DC Home for Sale Inventory is on the rise

Questions and AnswersCherry blossoms blooming are not the only pretty sight in DC this week. A short trip through any neighborhood reveals brand new “For Sale” signs. Announcements from brokers, large and small, in a myriad of shapes, colors and sizes proclaim DC home for sale inventory is on the rise. This morning, a search of the  area reveals listings everywhere.

American University Park has two listings under $500,000. A couple of weeks ago, there were only a few homes for sale there (all close to $1,000,000). You could spend a lot of time in the Adams Morgan area looking at homes for sale. There are over 200 homes on the market in an area that had little for sale last month. If you are still thinking about Brookland (the latest hot spot), almost 50 homes are for sale. It is the same all over the city. DC home for sale inventory is on the rise. Capitol Hill, Cleveland Park, Dupont Circle, H Street, Shaw and Tenleytown all have homes for sale.

If you would like to see any of the homes for sale, up close and personal, fill out the form below and I will make arrangements for that to occur at your convenience. After all, now is the time. DC home for sale inventory is on the rise.

Putting Doctors in a House

“Whatever houses I may visit, I will come for the benefit of the sick…”

If you are a physician, you know the phrase well. It appears in the fifth paragraph of the Hippocratic Oath. Of course, that portion of the oath goes on to affirm your purpose in visiting the home of a patient. Back in the day, Physicians often made “house calls”. Today, the practice continues to different degrees depending on your location. At some point, it became much more practical for the Physician to remain in one place and have the patients come to them.

But, let’s look a little deeper into those 14 words.  Of course, they were a preamble to a behavior when written, but today, they represent a beautiful truth about the life of a Physician and another purpose of visiting homes. I have worked closely with Docs since the mid-1980’s. My interactions included work with specialists, general practitioners, interns and residents. I have counseled them in private offices, doctor’ lounges and coffee shops. I have a pretty good feel for the challenges docs face.  I know another way of reading those 14 words.

Patients seeking remedies and healing are usually very thankful for the cure. From the outside looking in, few of them realize how many ‘balls must be juggled” to keep an office open. DRG’s, HSM’s, medical billing, contracts, etc are all buried beneath “Thanks Doc, I feel better’. Not many stop and realize the Physician move to the area “for the benefit of the sick’.

Most Physicians like to become a part of the community. (It should be no surprise that those that are the healing glue of an area seek out being a part of that area). Community service, even service that comes with a fee, is entrenched in the desire to serve a community.

When a Physician decides to purchase a home or establish a practice in a neighborhood, they are probably going to visit houses (or office buildings or condos). The purpose is to plant their personal flag and establish their place in the community. While, in some ways, it is accurate to say they are no different than any other home buyer or business owner, truth be told, their need of the community is counter-balanced by the communities need for them.

They deserve special attention and assisting Physicians in their home buying has always felt special to me. Once we begin an earnest search, I know I am helping them fulfill another interpretation of that Hippocratic Oath. Whatever house they visit in their home search, they do it for the benefit of the sick. Once they find that home, they become a member of that community and professionally become part of the healing process for their new neighbors and patients.

I would be remiss if I did not mention Sun Trust. They have a Doctor Loan Program. I have a relationship with the leading Sun Trust lender affiliated with this program. He not only works with individual Physicians, he is called upon to speak to large groups about the Sun Trust Doctor Loan Program. He has shared the overview below.

The Doctor Loan Program is a residential mortgage loan developed specifically for medical residents, interns, fellows, Doctors of Osteopathy (DO), and licensed medical physicians that have completed their residency within the last 10 years.

  • Available for both home purchases and mortgage refinances
  • Competitive pricing available along with special relationship discounts
  • Mortgage insurance is not required
  • Maximum of 80.00% Loan-to-Value (LTV) available1 for cash-out refinances
  • Both fixed rate and adjustable rate2 loans are available
  • Available in AL, AK, DE, FL, GA, MD, MS, NC, NJ, PA, SC, TN, VA, WV and DC; available in select counties in NJ and PA
  • No penalty for prepaying your loan
  • Gift funds or seller contributions may be used for closing costs

For licensed medical physicians who have completed their residency within the last 10 years:

