Let’s talk about loans …

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O.K. maybe not loans, but I think everyone should have a short primer regarding how folks pay for a house.  It really doesn’t matter if it is a co-op, a condo, a town home or a single family home.  One of the basic rules of contract law includes the need for consideration. Consideration is just a fancy legal term for money. If you want to buy a house, you have to be able to produce the funds at settlement.

Now, if you happen to be loaded and can pay cash for the house, well you can either read through this for information, or you can check out another one of the articles I have written. For those of you that want to buy a home and don’t have cash on hand, this is for you.

For purposes of example, I will use a $500,000 purchase price. You and the seller have agreed on the price. Well now, wait a minute, let’s back up. You really should have an idea about all of this before you begin looking for a home.  The very first question you have to ask yourself after deciding you want to own a home of your own is how much can I pay for a home (keeping mindful that your comfort level should be dictated by what you can afford and not what you would like).

I am not a lender. I can only give you general advice in this area. Let’s make that specific advice. After reading this primer, talk to a bonafide lender! Then talk to another. Keep talking until you find one that you are comfortable with. They will provide the rock that your dreams of owning a home will be built upon. The lender will gather information about you and tell you what you can borrow.

The most basic loan is a conventional loan.  Lenders like this sort of loan because it requires that the borrower (you) contribute at least a 20% down payment.  In the example of a $500.000 purchase, you will be putting at least $100,000 down and the lender will provide the rest of the money. Each month you will make a payment that includes principal and interest.  If you do not have 20% down, you can receive a gift from parents or grandparents or anyone to make up the difference. You will need to provide the lender with proof that it is in fact a gift and not a loan. If you just don’t have the 20% down, you have other options.

The FHA guarantees loans. That just means that your lender will have insurance that some of the money you borrowed is guaranteed to be paid back. If you default, the insurance involved steps in. This guarantee allows lenders to loan money to people that don’t have the 20% down payment available. You still have to have at least 3.5% of the purchase price available, and there are limits on how much money you can borrow. The credit demands are a bit less restrictive. Oh, and you still go through the underwriting process. The FHA has rules about who can qualify and their criteria must be met. Every month you will have a payment that includes principal and interest and the mortgage insurance premium (yep, you have to pay the insurance. if you don’t like that, put 20% down).

Veterans have loan guarantees available to them as well. They can get a VA loan. This type of loan is from lenders but it is guaranteed by the Veteran’s Administration. Another feature of the VA loan is that you don’t have to have any money down. This sounds great, but the flip side is that you will have a higher mortgage and you will have  VA fee as well. The VA doesn’t lend the money. Just like the FHA, they guarantee a portion of the loan. That’s right, you pay the premium for the protection.

In some areas, the USDA guarantees loans. It is very similar to the VA in that, you don’t have to put any money down. Again, remember your loan amount will be higher and your payments will be higher as well. This is a great program if you are purchasing a home in an area where these loans are available.

Of course there are all sorts of hybrid loan types out there. There are terms that vary with lenders.

Things to know.  An ARM is an adjustable rate mortgage.  Simply put, the interest rate is fixed for a short term and then it can go up or down depending on the market. Usually, there is a cap on the interest rate (i.e. the highest amount the interest can be).  Lenders offer these loans at attractive rates. You should always consider what you can afford at the market rate today, that means the size mortgage you are comfortable paying at market rates.  Use the lower rate as a saving not a method to qualify for more home  (if variable rates are lower, borrow less and invest the saved money). NOTE: that is just my opinion. I really believe borrowing money, hoping that your income will go up when the rates go up is a fast track to foreclosure.

An interest only loan is another product some lenders offer. Not a bad deal for the lender. You move in. You pay interest on the loan until the interest only term runs out and then your payment shoots up like a rocket ship on rails. Oops. You can’t pay and the home goes into foreclosure. Interest only loans only have the interest of the lender at heart.

So it is not really confusing. There is a conventional loan and then there are other products available to those that do not have sufficient money saved to buy a home. Lots of people have used the FHA guaranteed loans and VA guaranteed loans and USDA supported loans. They are good loans. As a matter of fact, all loan products are good products if they are used by the right borrower.

