Thoughts on the Washington, DC, and Northern Virginia Real Estate Market » first time homebuyer

Buying a Home in 2012?

Katie Wethman — Mon, 16 Jan 2012 15:11:42 +0000

Is buying a home one of your 2012 goals? It can be a long process, but it doesn’t have to be complicated if you do a little prep work. Get started by attending a free, no obligation first time home buyer class at Arlington Central Library on February 29 at 7:00 pm.

Our first time home buyer classes are educational sessions designed to give an overview of current market conditions and the home buying process. We cover a recap of the market, current trends and market stats including days on market, average sales prices, and inventory levels. We’ll also discuss the home purchase process and common pitfalls, financing basics and a how to get started checklist.

Specific topics covered:

Arlington, Northern Virginia and DC market analysis (average sales prices, days on market, etc.)
Mortgage basics: rates, points, fees
Financing basics: FHA, Conventional, Conforming, and “Jumbo” loans
Calculating the tax benefits of homeownership
Short Sale, Foreclosure/REO/Bank Owned basics
Search tips
Fees and closing costs
Buyer agency and choosing an agent

Details:

Wednesday February 29th 7:00 – 8:15
Arlington Central Library
1015 N Quincy St 2nd floor meeting room
Ballston (Orange Line)

Though there is no cost to attend, you must contact us to register since seating is limited and we need to make sure that materials are available for you.

Tips for Couples Buying Their First Home Together Buying a home means starting a new phase of your...
North Arlington (Orange Line) Condo Update: January 2012 Zip Codes 22201 and 22203 (includes Ballston, Virginia Square, Clarendon)...

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Tips for Couples Buying Their First Home Together

Katie Wethman — Mon, 12 Dec 2011 13:45:40 +0000

Buying a home means starting a new phase of your life. It’s big, it can be scary, and it’s tough to make decisions. Add a second person into that mix and it can be overwhelming! Here are a few tips to get started if you and a significant other are buying your first home together:

1) Get organized. Financing will be the first hurdle you face and it’s important that you are both open and honest about your savings, debts, budgets, and credit ratings. It’s important that you both be comfortable not only with your share of the mortgage and other housing expenses, but with the rest of your budgets too, since coming up short at the end of the month may now affect whether you have a roof over your heads!

2) Independently, list your “must haves.” Then, sit down together and compare lists to make sure you’re not contradicting each other. Go to open houses together to discuss which parts of the house you liked and didn’t like. Make sure the houses you’re previewing are in your price range! Consult your agent if you are finding that you disagree on some of the key factors–a good agent will be able to discuss different floorplans, potential renovation projects, and alternatives that would be a nice compromise.

3) Consider how you will take title (joint tenants with rights of survivorship or tenants in common), and what will happen if one of you wants to sell. I know it’s not romantic, but being part of a couple means you have to be practical sometimes. How will you split the equity (or loss) accrued? It’s imperative to put your understanding into a binding written agreement – hire a lawyer to do this! Though it may seem morbid, also include what happens if one of you were to pass away or otherwise become incapacitated. This is a good time to update your wills to ensure consistency with your agreement.

You’ll be learning a lot about each other throughout this process. Be patient!

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Can I make an offer now if I don’t want to settle for several months?

Katie Wethman — Mon, 21 Mar 2011 15:07:40 +0000

It’s a tricky thing to time a home purchase with the expiration of a lease. Often buyers ask me: Can I make an offer on a house I like now even though my lease isn’t up until later this year to minimize the overlap?

Typically contract to close will be 30-60 days. There are several reasons for this.

The first is your loan. You can not lock in an interest rate until you have a property (the letter has a rate, but if you read the fine print it will say somewhere that it’s ‘subject to’ an acceptable property…at that time they give you whatever the current rate is. Once you find a property, a lender will lock you in for 45 days for free, and beyond that you need to pay a rather hefty fee (thousands of dollars). For that reason, most buyers look to close within 45 days of contract.

Most sellers obviously want a quick close as well (unless you pay a premium to make them wait), so it’s rare to see a closing that is many months away on a resale.

Occasionally sellers will want a ‘rent-back’ or post-settlement occupancy agreement, wherein they reimburse the buyers for their costs to stay in the property for up to 60 days past settlement. More than 60 days will create problems with your lender, as that’s typically the time frame after which they will consider it an ‘investment property’ and your loan terms will be different.