  • Maximum of 100%1,3,4 financing for purchases and rate/term refinances with a maximum loan amount of $650,000 for well-qualified borrowers
  • Maximum of 95% financing for purchases and rate/term refinances with a maximum loan amount of $1 million1 for well-qualified borrowers
  • Maximum of 89.99% financing for purchases and rate/term refinances with a maximum loan amount of $1.5 million1

For Residents, Interns and Fellows:

  • Maximum of 100%1,3,4 financing for purchases and rate/term refinances for well-qualified borrowers
  • Maximum loan amount of $417,000

1State law may put further restrictions on the maximum loan to value ratio.
2Adjustable Rate Mortgage (ARM) products have interest rates that may increase after consummation.
3Borrowers should note that 100% mortgage financing will result in no property equity until such time as the loan principal is paid down through regular mortgage payments and/or the property value appreciates. Additionally, if property values decline, you could owe more than your property’s value.
4A down payment may be required if the property is located in a market where properties are declining in value.

Now that may be a lot of information for those outside medical practice. For Physicians, I hope you benefit from it and if you are in the DC area and would like the assistance of a Realtor that understands the demands of your profession and will work diligently to assist you in the purchase of home, please take a moment and fill out the form. All inquiries will be held confidential.

5 things you need to know about viewing homes

You  have scoured the internet listings. Maybe you have a list derived from homes your agent sent you to review. In some cases, you may have a mix of what your agent has sent and homes you have found using one of the websites that list homes for sale. Now you are ready to go see them in person.

There are 5 things you need to know before you go out the door.

  1. Your agent has to review the list to make sure they are all actually still for sale
  2. Your agent has to make sure he is aware of information about each home and neighborhood.
  3. Your agent has to follow the showing instructions in obtaining permission for you to view each home.
  4. Your agent has to put together a route that will get you from the starting point to the last home
  5. Your agent has to keep you on schedule to reach and view each home on the list.

Viewing homes is not just a matter of driving to an address of a home that is for sale and walking through the front door and taking a look around. It first must be verified that the home is still for sale and available for viewing. It is possible that a home that was listed as “active” when you last looked on line, has gone under contract. Some websites are not updated and homes showing for sale have actually been sold long before they caught your eye. If you have found a home in one of the many vanity magazines that claim to have homes for sale, chances are that nothing you have seen is still on the market (those magazines actually are for the benefit of agents hoping to list other homes).  Homes that are for sale, may or may not be occupied. If they are occupied, the resident usually likes to know that someone is coming to view the home. If they are vacant, it is usually easier to get in the home and view it. Your agent will have to “scrub” the list and remove those that are not really available.

Once the list of homes you want to see has been reduced to homes that you can see, your agent has to review the pertinent data about the home. You may have questions about square footage, the approximate tax bill, the schools in the area as well as where is the closest shopping, etc. Your agent has to be able to answer your questions. In most cases, these general questions are part of your weaning method and getting back to you will prolong the process. At this stage, you are subconsciously evaluating each home. Answers that make it easier to include or remove a home from your final list are very important. Your agent should be aware of traffic patterns and possible commuting routes. Understand, in urban areas, finding a parking space is not a skill, it is the luck of the draw.

Every listing agent has been directed by the seller when the home is available to be shown. These instructions vary from home to home. There are lots of reasons that homes may not be available when you wish to view them. If people are still living in the home, they are selling a house but they are also doing their best to maintain some semblance of order while that occurs.  The listing agent includes showing instructions in the MLS listing. The instructions are not always finite. Often, the listing agent uses the services of a third party showing scheduler. A call must be made and permission granted for the time frame your agent plans for you to view the home. These “showing windows” have a beginning time and are usually confined to a 60 minute slot. If a home is vacant, you often have a great deal more latitude in times. The showing permission has to be followed. It is very important that you stay on schedule. If a home you visit is impressive enough that you want a longer look, have your agent schedule a second showing later that day or the next day. Don’t linger and throw the viewing schedule off. You may not be able to see all the homes on your list and you will never know if the one  you missed would have been “the one”.