Buying a home is a major step. I think it is wise to have some money set aside to invest in your purchase.  Of course, you may use a loan product that does not require that you put that money into the purchase of the home. Home ownership is not cheap. The money should be set aside for maintenance and upkeep. It will be your home after all.

If you have any questions, talk to your lender. If you are in the DC area and do not have a lender, I will provide you with a list of three names. You can call them all.

Once you have been pre-approved and are ready to begin the search, well, that”s my area of expertise. Once you are in my hands, I will review where you are with the lender, offer some advice about fine tuning the financing and then I will listen to you tell me a tale of your dreams and set out to assist you in making those dreams come true.

As always, I am only a phone call away…. 301-509-5111

The DC housing market … why is it so hot

Every recent market report seems to add the caveat that DC is an anomaly. Most markets are still attempting to recover from the 2006 crash. DC took a bit of a dip, but is roaring back. How can this be happening?  The economy is certainly not much better today than it has been for several years. Federal workers haven’t seen a raise in pay for a few years. If all economic indicators remain uncertain, why are homes in DC costing more every month?

The answer is as plain as day.  DC has jobs.  Very few places across the country can make the same claim. DC is a small 10 square mile area. There are only so many homes that will fit. Engineers and builders and architects can do a lot of things …. they can not create more dirt. Space is limited in DC. Put those two factors together and you have recipe for rising home prices (regardless of the economy).

This little chart covers the phenomena.  At the top, the various places new residents come from are depicted.  People moving to DC come from Universities (college dorms or off campus shared housing), their parent’s home, homes they own in other parts of the country or homes they rent elsewhere.  They want to live in or near DC and begin a search. Almost every last one of them jumps on the internet and begins their search there.  After all, there are hundreds of thousands of websites that share available homes in DC.  The majority of the people searching do not understand that the accuracy of the data is often outdated or limited at best.  For every single home/town home/row home/condo listed there is just one property. How that property is displayed has more to do with syndication by agents and brokers than it has to do with the actual property. (A word to the wise: If you want to be more successful in your search, contact an agent in the area. Talk to someone that knows more about the area than can be revealed in wikipedia or some local towns site. Boots on the ground, an ability to listen and then share information is the best way to discover DC (or any other area for that matter).

housing flow chart

As always, DC has more people wanting to live here than there are places to live.  More buyers than available homes creates an imbalance and that old supply and demand process takes over.  Multiple bids appear, prices continue to rise and the market remains “hot”.  Regardless of promises that might be made by some, the truth is you may not find a home you are seeking for the price you are willing or able to pay.  I certainly would never guarantee that home prices will continue to rise, but I promise you that I can see nothing in the marketplace that will slow down the DC market in the near or distant future.

If you are considering a move to DC, you need factually based assistance.  You need to begin the process now, rather than later. You need to begin putting together a comprehensive home buying plan today.  Remember, a comprehensive plan begins with a discussion with a lender. Know what you can comfortably afford. Then, and only then, take the next step. Contact an agent that knows DC. Speak with someone that knows the difference between Adams Morgan and Madame’s Organ. Have a conversation with some one that understands the difference between Petworth and what is a pet worth, the difference between NOMA and no mas or the difference between the Capitol and Capitol Hill.  Subtle differences of a few blocks can add 30 minutes to an hour or more to your commute each day. A map of the subway (Metorail Line) does not include information regarding ease of use or ease of transfer.  A google map of DC will not reveal the walking score of a neighborhood.

DC is my town. I was born here. I know the neighborhoods. I know the Metro stops. I know the nightlife. This is a great place to live. Before you move here and decide on an address, don’t you think we might need to talk.  My phone number is 301-509-5111.

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Carry Lofts … DC’s upscale affordable new address

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Carry Lofts 257 15th St SE Washington DC 20003

Priced in low to mid $500’s

(condo fees under $350 per month)

Carry Lofts is located a few blocks east of Eastern Market at 257 15th Street SE . The project has three two-bedroom units and a one-bedroom w/den condo that range in size from 928 to 1,022 square feet (monthly condo fees run in the mid-$300s). Each unit is unique in layout and style.

