If You Can't Say Yes to These 3 Questions, You'll Need to Postpone Your Home Search

You really don't want to buy a home when you're not ready financially.

If you're in the market for a new home, you may be getting exhausted from a seemingly endless search. The reality is that housing inventory is low right now, so you might struggle to find a home that checks off the right boxes in terms of features and also fits into your price range.

You may be at a point where you're thinking about putting your home search plans on hold. And that may be due to frustration with the real estate market. But here are some additional signs that you should consider postponing your home search for a while.

1. Can you put down 20% of your home's purchase price?

You don't have to make a 20% down payment on the home you buy. Mortgage lenders will often accept as little as 5% down, and that's with a conventional loan. And there are other mortgage products, like FHA loans, that allow you to put down even less at your closing.

But if you're taking out a conventional loan and don't make a 20% down payment, you'll be hit with private mortgage insurance, or PMI. PMI is a premium that generally gets added onto your monthly mortgage payments, and its purpose is to protect your lender in case you fall behind.

But PMI is a really big problem today. Higher mortgage rates have made borrowing for a home more expensive than it's been in years. So if you have to tack on PMI to an already-higher mortgage payment, you might end up struggling.

2. Is your credit score in good shape?

Because mortgage rates have risen so dramatically over the past 11 months and change, it's important to apply for a home loan at a time when your credit score is in great shape. If you apply at a time when your score is just mediocre, you might end up with an even higher borrowing rate. The result? Monthly payments that are difficult for you to manage.

3. Have you crunched the numbers to see what mortgage payment you can afford?

As a general rule, your housing costs should not exceed 30% of your take-home pay. And in this context, housing costs mean not just your mortgage, but any other predictable monthly payment you can anticipate. Those include property taxes, homeowners insurance, PMI if applicable, and HOA fees if you're buying in a homeowners association that charges monthly dues.

If you haven't crunched the numbers yet to see what you can afford, it means you should probably hit pause on your house hunt, do some math, and then regroup. You may find that the number you thought you could afford initially isn't right at all.

It's a really tough time to be purchasing a home, between higher mortgage rates, elevated property values, and an ongoing lack of inventory. That's why it's important to make sure you're in a solid place financially in terms of home buying. And if not, waiting on a home purchase could be the best move for you.