In a perfect world, you would start at point A and move systematically to point B and so on. Showing homes just doesn’t seem to work that way all of the time.  Often, available showing times create the need for a back and forth flow to your tour.  It is up to your agent to orchestrate this journey. Each home and each availability time has to be put together like pieces of a puzzle. When complete, you will have a good picture of which homes you will visit and the order in which you will see them. Nobody is perfect and a system with so many variables can cause the best of us to falter. Your agent’s mission is to get you into each home you wish to see. Usually, that happens, but sometimes things change and you end up standing at a front door and discover it is not available to be seen.  It happens to the best of us. Keep in mind, the seller can restrict showings when ever they want. If you can’t get in, move on to the next home on the list.

Sometimes when viewing homes, you discover that the listing agent was a magician with a camera. Other times, when viewing homes you will marvel at a listing agent’s talent in describing the home. When viewing homes, what you see is what you get. Your agent has no control over the accuracy of photos presented or description used by the listing agent. Your agent is responsible for looking at the home and attempting to see anything that needs further investigation. Always remember that you are the buyer. You will be the one living in the home. If you ask the agent “What do you think?”, you are asking too broad of a question. You can ask about lots of things regarding the home or the area. Your agent (in most cases) will not be moving in with you, so “what they think” is not something they can easily answer. It is your job to walk around, get a feel for the layout, visualize your self and your things (furniture, etc). Most of the time, this will be accomplished rather quickly. Make notes and wait until you have seen all the homes before making a final yes decision about any of them. Remove any home as soon as you know it does not work. Stay on schedule. Your goal was to see a certain number of homes to make a good evaluation. You have to stay on schedule to accomplish your goal.

Viewing homes properly entails planning. If you follow your agent’s direction, you will have a successful day. You may not find the home of your choice, but you will definitely remove possibles from your list. Remember, it takes time to prepare and preparation is necessary for you to see the homes you wish to see.

Enjoy the journey, take notes and stay on schedule. Your home is just waiting for you to come by.

You are a buyer and found the ONE, now what

Happiness Heart

You can hardly believe it. Truth be told, it is not exactly what you thought it would be and then again “upon further review”, it is exactly what you hoped to find.

Sure, you started out with some general ideas. Maybe, things started coming into focus when you traveled around the area. At first, those “For Sale” signs were just multi-colored blurs on the periphery. The subliminal message was taking root in that tiny corner of your mind where dreams are born. Life changes doesn’t it. One day the apartment you’re in is sufficient, the banner flying high declaring your independence. It is the place where you learn the lessons of housekeeping, privacy and style.

No one can really pinpoint that moment when the walls began closing in. Maybe it was the morning you stubbed your toe, navigating through the apparently diminishing space between the bed and your dresser. It could have been that night you had friends over and the once spacious living room felt like phone booth. Then again, it could have been that moment, sharing a drink with someone special and suddenly two addresses just didn’t make sense anymore.

Today, you have been through the gauntlet and have found the place.  After what must feel like an impossible journey, you know where you want to call home. Your home. You have told your agent, this is IT!

Now what?

I can’t speak for every agent. I can only share a broad overview of the next steps taken if I were your agent. (note:that statement is tweetable)

While you have been visiting homes and tweaking your list (moving “must haves” to “like to haves” and adding new “must haves” to cover things you had not considered), your agent has been quietly keeping track of the market that includes for sale, sold, off the market, etc. Behind the scenes, data has been sorted, dissected and reviewed. Now that you are ready to move forward with an offer, the pieces will come together. While you share the good news with family and friends, the framework of the next step is being put together by your agent.

The first conversation will take place between your agent and the listing agent. On the surface, it may appear that the only thing being accomplished is gathering the necessary disclosures. Appearances are deceiving. Your agent is already beginning the negotiation process. Reviewing the listing agent’s history before the call has offered some insight but the conversation will season the statistical data and offer hints as to which direction the negotiation should take.

Your lender will also be contacted. A letter validating your ability to actually buy the home must be included with your offer to purchase. This is another conversation in which your agent will develop more information necessary for the ongoing negotiation. A discussion of how your offer will be prepared and what may be necessary for responding to any counter offer will take place.

Once all the necessary information has been gathered, your agent will go over the offer process with you. You will be asked to fill out a financial information sheet that will accompany your offer. This is basic information given to the seller so they will have a certain comfort level that you actually do have enough cash on hand to cover the amount of money you will have to bring to closing. The letter from the lender is but one piece of the puzzle. A seller will want to see the probable source of down payment, closing costs, etc. This is well within their rights. Money is not a “protected class” and if a seller is not comfortable with all the issues surrounding your financial ability to purchase the home, they can refuse to accept your offer.