Every unit in the building has up to 18-foot ceilings, unique loft details, stainless steel railings, private outdoor space, silestone counters in the kitchen, stainless steel appliances, gas cooking, distinctive lighting features with dimmers, prewired for security systems, Dolby surround sound and two full bathrooms (one has a shower, the other has a tub), modern full size front-loading washer/dryer and central A/C. Every appliance (in both the kitchen and laundry) is Energy Star rated. A casual walk through each unit reveals an attention to detail not always found in new condos as well as the use of top of the line materials in every facet of construction.  And on top of all of that, every unit has multiple exposures offering plenty of natural light.

The private residential lobby has an electronic guest entry system and the building has bicycle storage. Nearby features are a upscale Safeway Food Store, 2 metro stations, the aforementioned Eastern Market and Barracks Row. The neighborhood is walkable.

The owners, builder and management company have all put their efforts in creating a delightful building that will be home to 4 very happy owners.  If you, or someone you know, is looking for that perfect home in DC, the Carry Lofts might just be the spot they are seeking.  I would be glad to arrange a private tour of the building, just give me a call at 301-509-5111.

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It is no secret what a streamlined 203k can do

The condition of many of the homes for sale today is far from the rosey picture painted by agents in their on-line comments. Often agents put up pictures of the home before the place was destroyed.  Consumers, visiting any one of the 6 million websites that feature homes for sale, are routinely misled about the actual shape of the homes they select to view.

Let’s face it, this kitchen needs more than a little “TLC’ !  Buyers go on their house hunting mission and soon become dismayed at the “real condition” of the homes that are listed “need a little work”.  The first clue is the over grown yard. Abandoned homes often have been stripped of appliances, feature rooms with carpeting that carries suspicious stains, water damage and more. They are often “musty” (I know I am being kind) or down right foul smelling.  The power and water usually are turned off. Many are secured by a deadlock and access is obtained with a key secured in a combo lock box.

Don’t shoot me, I am only sharing the truth. As an industry, we are challenged to sell these properties.  Often, they are “bank owned” or they are in the limbo state where the owner has walked away and the bank is going through the foreclosure process. Some of them are listed as “short sales”, but they have been abandoned and left in a state of disrepair.  Their condition is reflected in their sales price.  The impact of the sale is felt by everyone in the neighborhood.

There is hope.  Many of these trashed properties are not that far removed from their past glory.  “TLC” implies a little elbow grease. These homes need more than can be accomplished on a free weekend.  Despite the visual appearance, there is a wonderful home beneath the rubble. Not only that, home buyers have access to loan programs that will do more that “put lipstick on a pig”.

Rehab a Home with a 203(k)

You might be surprised to learn what you can accomplish using a streamlined FHA 203k.  For starters, there is no minimum amount regarding repairs and you can borrow up to $35,000 for qualified improvements.  What are some of the things you can do?

You can repair or replace a roof !

You can install new windows !

You can install new floors !

You can upgrade the electrical system !

You can install a new HVAC system !

You can install new appliances !

You can remodel the kitchen !

You can change the back of your home from this

to this by adding a deck and patio !

It is no secret what a streamlined 203k can do!  This program allows you to change the old saying “what you see is what you get”.  You can now look beyond the condition of the home you visit and imagine what you can create using the 203k streamlined loan.

When considering what you might want to do and what may be possible, understand, there are limitations. $35,000 may sound like a lot of money (well, it is a lot of money), but home improvements vary in cost. In the DC area,  a new roof can cost about $300 per 100 square feet (that is a 10′ X 10′ area),  new windows will depend on the number of windows (there are several well know companies that will gladly give you an estimate), new flooring can cost about $7 to $11 per square foot, upgrading your electric can cost as much as $2,500, a new HVAC can run $8,000 and kitchen remodels can go from$15,000 and up. Just remember, you can do a lot with the loan.