Buyers should also remember that the first mortgage payment isn’t due until the 2nd full month after you settle. So, for example, if you settle in April, then your first payment isn’t due until June 1. This is because you make mortgage payments in arrears, rather than in advance like you do with rent.

Of course every situation is different, but an experienced agent can help you utilize some of the contract’s clauses to minimize any overlap between your lease and your mortgage. Every situation is different, so contact us to discuss your rent-to-own transition or attend a free first time home buyer class.

Cheaper to Buy Than Rent in DC Area According to Trulia’s first quarter 2011 index, it is officially...

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Cheaper to Buy Than Rent in DC Area

Katie Wethman — Mon, 28 Feb 2011 18:17:33 +0000

According to Trulia’s first quarter 2011 index, it is officially cheaper to buy than rent in the DC area, along with 72 other large US cities. With rent averaging $2500-3000, and an average purchase price of $400-500k, the price to rent ratio is hovering around 14.

According to Inman News: “A price-to-rent ratio of 1 to 15 means that it’s much cheaper to buy than to rent in a particular city. A ratio between 16 and 20 means that it’s more expensive to rent than to buy, but, depending on the family’s situation, buying could “make financial sense,” the site said. Any ratio above 20 indicates that owning is much more costly than renting in a city.”

Of course, there are many factors to consider when deciding to rent or buy. If you’d like to discuss the home search process, please contact us, or consider attending one of our upcoming free first time home buyer classes.

More Resources: New York Times Rent vs Buy Calculator

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Proposed Elimination of Fannie, Freddie May Boost Interest Rates; FHA Insurance Premium Set to Increase

Katie Wethman — Mon, 21 Feb 2011 18:21:26 +0000

The administration has released a white paper saying it intends to wind down Fannie Mae and Freddie Mac and severely cut back FHA’s role in mortgage funding. Though the plan could take up to seven years to execute, it would mean a dramatically privatized mortgage market and very likely higher rates. The report offers three options, including creating a new government agency that would continue to insure mortgages or a new agency that would step in only during times of crisis. The most drastic option would end government backing for home loans beyond the FHA. This could prove to be disastrous for condo financing, which has long been problematic when it comes to FHA. (Read more about how changes in condo financing impacted sales in this post.)

This report comes on the heels of another direct hit on buyers: FHA’s recently announced increase in the monthly mortgage insurance premium of .25% beginning with case numbers assigned on or after April 18, 2011. FHA Commissioner David Stevens said “After careful consideration and analysis, we determined it was necessary to increase the annual mortgage insurance premium at this time in order to bolster the FHA’s capital reserves and help private capital return to the housing market,” said Stevens. “This quarter point increase in the annual MIP is a responsible step towards meeting the Congressionally mandated two percent reserve threshold, while allowing FHA to remain the most cost effective mortgage insurance option for borrowers with lower incomes and lower down payments.” This means that FHA buyers who have a ratified contract AFTER that date will have a higher monthly payment, so plan accordingly and get those offers in during EARLY April! On a $400,000 loan it translates into an extra $83 in your monthly payment.

Interest rates have a huge impact on affordability, especially for first time buyers who typically have lower down payments than 2nd or 3rd time buyers who are rolling equity over from a previous home.

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DC $5000 First Time Home Buyer Credit Retroactively Approved for 2010 Purchases

Katie Wethman — Tue, 21 Dec 2010 15:09:24 +0000

Buried in Friday’s signed, sealed, and delivered Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 was a provision retroactively approving the $5,000 tax credit for first-time home buyers in DC for 2010, and extending it through 2011 as well. Home buyers will remember that the credit, last approved as part of the 2008 stimulus bill, is usually approved late in the year and applied retroactively, leaving home buyers anxious about whether they’ll be entitled to the large credit.

This is a dollar-for-dollar credit against your federal income taxes owed (as opposed to a deduction, which would be worth less.) “First Time” buyers, for purposes of this law, are defined as those who purchased a home during the tax year and did not OWN IN DC in the twelve months prior to purchase. So if you owned in Virginia or another state and then bought in DC, you still qualify!

The maximum credit is for $5,000, or $2,500 if married filing separately. The credit begins to phase out when the modified AGI above $70,000 ($110,000 for married filing jointly) and phases out completely at $90,000 ($130,000 married filing jointly).

If you want to take advantage of the $5000 credit by buying a home in 2011, contact us to start your search!

Search the entire multiple listing service here.