Your actual offer will be prepared with the help of your agent. Forms that have been developed by the local real estate commission will be used. They include the basic contract of sale which outlines the terms necessary to make a legal purchase. In addition to the basic offer/contract, you will have addendum’s specific to the jurisdiction, others defining contingencies of the offer and even more that narrow the terms of the offer. You will also have disclosures about the property prepared by the seller that cover the condition of the home.

It may seem a bit overwhelming, but remember if it is not in writing, it does not exist. Your offer, once counter signed by the seller becomes the final contract of sale. It will provide the framework for the transaction.

Your agent will submit your offer.

You will discover that there are 60 long seconds in every minute. You will become aware that every passing hour has 60 plodding minutes. You will wait, and wait and probably wait some more. After all, the ball is in the seller’s court.

Attempting to determine the outcome based on the length of time you have to wait for a response is pure folly. Your agent can not possibly know all of the factors the seller is sorting through. You have come this far, now is not the time to bristle. You have done all that you can do. Until you receive a response, patience will be your sweetest ally.

what have i doneOf course, it is only natural for you to be filled with a little doubt.  Angst is doubts pain filled bedfellow. Cup of coffee or latte, maybe you do that every day. This is a major step. For most people, the biggest expense they have dealt with (other than college loans) has been an exotic vacation. This is all about the long term.  This is home.  Sure, it is not forever, but, it is today and this is a lot of tomorrows.

Anybody in your situation would be spending a few minutes here and there wondering about the decision.  Trust yourself, you have come this far based on desire and practical application.  You have followed the necessary steps to reach this point. The seller will respond and you will have the support and counsel of your agent to deal with any counter offer that might be made. If the offer is accepted, you will be shepherded through all the following steps in the process.

You have found the ONE. With the guidance of your agent, you can now proceed to see if the ONE is the ONE.

Just beginning? Fill out the form and get the support of a “REAL” Realtor

Buying a home and overwhelmed with the process, make a list

checklist

Buying a home can be overwhelming. You have moved past the dream and are now ready for reality. There is nothing that could have prepared you for what you are feeling.  First-time home buyers have shared the experienced with us.  The doubts range from not knowing what you think you should know to not being sure what you know is really what you should know.  Couples face the challenge together and single folks face it alone, but they both feel the uneasiness.  How could you feel any other way?  Just the basics are daunting. You are preparing to spend anywhere from a quarter of a million dollars to more than a million dollars.  You have been saving, and it has taken forever to accumulate that nest egg. Suddenly, all the sacrifices you have made are staring back at you.

You have done your part.  You may have spoken with a lender already or you may have just begun searching on-line looking at homes.  What next?  Well, before I go any further, let me share the list of things you need to have accomplished before looking at one more pretty picture of a home for sale on line.

This is your initial checklist. Taken one step at a time, it will be less overwhelming. For now, the long term goal is purchasing a home but you are going to focus on a series of short term goals, one at a time. Clear everything off your plate and follow these easy steps in order they are presented. The title by the number is the goal. The subtitles under the goal are steps taken to accomplish the goal.

  1. Establish your financial position.
  • Make contact with your personal banker, a rival local bank and a local Federal Credit Union.
  • Sit with each one and inquire about their loan programs. Share only what is necessary for them to give you a general idea of what they have to offer.
  • Once comfortable (you truly understand what is being shared, if not, go back a step) ask them to give you a general idea of what you can afford based on a payment that you are comfortable with making. Do not allow them to pull a credit report at this time. It is not needed and you want to keep the number of inquiries to a minimum so your FICO score will not be impacted.
  • Thank them for their time and give the information at least 24 hours to sink in.
  • Make a follow up appointment to discuss anything questions you have. Unless your personal bank is an online bank, you can have them prepare a pre-approval letter for you. The only caveat I will offer is that sometimes market conditions are such that Federal Credit Unions have better products. If that is the case, have the FCU prepare the pre-approval letter. Whomever you choose, they can pull your credit reports.
  • Understand, this is just the beginning of the financial process. You are not bound to any lender. As long as there is time for the loan to be processed prior to closing, you can switch lenders.

