Cindy Lin, Founder, Staged4more

Hi, Welcome to Our School of Home Staging!

After a successful, 12+ years run as a home staging company in San Francisco Bay Area, STAGED4MORE is now an online school that focuses on home staging education for home stagers, home sellers and real estate agents.

Please take some time and check out all the free resources and tips available on our blog & podcast, as well as our courses selections.

The Financial Lessons I Learned as a First-Time Home Buyer

The Financial Lessons I Learned as a First-Time Home Buyer

The Financial Lessons I Learned as a First-Time Home Buyer | Staged4more School of Home Staging Blog.jpg

I was a first-time homeowner and didn’t know what to expect as my husband and I started the process of buying a house. I knew it would be the biggest financial investment we’ve ever made, and I had an idea of what the process looked like. What I didn’t know was how extensive the paperwork would be or that there’s something called PMI that you can use if you want to buy without putting down 20 percent. 

Keep these lessons in mind as you think about buying your first home. When you’re prepared for the commitment, the long process is more exciting and less stressful.

Organization is the Name of the Game

Banks, lenders, mortgage brokers and real estate agents don’t skimp on data and paperwork. Quite the contrary—they love it. My husband and I were on the phone with these people nearly every single day, not to mention our real estate agents. Each call was for a new form to be filled out, or missing information in one area or another. 

When you’re organized, this potentially-stressful aspect of home buying is less hectic. As you get organized, consider all the financial information you’ll be asked for. Quicken Loans explains:

“To get approved for a home mortgage, expect to share every facet of your finances. You’ll need forms that show your taxable income, assets, rent payments and any other financial statements. Lenders will need your pay stubs and W-2s to verify your income. They’ll also need all bank, investment and tax forms.”

In our case, I didn’t have W2s, because I work on a contract basis as a business owner, so we even needed to create a profit-loss report—something neither of us had done before. 

You Spend A Lot Before Even Buying the House

You may think a down payment is all that’s needed before buying a home, but think again. Before evening signing closing papers, you have to pay for your appraisal (sometimes this is included in the closing costs) and home inspection, not to mention a series of expert inspections that come after that, including roofing, plumbing, electric and foundation, to name a few. 

The lesson is to have your bank account in good shape before submitting any offers. If it goes through, you’ll need to pay a number of fees right away. If you haven’t saved, this would be a challenge.

Your Pre-Approval Isn’t a Green Light

We were approved for a specific amount of money. While it’s exciting to see those numbers on paper, remember: you still need to be able to afford the mortgage, along with everything else that comes with being a homeowner, like unexpected repairs. Before re-thinking your budget, take a step back and do the math to determine how much house you can actually afford. 

Use Nerd Wallet’s Affordability Calculator to figure that out and then stay on that course. Buying more than you can afford leaves you house poor—which means you can’t afford anything but your home.

You Don’t Need to Put Down 20, 10 or even 5%

Most people assume you need to make a 20 percent down payment when buying a home, but that’s no longer the case. You don’t need to put down 20, 10, or even 5 percent—you can put down as low as 2 percent, with just one catch: PMI. My husband and I took advantage of this option when we bought our home just a few months ago.

PMI, which stands for Private Mortgage Insurance, is a fee you pay, along with your mortgage and other monthly home costs. This fee protects the lender that took your reduced down payment. The best part is that the cost is relatively low for most homebuyers, at just $30-$70 monthly per $100,000 borrowed, according to Zillow.

The key is being educated about what a PMI is, what it means for you financially, and whether it’s the right fit for you or not. Check out this thorough PMI guide, which includes a number of valuable resources about how to get rid of your PMI, what to expect, and even some PMI alternatives if it’s not the right fit for you.

Know Before You Buy

Keep these lessons and tips in mind as you begin the home buying process. You’ll be less stressed, more prepared, and much happier as the paperwork piles up along with home buyer fees. In the end, you’ll (hopefully) buy a home you love, and that’s all that matters.

BIO: Jessica Thiefels has been writing and editing for more than 10 years and is now a professional freelancer and consultant. She's worked with a variety of financial and real estate clients, and has been featured on Forbes and Market Watch. She’s also written for Sofi, House Hunt Network, and more. Follow her on Twitter@Jlsander07 and connect on LinkedIn.

Image courtesy of Logan Nolin.

Interior Photography for Home Stagers

Interior Photography for Home Stagers

Your Questions Answered | The Home Staging Show S7.10

Your Questions Answered | The Home Staging Show S7.10