might be shifting are homes that have been sitting on the market for a while and sale prices being slashed. 

Trapasso says that "about a fifth of all sellers cut prices in November" — a sign that bodes well for buyers.

2. You've heard of other buyers submitting offers under the asking price or requesting concessions from the seller.

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It may be time to buy if buyers in your market have a little negotiating power. Trapasso says two big signs of this are that "...buyers are able to submit offers under the asking price" or "ask for concessions such as the seller contributing to the buyer’s closing costs or buying down the buyer’s mortgage rate."

3. You have enough money to cover the down payment, closing costs, and then some.

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In an ideal world, homebuyers should have enough money saved to cover a 20% down payment, an extra 3% to 6% for closing costs, and money left over for things like furniture, home maintenance, and emergency repairs.

That means if you want to buy a $300,000 home, you'll need around $80,000 in the bank ($60,000 for a down payment; $9,000 to $18,000 for closing costs; and extra cash for things like a new couch or an emergency repair).

4. You're already pre-approved for a mortgage and can act fast.

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Getting pre-approved for a mortgage before you find your dream home will make sure you have a chance to iron out any problems, clean up your credit, and find the best lender. 

"This way, they’ll be ready to put in an offer if they fall in love with a home," says Trapasso.

5. Your mortgage payment is less than what you pay for rent. (That said, times are a-changin'.)

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Historically, a monthly mortgage payment was less than the cost of rent (assuming the two residences were similar in size and quality), but in this wild world of high interest rates and home prices, that's not always the case.

According to Bloomberg, "The difference between median rent and monthly mortgage payments in the US is the smallest on record," so, many people are paying more money to own than they would be to rent. 

This is when the decision to buy a home becomes extremely personal. You may not be able to find a rental that meets your needs or might want the freedom to personalize your home to your tastes.

6. You're sick of giving money to your landlord and want to build equity.

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Every time you pay your rent, you're giving your money to someone else, while every mortgage payment gets you one step closer to complete home ownership. That's why Trapasso notes that "Some people believe [paying rent is] putting money into the hands of a landlord instead of yourself because you’re not building wealth through home equity."

Even in times where interest rates and home costs are high, she says that "Homeownership is the American Dream and has helped millions of Americans build wealth over time."

7. Your credit score is in the low-to-mid-600s (or higher).

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According to Trapasso, "Lenders issuing conventional loans typically want to see minimum scores in the low to mid 600s." That said, "The higher your credit score, the more qualified of a buyer lenders perceive you to be. Borrowers with high scores typically get the lowest mortgage rates and the fewest fees. Lenders believe they’re unlikely to default on their loans."

So, it's worth it to take some time to increase your credit score before you buy. Things like paying off debt, making regular payments, and holding off on opening new accounts can help.

8. You plan to be in your home for at least five years.

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When you buy a home, you'll have to pay things like closing costs, and when you sell, there are added selling costs. For this reason, it typically only makes sense to buy if you plan to be in the home for at least five years. 

Trapasso notes that "This gives a property time to appreciate over time." She adds that "Sellers typically spent about 10 years in their home before putting it on the market, according to a recent National Association of Realtors report."

Signs you should rent:

9. You don't have enough cash to cover the 20% down payment and the closing costs.

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If you can't afford a 20% down payment, you'll need to get private mortgage insurance, which increases your monthly cost and will make you pay more money over time. And don't forget to budget money for the closing costs, which Trapasso says "can run from 3% to 6% of the purchase price of the home."

If you're not there yet, keep renting and start saving. "If you’re renting, you may want to move further out if you don’t have to commute to work as much, downsize into a smaller apartment, or even find a roommate to cut down on costs," says Trapasso.

10. Buying a home will make you house poor.

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If putting together a down payment and paying for closing costs will leave you totally broke, it may not be the best time to buy. Remember, once you're a homeowner, you'll be responsible for paying for the plumber or replacing a leaky roof. 

"The first week I moved into my house, my boiler needed to be repaired — and I couldn’t call the super to fix it. That cost about $500 in the first week. There were also gutters that needed to be cleaned, repairs and minor renovations that needed to be made, and furniture that needed to be purchased. It adds up really, really quickly," notes Trapasso.

11. Interest rates remain high.

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Interest rates have been top of mind for many buyers as of late. According to Freddie Mac, the main industry source for mortgage rates, the average interest rate for a 30-year fixed-rate mortgage in October 2022 was 6.9%. That's a significant jump from October 2021, when the rate was 3.07%.

Trapasso sums it all up: "It’s expensive to buy right now due to higher mortgage rates and still high home prices. Those purchasing homes in October paid about 75% more in their monthly mortgage payments than they would have if they’d purchased a year ago."

It's worth noting that Realtor.com’s economics team anticipates that mortgage rates will average about 7.4% in 2023, ending the year at about 7.1%.

12. You aren't sold on the area and like to move around a lot.

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If you're not totally in love with the community or the area, and tend to move around a lot, Trapasso says, "Renting makes a lot more sense than buying. You want to stay in a home for at least five years, traditionally, before selling."

13. You don't need to buy right now.

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Here's the truth: "Prices and rates are high right now," says Trapasso, who notes that some "may want to wait out the market and hope they can get a better deal in a year or two if prices and rates come down. There is no right or wrong answer. It’s whatever is best for the buyer at that moment in time."