2.  Determine where you want to live

  • Stop the wide focus searching on the internet. Narrow your choices down to specific areas.
  • In urban areas, you will find neighborhoods and in the suburbs you will find developments.
  • Your focus should be on where the area is in relation to your job and what are the various ways you can commute between home and work from each area.
  • Once you have some areas in mind, go spend time in them. Visit on a weekend afternoon, Drive by in the evening. If possible, park you car (if you have one) and walk around. Get a real feel for the area. You will be able to tell more about the area by actually spending time there than any website will be able to relate.
  • If neighbors are out and about and you are up to approaching them in congenial fashion, stop and ask “what’s the neighborhood like?”
  • You will find that your visits factored with your commute will create a pecking order of preferences for you to use as an outline for your actual home search.

3. Select a Realtor

  • At this point, you really do need a guide, caretaker, interpreter and adviser. As you can see, if done properly, the process has already been quite extensive.
  • The Realtor will be the person that assists you in your search. Of course, you will spend hours in front of computer screens, dreaming and hoping. Your agent will be the one charged with providing you facts.
  • Your Realtor should have a deeper knowledge of the area than what you have gleaned in your visits.
  • The most important thing your Realtor can do initially is listen to you. It is your home search. There is no way it can be accomplished successfully unless the agent is on the same page as you.
  • Communication is vital. Keep in mind all you have put together to reach this point, You have to understand what is going on and how the process is proceeding.
  • The Realtor has the tools to fine tune your criteria and match it with available properties. Keep in mind, every listing presented or suggested is only a maybe. You will turn away more than you will choose to visit and you will visit more than you will opt to purchase. Don’t be afraid to speak up and ignore a suggestion. Again, it is your home search.

4. The Search

  • You are ready to begin the search in earnest. You have your financial base, your target areas and your Realtor. Now you can begin to separate the pretenders from the contenders.
  • A solid search can be done based on area, price, amenities (number of bedrooms, bathrooms, parking, etc.), and style of home (single family, town home, condominium) Note: price may narrow choices regarding location and some amenities).
  • It is important that you truly understand, your Realtor has access to every home that is listed in the MLS in your area. The same can not be said for the national search sites. National sites (Zillow, Trulia, etc) do not have contractual agreements with all multiple listing services and in some cases they are missing homes that are for sale or show homes for sale that have already been sold. That is just reality.
  • Your Realtor should be monitoring the MLS to make sure you are notified of every home on the market that meets your general criteria as soon as it is available.
  • Viewings must be scheduled. In some cases, visits have to be scheduled a day or two ahead of time. Your agent is at the mercy of the seller’s showing instructions. You should be able to give your Realtor the times that you are available to view homes and set up viewings at your convenience. It is your home search. Just remember, in many cases, it is not possible to call and set up an appointment for later in the same day.
  • Re-visit any home that you are considering to purchase. The first visit was just that, the first visit. The second visit should be a bit longer and you should take the time to visualize living in the home.
  • Do not be discouraged if it seems like the process is plodding along. When you walk through the doors of the right home for you, you will know it.

Now, you know you are financially ready, you know where you want to live, your agent has taken you through homes and you have found the one!

Sit down with your agent, he will help you prepare an offer that will present you in the most favorable position to the seller. You have gotten this far. The rest will be nerves. It may help you to make a list of all the reasons you have to be proud of yourself for reaching this point. Never discount the pride in accomplishment every new home owner feels when the receive the keys at closing.

Of course, if you reach step 3 and figure I might be a good choice, fill out the form. I would be delighted to assist you in your journey.

DC and Md First Time Home Buyers

You want to buy a home.  You have spent time on the internet looking at houses.  You may have driven around on a few Sundays visiting open houses.  If you have given your name to anyone or shared your email address with anyone, there is a good chance you have been inundated with all sorts of information. There is a lot of information available for first time home buyers.  We have offered several articles ourselves.  Rather than give you a bunch of links to what has been shared in the past, let us try to put things in perspective for you.

Let us pull back the curtain and help you become a home owner.  In order to reach your goal, you must first determine if now is the time and if you are actually in a position to pursue the goal. For starters, lets give you an idea of what you can expect to pay.

