Paint should not be allowed to deteriorate to the point where it is peeling or where bare wood or trim is exposed. Once the wood is exposed, it will oxidize and degrade due to UV sunlight causing an increase in preparation work and expense than normal when ready to paint. Expect to paint the exterior of a house every 5 to 7 years depending on the number of coats and quality of materials.
With exterior painting, much of the expense is in the preparation work. Because there is no prep work for the second coat of paint, two coat applications are usually more advisable than a single coat. Furthermore, two coat systems last significantly longer and are much more economical in the long run.
Note: Proper exterior paint preparation involves scraping and sanding. If the paint was applied prior to 1978, there may be a concern for potential lead contamination. You need to understand the appropriate precautions before you contract any work. Some contractors may avoid discussing it, while others may be overly alarming about it. You may have been given a special pamphlet discussing lead-based paint when you purchased the home. Please review the material. A good source of well-researched information is available at www.epa.gov/lead