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Now Open For Registration: Buying an Investment Property Seminar

Katie Wethman — Thu, 09 Dec 2010 17:20:32 +0000

Are you thinking about adding a rental property to your investment portfolio? Wondering how to go about identifying an appropriate property and estimating cash flow? Not sure what typical expenses are for an investment property? Then attend this free informational seminar that will cover:

- Identifying opportunities in the current real estate market

- Finding the right property

- Estimating rental income

- Estimating expenses

- Calculating total return

The class is free, but registration is required.

Arlington Central Library
1015 N Quincy St
January 31, 2011 8:15 pm – 9:00 pm

You can register for this session, as well as our “Selling Your Home” and “First Time Buyer” seminars here.

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Is the First Time Home Buyer Credit Coming Back?

Katie Wethman — Mon, 30 Aug 2010 13:12:23 +0000

With the precipitous 27% drop in July housing sales, the first time home buyer credit is getting renewed interest from some heavy hitters in Washington, including Secretary of Housing and Urban Development Shaun Donovan, according to The Hill. Though admitting that just one month of numbers was too little data to say whether the credit will be revived…

“In an interview on CNN, Donovan said the administration is “concerned” about the path of the industry. He defended the Obama administration’s record on supporting the housing market, amid new signs that the market is struggling alongside the broader economy.
Donovan did not rule out a further homebuyer tax credit to support the market.”

While plenty of blogs out there are again predicting real estate Armageddon, personally, I don’t think that the huge drop in July sales really should have been ‘unexpected’ at all. But no one wants to read a meh headline like “Home sales drop as expected in July as would be normal following any artificial force on a market.” (OK, I’m sure editors would shorten that headline, should it ever exist.)

Think about all the second half 2010 first time home buyers who pulled forward so that they could close before June 30 to get their extra $8000. We essentially ‘used up’ the first time buyer segment for at least a few months, and probably the remainder of 2010. By the Spring 2011 market there will be a new crop of buyers. Unless Congress intervenes first, that is.

Note to Congress: Spring is NOT the time to have a first time buyer credit expire. It was a double whammy…end of the usual Spring market–giving a credit to buyers who were going to purchase those homes anyway–PLUS the expiration of the credit. Next time, make the credit active in the late Fall and through February so that buyers are buying up the old inventory and foreclosures that otherwise would be sitting.)

And here’s another tip…if you want to jumpstart home sales with a buyer credit, don’t start hinting around about it to the press…Secretary Donovan essentially just wiped out what few first time home buyers there currently are, who are now all going to wait to see if there’s another credit.

Stay tuned.

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Free First Time Home Buyer Seminar in Arlington

Katie Wethman — Fri, 27 Aug 2010 02:01:23 +0000

Monday, September 20, 2010 from 7:00 – 8:15
Arlington Central Library
1015 N Quincy St 2nd floor meeting room
Ballston (Orange Line)

Though there is no cost to attend, you must contact us to register for the First Time Buyer Class since seating is limited and so that materials are available.

Educating Home Buyers to Enable Better Decisions

Our first time home buyer classes are educational sessions designed to give an overview of current market conditions and the home buying process. We cover a recap of the market, current trends and market stats including days on market, average sales prices, and inventory levels. We’ll also discuss the impact of the banking system collapse and bailout, the home purchase process and common pitfalls, financing basics and a how to get started checklist.

Specific topics covered:
- Northern Virginia, DC, and Montgomery County market analysis
- Mortgage basics: rates, points, fees
- Financing basics: FHA, Conventional, Conforming, and “Jumbo” loans
- Calculating the tax benefits of homeownership
- Short Sale, Foreclosure/REO/Bank Owned basics
- Search tips
- Fees and closing costs
- Buyer agency and choosing an agent

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Is the $8000 First Time Home Buyer Tax Credit Going to Be Extended?

Katie Wethman — Fri, 16 Apr 2010 15:24:50 +0000

Alas, my crystal ball is in the shop.

But I CAN tell you the same thing I recently told the Washington Examiner about the upcoming expiration of the credit: the administration and Congress are under a lot more pressure now to control spending than they were this time last year.

Last year it was all about saving the economy (read: saving the housing market) and pulling us out of our depression/recession. This year it’s all about record deficits, massive new entitlement programs, and the threat of inflation. Even a bill renewing the national flood insurance program and extending unemployment benefits has been held up for weeks. How difficult do you think it would be to renew the home buyer tax credit?

My best guess right now is that the tax credit will not be renewed in its current form.

Learn More:

Read about the tax credit.

Attend a free first time buyer class.

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