For general purposes, we will use an interest rate of 5%.  Borrowing money at 5% over a 30 year period will cost you $5.37 for every thousand dollars you borrow.  This figure is only for principal and interest. It does not include your monthly cost for taxes, insurance, home owners association or condo fees. If the interest rate is lower than 5%, the monthly cost will be lower. If the interest rate is higher than 5%, the monthly cost will be higher.  Your lender will be able to narrow down your exact cost when you apply for a loan.  Right now, you just want a general idea of what you can afford.

Take the amount that you will be comfortable paying each month.  For example purposes, we will use $2,000.  Subtract the approximate cost of your home owners insurance. In Maryland, the average cost is about $600 per year or $50 per month.  You now have $1,950 to work with.  Your cost for taxes and other fees will be property specific.

If you divide the $1,950 (the money you have available) by $5.37 (the monthly cost for a 5% 30 year loan), you will come up with  about $363,000.  If you qualify for a loan paying $1,950 per month, you can look for homes that are priced at about $375,000.

This example is for those that are going to use an FHA loan which will require about a 3.5% down payment. You will also need to factor in the cost of the FHA loan (your lender will have that information).

You will have to have money available for the down payment and other cash need for closing.  It may be money saved or it may be a gift from a relative (gifts must be documented as gifts and not short or long term loans).  Sure, there are  lots of ads claiming you can buy a home with no money down and no money out of pocket.  There is always a catch and those ads are used hoping to attract uninformed and desperate buyers.  The  collapse of the housing market has resulted in a buying environment in which you now have to have some of your own money invested in your purchase.

How much money?  The amount of money you need will depend on the type of loan you use and the additional requirements of your individual lender and the specific requirements in your contract to purchase.  A  VA loan requires no money down but the borrower will have to have money available for closing costs and any reserves the lender requires. (Reserves are monies that are set aside to cover future expenses as designated by your lender).

If you are going to be using one of the FHA loan products, you will need to have 3.5% of the loan amount as a down payment (this amount is subject to change as the government restructures FHA loan requirements) and about 3% of the purchase price ( approximate closing costs for the buyer) available in cash at the time of your offer.  Your agent may be able to negotiate some closing help, but that amount will be limited by your lender’s internal rules or by FHA standards.

Conventional loans require more money down and a purchase using a conventional loan is also subject to closing costs for the buyer. As with any purchase, some closing costs assistance can be negotiated in the contract. The amount is always subject to the lender’s approval.

YOU HAVE TO SPEAK WITH A LENDER.  There are some lenders that have grant money available. We deal with several of them.  Grant money should be considered a bonus. If you need grant money to make the purchase, it may not be the right time for you to buy.  A lender will review your situation, determine what you can afford to purchase and give you information about the monthly costs associated with your loan. Note the earlier information about your monthly costs for borrowing money.

THERE MAY BE A DISPARITY BETWEEN WHAT YOU QUALIFY FOR AND WHAT YOU ARE COMFORTABLE REPAYING.  We strongly recommend that you only borrow an amount that you are comfortable including in your monthly budget.  Home ownership will include unexpected expenses.  The news stories of homes lost over the last few years should be a warning signal to anyone considering buying a home.  Do not borrow money based on future income. Do not borrow money based on the potential for future raises in salary.  Do not borrow money based on possible increases in over time. Only borrow what you can comfortably repay from your current income. (Yes, there are exceptions to every rule. If you are a professional serving a residency, there are programs specifically designed with your needs in mind.)

Once you have spoken with a lender, it is time to begin your search.  You may have already spent time on-line. Now you have an idea of what you like, it is time to call in an expert and get assistance in making your dream a reality.

LOCATION, LOCATION, LOCATION.  Remember, location determines price but location also influences your quality of life in your new home. The distance to and from your your job, the distance to shopping, the proximity of schools and the neighborhood in general all have to be considered.

If you have reached the point where you have a firm idea about how much you can spend and a general idea of where you would like to live, you are ready to sit down with us and take the next step in your home buying process.

 

DC and Md Home Buying

Here is some general information regarding buying a home. You might want to pour a cup of coffee before beginning to read. It is a bit long, but, buying a home takes a little more input that suggesting which big screen t.v. you want to put in the family room.
We find it most useful to go through the process in general terms. Each buyer is an individual and the general can be tailored to specifics.
You want to buy a home.
 
