Banker, real estate agent advise home buyers
Glenn Thiessen is the owner and broker for Fast Reality in Hillsboro. His job depends on selling homes.
He said he would advise young couples to start with rental property so they can build up a nest egg.
“I advise people as a parent; I’m more involved with you as an individual,” Thiessen said. “I have two grown adult children — I advised them the same way.”
Don Noller is the executive vice president of Marion National Bank. Part of his job is establishing residential mortgages. His son is 29. When he talked about purchasing a home, Noller told his son to consider paying the mortgage on half the couple’s income. What if one of them lost their job? What if their car broke down? They may not be able to borrow money to buy a new car.
“You need to sit down and go through their finances,” Noller said. “There is so much uncertainty out there.”
There are certainly benefits to owning a home. If a person has a stable income, limited debt, and solid credit score, interest rates are low, averaging about 3.4 percent on a 15-year mortgage and about 4 percent on a 30-year mortgage.
There also is the opportunity that the house will appreciate over time, although values have stayed stable over the past five years, Noller said.
The first few payments on a mortgage are primarily on interest, with most of the principal cost being paid in later payments. Payments on interest can be written off on income taxes and equal thousands of dollars.
“You can’t rely on that 20 years from now,” Thiessen said. “They may not always be there with administration changes and tax changes. I’d never advise anyone to buy a home just to save on taxes.”
There are other costs to consider besides a mortgage. Residents will have to pay property tax and insurance.
Thiessen said those costs combine to average about $5,000 a year. There is a closing cost of about $3,000. Title insurance can cost $1,200.
There are also costs for maintenance. Thiessen put it this way, when looking for a home would you rather buy the house with a brand new furnace or a furnace installed in the 1970s? The same thinking goes for windows, air-conditioning, and a roof.
The exterior of the house is important. The siding and landscaping may seem like superficial modifications but Thiessen said the house with the well-manicured lawn is likely to sell faster.
There are other things to consider before buying a home. Location, location, location, and city is not the only factor.
Thiessen said that even in Hillsboro some neighborhoods are better than others.
While not everyone can afford the estates off Indigo, the homes on the east side of town off Wilson, Jefferson, or Kennedy, near the schools, are in nicer condition than their counterparts on the west side of town, Thiessen said.
Thiessen and Noller both recommend having a sizable amount of money available when purchasing a home. If a buyer can put 20 percent of the cost down, they avoid a monthly mortgage insurance payment that most lenders require.
Noller said the lowest down payment is a 3.5 percent using a Federal Housing Association loan. He added that mortgage insurance is less if a buyer can put down 5 to 10 percent.
Thiessen said the most important thing for buyers to do is to pay their bills on time to keep their credit score in check.
Once the buyer owns a home, Thiessen and Noller recommend staying there for five years.
Thiessen said all of those maintenance costs are easier on a gradual basis. The fees to the real estate agent to advertise and sell the home are steeper than people realize.