Your local lender should be able to go over the loan with you. If they do not have someone that has actually done 203k loans, find another lender.  You don’t need the aggravation of having your lender stumble through the requirements at your expense. Use an experienced local lender.

Oh, if you need help finding the right house (in Washington DC  or the Maryland suburbs), well that is one of my services. I also listen to dreams, hold hands and support my clients from home search through settlement. I can be reached easily by calling 301-509-5111.

Frankly My Dear, WE do give a Damn !

Oh Rhett, you said we would always have Tara

                    I don’t suppose being a real estate agent carries the same frustrations shared by Rhett Butler in “Gone with the wind”.  It does have it’s moments.  Buying and selling real estate often includes challenges that threaten the serenity we all seek in our professional lives.  It happens.  There are agents that do leave you with the thought that maybe, just maybe, they “didn’t give a damn”. Some of you reading this have felt that way and you know exactly what I am talking about. To be fair, most agents care. The problem often is the result of inexperience.  Paralysis by analysis gives way to a deafening silence when clients expect answers.  The real or potential liability of “messing up” seems to cause agents that haven’t done many transactions to crawl into a “hypothetical cave” and wait for the storm to pass.  Clients are left wondering if letting their nephew, whom is just starting a career, handle their transaction was the wisest course to take.  Some are left to ponder if choosing their agent just because the agent works for a “name brand” company didn’t leave them with a well manicured, practiced script spouting novice. It may be hard to care about clients when you are struggling to understand the intricacies of your new profession or when you have not “done the dance” in a real ballroom.

         Frankly, my dear, we do give a damn.  It matters to us that every potential buyer is counseled at the beginning of their adventure and that they keep receiving advice and counsel throughout the process. Knowing exactly what to do and when to do it is important. Knowing why is comforting.  Our strength was not developed by attending more classes to generate fancy alphabetical designations on our business cards.  Our ability to take processes and language inherent in real estate and translate and explain them in layman’s terms is the cumulative result of handling hundreds of transactions as an agent and as a manager.  Experience is the birth place of understanding, actual skill development and knowledge.  I am not the first to share, knowledge is power.  Moving a transaction smoothly from start to finish takes power.

Experience has taught us valuable lessons.  It has also led us to make a significant change in our business model.  You see, there are practices that occur in real estate that have never settled well with us.  We have spent our entire career under the umbrella of the largest brokerages in the DC market.  There was a time when we actually bought into the theory that the branding offered by those firms was necessary to gain credibility with potential clients.  Experience has taught us otherwise.  The public is inundated with glitzy commercials that are long on statistic bending but short on reality.  We have spent time behind the curtain and would prefer to continue our practice in the light of day.

Our new home

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         We have moved our practice.  You see, the big firms have chosen what they advertise as a “consumer friendly, one stop shopping environment”.  They have developed a model that offers agents, lending and settlement services under one roof.  The move caused the government to step in and require them to disclose their relationship to consumers.  Another part of the model uses “preferred partners”  in areas like home warranties, home inspections and insurance.  “Preferred partners” have been vetted and give the consumer one more choice when seeking assistance.

          Century 21 New Millennium is not a one stop shop.  We are free to offer recommendations for lenders, title companies, home warranties, home inspections and insurance.  In addition to the firms that have been vetted and established a relationship with Century 21, we can actually give our clients choices (if they ask) based on our experience with firms.  We receive no kick backs or other considerations for our recommendations.  The companies we recommend have performed in the past and have proven to be worthy or our trust.  Our clients are not charged a “transaction fee”.  We are  quite comfortable operating on the commission earned on sales and prefer to pay any additional fees out of our commission.  Working with us, you will get what you pay for… experience that makes a difference.  Give us a call or text us at 301-509-5111.


Buying a home in Washington, DC

Buying a home in Washington, DC?  There are a few things you should know before beginning the process of buying a home in Washington, DC.  As with a home purchase anywhere, you need to know how much home you can afford to purchase.  If you have not had a conversation with a mortgage lender, now is the time to do so.