We won’t attempt to list all the reasons that lead people to this decision. From a purely economic standpoint, in the long run, it is better to own than to rent. When purchasing property, payments made against principal increase the equity you have in a home. Despite the recent downturn, home values today are greater than they were 5 years ago. This fact holds true over the last 70 years.
homesaleschart
When do you want to buy?
 
It may be that you are not quite sure. You may need more information to formulate a time line. This note should help clear up any mystery about the process. Hopefully, it will answer most of  your questions. If any questions remain, we will be glad to make sure they are answered.
The most important step is for you to determine how much home you are comfortable paying for on a monthly basis. You will see ads on television and hear ads on the radio extolling the virtues of different lenders. You will see many different advertisements on the internet offering to pre-approve you for a loan quickly from the comfort of you computer.  You probably would not make any other major life decision sitting in front of a computer. We think you should only deal with a lender that is local.
You have seen what happened to people that chased “bargain” rates on the internet. They usually found the real rate was higher and they had no access to anyone. This is a very personal decision and computers are rather impersonal objects.
bank
We recommend that a buyer contact a local bank or mortgage company. It is much easier to deal with a firm that offers you a face to face meeting to discuss the process of obtaining a mortgage. Remember, just because a firm pre-approves you for a loan, you are not obligated to use them to purchase the home. You can change your mind about a lender right up to a few days before closing. If you have applied for a loan and the lender has done an appraisal, the appraisal can usually be purchased by the new lender.
There is no cost to being pre-approved. If a firm requires some sort of payment, refuse to do business with them.
Being pre-approved by more than one lender will not affect your credit rating one iota.  The credit scoring systems treat multiple inquiries for mortgages as one inquiry. No one will penalize you for attempting to acquire the best mortgage for your situation.
When you speak to a lender, they will need you to reveal a great deal of our personal financial information. They need this information to satisfy their underwriters which in turn are under the “microscope” of institutions that will subsequently buy the loan from the lender. Our recent credit meltdown has caused all mortgage companies to document all information regarding loan applicants.
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When you speak with a lender, you must keep in mind that your goal is to ascertain how much home you can buy and keep payments in a comfortable range. I would strongly urge you to only look at fixed rate loans that do not include provisions for rate changes in the future. There are situations in which adjustable rate mortgages make sense, but it is usually best for a first time home buyer to focus on a loan that will offer a consistent payment.
Depending on the amount of money that you have set aside for a down payment, you can either qualify for what is called a conventional loan (this is a loan in which you usually put down at least 20%) or you can qualify for an FHA loan (these loans require as little as 3.5% down).  A qualified lender will be able to go over both types of loans and see which one fits your individual situation. You can get a conventional loan with less than 20% down, but this will create a need for private mortgage insurance (PMI), which will increase your monthly payment.
Once a loan amount and interest rate is determined, you ask the lender for a good faith estimate. It will clearly outline what has been promised. I will share that the good faith estimate is not carved in stone. The newest version of the good faith estimate will not even include your monthly payment.  Some lenders will try to avoid giving you a good faith estimate.
They will offer a “worksheet” which will have your monthly payment. It is not binding. Demand a good faith estimate and a worksheet.
In our fluctuating market, interest rates are on what seems like an hourly roller coaster ride. Rates can and do change quickly. It is important for you to understand that the rates usually do not change a great deal over a short period of time. Today, they are close to 4% but they may shoot up before you finish reading this note. The actual rate you receive will be determined once you find the property you wish to purchase.
Once you have a contract ratified, you can ask your lender to lock your rate and you will not be affected by any rate changes that occur between contract ratification and closing.
Phew…….it sounds daunting to just get through that process, but in reality it may only take a 15-20 minute phone call to give the information to the lender and then maybe another 30 minutes to discuss your options. We are always available to digest what our clients have been told and answer any questions that exist. If necessary, we often speak with the lender to make sure our client is hearing what is actually being shared.
Once you know how much you have to spend, you can decide what you wish to buy. The amount of money available will impact whether you can buy a condo, a town home or a detached single family home.  Condo’s are at the lower price end of the scale and single family homes are at the top. In our current market, all styles are are available.
As you have heard, location is a major factor.  The closer a home is to the center of activity (in this area Washington, DC) the higher the prices are for homes. As you move out into the suburbs, prices are lower. In the suburbs, again the proximity to a Metro will impact the pricing.
Understanding that price is a factor, we think it is important to stay focused on the fact that you’re are buying a home. You need to make sure that regardless of location, the home you find has the amenities that will make it a home for you.
Location is usually defined as a place.
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Once you live in a location, you will realize that the distance of your commute is a major factor. You will realize that your access to shopping, public transportation and recreational facilities is also an important part of location. You need to spend a little down time with yourself and examine your lifestyle and make sure all aspects of location are part of your decision making process regarding where you new home is located.
We can go over the various options and areas with you. It will be easier for us to perform our magic if we have a complete understanding of what is important to you. The right home is out there. With the proper information, we can find it and it can be yours. Patience!

