For decades, buying a house has been the norm, an indispensable factor in the equation for the American dream. However, with the coming of the younger generations, buying a home is not always the best financial move.

Here are the signs that it’s better to rent than to buy in the meantime:

You don’t have the 20% down payment

When you use a mortgage calculator or go on any real estate website, the ideal down payment is always 20%. Having 20% down payment paints you as a non-risky borrower for lenders, helping you get better interest rates that can lower your monthly payments. If you put less than 20%, you’re likely going to pay more money in the long run and end up with a longer loan life.

If you don’t have the 20% down payment saved up yet, it is better to rent than to put yourself in a potentially precarious financial situation. Remember that it’s not just about the down payment; there are other hefty costs that you have to consider as well, such as taxes, closing costs, and maintenance.

There’s a chance of relocation in the next five years

On average, it takes five years before you can build enough equity to have a good return-of-investment on your house. If you move too soon, you can risk losing money in the sale.

Before deciding to buy a home, picture your life in the next half-decade. Do you think you will stay in your current career path in the next five years? Is there a chance that you might relocate to another job site? Do you plan to settle down soon with or without a family? What kind of lifestyle do you want to pursue?

If the future is too indefinite, or if you haven’t solidified your plans yet, keep renting. You wouldn’t want to commit to a house and end up deciding to move somewhere else before you make a break-even. Moreover, renting will give you the freedom to move wherever you want and live life to the fullest before settling down.

It’s a seller’s market

When there’s high demand, the price tags tend to be heavier. If the current market is too expensive, stay in your rental for now. Buying when the prices are too high can have you committing to a house that might not be worth the money in the end.

Your finances are not in the best shape

Buying a house is a substantial financial commitment, and you don’t want to make that commitment when your finances are not looking so good.

The first factor that you have to consider is your credit score. If your credit score is too low, it’s not wise to buy a house at this time, as you’ll only end up with exorbitant interest rates. Similarly, if you don’t have a healthy emergency fund saved up, buying a house means taking on a giant financial risk.

Buying is not always better than renting, and in situations like the ones mentioned above, it can be more cost-effective to rent in the meantime.

If you’re not sure if it’s the right time to buy a house, consult with a trusted mortgage lender today.