The mortgage lender will evaluate your financial situation.  Your credit score will be pulled and analyzed. Your credit report will be reviewed.  Your employment, salary records and available cash on hand will be part of the mix as well.  Lenders have specific guidelines to follow when determining how much money you can borrow.  When buying a home in Washington, DC the lender’s decision is just one piece in the puzzle.  While it is important, it is only a guideline for you.  You have to decide how much money you are comfortable spending for housing on a monthly basis.  It is quite possible that your lender will be ready to offer you a loan that is more expensive each month than you are prepared to pay. You don’t have to take out a loan for the lender’s maximum.

A word of advice when tallying up your monthly housing costs.  Be sure to factor in the amount you will have to pay for insurance, taxes, home owner’s association and/ or condo fees. Buying a home in Washington, DC may seem challenging, but I have helped many homeowners and I would love to help you.

Once you have a clear understanding of how much money you can spend on a new home, it is time to sit down and determine what type of home you want.  When buying a home in Washington, DC, you have many choices.  Your choices will be narrowed down by a combination of your “ must have list “and your “wish list”.

The “must have” list will include the things that you deem absolutely necessary in your new home. This list begins with the number of bedrooms and bathroom in the home.  It may also include parking,  distance from public transportation, a certain school district, the type of home (condo, town home or single family detached), a first floor bedroom and anything else that you “must have” in your new home.

The “wish list” may include just about anything your heart desires. Some people would prefer a brand new home while others really would like to have that “man cave” possibility. You are buying a home in Washington, DC. Let your imagination be free to dream.

The next step in buying a home in Washington, DC is to select a real estate agent.  The agent does not have to be the first one you meet, nor do you have to interview several. Choose an agent that is experienced and gives you a comfort level that they are more concerned with helping you than earning a commission on a sale.  Of course the agent will earn a commission, but that should occur because you’re needs are being fulfilled and not because they happen to be the one that writes your offer.

The agent you select should be familiar with the steps that must be taken when you are buying a home in Washington, DC.  They should always listen first and continue to streamline your search as your desires come into greater focus.  They should be able to communicate with you in a timely fashion using whatever means you are most comfortable.  Today, that might include texting, email or phone calls.

The agent has to be accessible for you.  This is the one person that will be involved with every facet of your purchase.  Agents have to fill the role of dream weaver, hand holder, reality checker and negotiator.  When buying a home in Washington, DC the agent is your key player.  Choose wisely.

Once you have found the home you wish to purchase, the process of making it yours begins.  An offer must be prepared and submitted.  The final terms of your contract to purchase must be negotiated. Once you have an offer and acceptance, the road to settlement is undertaken.  Clearing the conditions of your contract will begin.  Buying a home in Washington, DC may include an appraisal, a home inspection, a termite inspection or a survey to name a few items that must be dealt with before settlement can take place. Your agent will play a large role in coordinating each of these steps.  There is no substitute for experience here.  A smooth transaction is not always possible, but your agent has to know the lay of the land and what steps are necessary to guide you home.

Buying a home in Washington, DC may not be as easy as ordering dinner or planning a vacation. It can be the next step you take in your personal journey to fulfillment. If the time is right and you are in position to make the move, buying a home in Washington, DC can easily become a reality. No essay can answer every question. No short article can put you at ease.  Most people prefer a little give and take in the form of a conversation. Blogs don’t reveal body language or tone.  I know that buying a home in Washington, DC may seem challenging.  I would welcome the opportunity to discuss your dreams with you. You can call me at 301-509-5111 or text me at the same number.  I will make the time to sit down with you at your convenience a priority.  Take the next step in making your dreams come true.

If you are just beginning the process of buying a home in Washington, DC and just want to see what might be available, click on this highlighted link and search the available listings from the comfort of your computer …HOME SEARCH NOW

The #1 home search site in the DC area …

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         Sure, there is a lot of information here. If you take the time to scroll through that list over there on the right, you will find advice, neighborhood information, personal rants and some videos.  All of it is provided to educate.  It is  your dime.  Now if you just want to start looking at homes, use the link above. It is our personal little Multiple Listing Service rip-off. It has more information than most search engines. Try it, you’ll like it. If  you just want to read…go ahead, pick a link on the right and click it.