 
Now, you probably have read and heard the term “short sale” and or “foreclosure” or even “bank owned”. These terms have spent a fair amount of time in the news over the last few years. They represent different situations.
“Short sale” generally is referring to a property that is owned by someone that cannot pay their mortgage anymore. Some of these people financed the home with exotic financing. Some of these people took advantage of rising home values and took out equity lines that they can no longer pay. Others have fallen on hard times and can no longer pay. The reasons are many but the end result is the same, the property owner owes more than the house is worth and the property owner is no longer paying their mortgage.  They call the bank and they are told that they need to try to sell the home. They call a Realtor and have the home listed for a price that the Realtor thinks will get an offer. Once the offer is received, it is signed by the property owner and forwarded to the lender with an elaborate “short sale ” package.
Before the bank will even consider the offer, they must receive all the documents. Once they have all the documents, they forward the offer and package to an internal department that will review the offer and accept the offer or make a counter offer. This process can take weeks with some lenders. There is no guarantee that the price the home was listed for is the price that the bank will accept for the home. They have internal reviews that determine how much they will lose on the sale and what they may potentially lose through foreclosure. Decisions are not based on facts apparent to the public.
If the sale falls through, the property does not become a “pre-approved short sale”.  Some agents re-list the home with this term or a similar term.  It is not true. Any new offer has to start at square one and the prior approval is not part of the equation.
Many times deals are turned down because of the lenders financial position at the time of the offer.
 
“Foreclosures” or auctions are really very difficult to purchase comfortably. Homes that are being auctioned often can only be viewed from the outside. Auctions are usually held on the courthouse steps. Participants must have a cashiers check to submit and if a bid is won and they must promise to get financing within a short period of time. Many homes that are auctioned off, do not appraise for the value and a loan is not available. The cash deposit is lost. It is a very costly gambit into the unknown. It is much better to wait and look at bank owned properties.
 
“Bank owned” properties have been foreclosed on by the lender. The bank has title to the property. They are sold “as-is”. They can be viewed like any other home for sale. The bank has determined what they need from the property so you know that the list price is close to what they expect. We have represented many clients that have purchased bank owned properties. We have no problem dealing with the banks. These sales are very similar to the sales that occur between homeowners and buyers outside the “short sale” dynamics.
Once you have a comfort level regarding the process, you should choose a real estate agent.
This is another important decision. Your agent has to become your confidant. You have to share your dreams and your weaknesses. You have to trust this person to protect your interests above all others during the transaction. I think you have to believe that your agent is responsive to your needs.
In the state of Maryland and in the District of Columbia, agents have to be licensed. Most reasonable people agree,It takes more than a license to perform a service properly. Experience garnered over time and transactions adds an immeasurable understanding to lessons taught in classrooms. Once you are comfortable with an agent, you should work with that agent exclusively. The agent will work under a contract.
If an agent says that they do not need a contract, understand that they legally can not represent you completely (They are forbidden from offering advice or assisting you with preparation of an offer or negotiating on your behalf).
An agent that shows you homes without a contract, may be presumed to represent you, but without a contract they must represent the interests of the seller of each home you are shown. (They are legally bound to protect the interest of the seller as a sub-agent of the listing agent.) Making sure that your agent has a contract with you protects you throughout the process.
We hope this long article covers most of the basics regarding buying a home. If you would like to sit down and go over the process, we would be glad to set aside a time that is mutually convenient for both of us. We can meet  and we can answer any questions you have face to face.
My name is John MacArthur and my partner is Lourdes Tudela.  For more information, fill out the form below.