You know how you (should) gain wisdom as you grow older? At least that's the intention. As I continue to serve first time home buyers as a Frisco TX realtor(R) and now also act as a volunteer financial counselor at church, I realized that there are some things I would do differently if someone would have shared some wisdom about first time home buying with me along the way.

I was 22 years old. I graduated with no debt other than my new Honda Civic car note. When you are 22, almost debt-fre and a young professional (Structural Engineer), you think that paying rent is a SIN. So, I bought my first home 9 months after I graduated college.

My husband (then fiance at the time) and I have always been frugal people. We've always learnt to live way below our means. In no time, we saved enough money for a 5% downpayment. Our credit were outstanding and we did a 80/15/5 loan to avoid PMI. Back then, PMI is not a tax-deductible event.

We were the first people in our "group" from college to purchase a home. I clearly remembered when our friends were having happy hour and shopping on weekends, my husband had to come home to mow yard. At one point, we felt the home was taking too much of our lives instead of enjoying our 20s. The hindsight was everyone else came to us for advice on home buying, and I was their Realtor on the transaction.

We were in a "caught a buying bug" mode some 5 years later, and we were considering buying a "nicer" vehicle - a Chevy Tahoe because we feel we "deserved" it. Again, reality and sensibility kicked in and we decided to upgrade our home instead. Then, we moved on to our second Frisco TX home, the home we live in today. By then, we were in the "Using Other's People's Money" mindset. Instead of putting a healthy down payment, we decided to do 100% financing. We felt, money in our pocket is better than money at the bank (as downpayment). Plus, our big boosted ego made us feel our credit must be pretty damn good to qualify for a 80/20 loan. We must be on top of the world! Instead of putting the money in our savings to good use (as downpayment), we spent over $16,000 on a new patio and furniture for our brand new home.  Ouch.

So, for the next few years later (after 2006), we re-directed our focus and energy towards paying off this current home. Just not very wise in spending $16K that way in my opinion on stuff that has no value (furniture especially). We still own our 1st home as a rental property but that would be our next attack after our personal residence.

So, if I have a young couple who would come to me for sincere and honest advice, what would I do differently?

We wouldn't buy our first home so soon.

Renting is not a sin. Renting is a temporary place for something greater in the future. Although there was no financial damage early in our 20s, had we waited to buy our first home, we would have saved a larger down payment. 20% instead of 5%. It's not impossible for us to put a 50% down just because rent was cheap and we really weren't spenders. Ahhhhh.... you live and learn, right?

We would also do a 15-year note instead of 30-years.

We had the finances to support a 15-year note, but we held back as a "just-in-case" decision. Just in case either one of us lose our job, we had a smaller mortgage to pay on a 30-year note. Not bad advice. But guess what? Life always happens. Or an international trip always pops up. We never ended up making the extra payment like we should a 15-year note. The last time I checked, had we signed up for the 15-year note, we would have paid off that house in 15 years for sure. That would have been just 4 more years from now. Another OUCH!

John Cannata refinanced my current's home last year to a 15-year note. Having experience the significant loan payoff on a 15-year note is almost unbelievable. You do pay ALOT LESS in interest and you actually see the debt go down.

The most important lesson I think I would say to this young couple would be - Find a house on a spending budget of 1-income instead of 2. There are so many people who make the home buying decision on 2-person's salary, but when the kiddos come along, one person decides to quit the job for a nurturing role instead. Finances could be tough then, or there is no choice for some household because the financial strength just isn't there. That's a sad situation then.

So, this is my sincere advice if I had to re-do my first time home buying process. This comes from my very conservative nature. I understand that not everyone thinks the way I do and that's completely alright!

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Loreena Yeo
Frisco TX Realtor(R)
Realtor®/ Broker of 3:16 team REALTY
(214) 783-2210
loreena@loreenayeo.com

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If I were to buy my first home all over again