STEPS TO A DC HOME PURCHASE
Hey, DC real estate buyers! Ready to purchase your first home in Washington DC but don’t know where to start? Here’s our ‘best practices’ list to set you on the path to home ownership. Reach out when you have a question, or you're ready to get started!
MORTGAGE LOAN PRE-APPROVAL
DC real estate buyers should contact three lenders for mortgage pre-approvals and worksheets. You'll need a pre-approval from a local, recognizable lender to get started. You can get a pre-approval over the phone & online. Review DC homebuyer programs for those that may benefit you. You may also qualify for down payment assistance, home buyer tax credits or tax abatement. Don't make a lender commitment until you’ve contracted on a home. Individual DC condos, new condos in DC and DC co-ops qualify differently than single family homes, and lenders offer a variety of programs. You’ll want to match your loan to the property you want to purchase.
PARTNER WITH A REALTOR
DC real estate buyers should interview Realtors to find the professional best suited to their needs. Here are some questions you’ll be asked:
Do you have a pre-approval letter issued within 90 days?
Do you have any credit, tax or other issues that may affect your ability to obtain a mortgage loan? What type of financing will you use?
Do you have liquid funds for an Earnest Money Deposit?
What will be your downpayment amount?
Desired locations, "must-haves" & “wish list?”
What’s your timeline?
Do you have closing costs worked into your budget?
CREATE A GAME PLAN
DC real estate buyers can discuss criteria, timeline, financing & goals with their real estate agent and create a plan that will address their needs and goals.
REVIEW LISTINGS
Not all listings on the listing feed an agent creates will meet buyers' exact criteria. Learn how to review listings and read between the lines to create effective tours.
TOUR LISTINGS
It's time to look at homes! Your agent will guide you through the process to maximize your results. We invented "tourapalooza," a half to full day tour to kick off your home search. We'll see all the listings matching your criteria possible during that first tour. This gives you a sense of what your price point delivers in today's market. It gives us a good indication of your likes and dislikes.
IDENTIFY A PROPERTY OF INTEREST
When you find a home you like, it's time to research its value and outline an offer strategy. Your agent will provide "comps" and guide you through the process. We have a different strategy for each buyer and property. Tailor-made.
MAKE AN OFFER
It's time to make an offer! Your agent will be a key player. Strategies and negotiation factor heavily into this portion of the process.
THE CONTRACT PHASE
Once under contract, a different set of actions come into play, depending upon the type of property and the contract terms. DC real estate buyers benefit from having the guidance of an experienced real estate agent in this phase of the process.
SETTLEMENT
At settlement, you'll take legal possession of your new home. Your title company will facilitate the closing, your agent will accompany you in most cases, and you'll sign a ream of paperwork. Fun! At the end, you'll be handed the keys to your new home.
ANSWERS TO COMMON QUESTIONS FROM DC REAL ESTATE BUYERS
Earnest Money Deposits for DC real estate buyers is typically an amount between 3% and 20% presented with your offer. The lower end of 3% commonly represents an amount equal to a special mortgage program. The higher end commonly relates to sums for cash transactions, high value purchases and/or deposits relating to multiple offer scenarios. EMD is credited toward your downpayment if the contract goes to settlement. EMD will be lost if you default on your contract. EMD is held by your title company and deposited when a contract is ratified. Deposit deadline is outlined in your contract. In a multiple offer situation, earnest money deposit percentage affects the strength of your offer.
Down Payment amounts vary. In the DC Metro area, down payments range from as low as 0% down for qualifying VA borrowers, to 3.5% for FHA loans, 3% to 5% for specialized mortgage loan programs, 10% to 20% for co-ops and conventional loan programs from 5% to 20% or higher. In a multiple offer situation, down payment percentage affects the strength of your offer.
Preferred location, “must haves” and “wish list” Try to provide your real estate agent with as much information on your preferred locations as possible and include preferences on proximity to transportation, area amenities and other essentials. DC real estate buyers should try to separate ‘needs’ from ‘desires’ in order to create a well-prioritized search list. From number of bedrooms and baths to square footage, parking needs, stairs vs elevators, basement or terrace level preferences, area preferences, proximity to metro or other modes of transport, laundry facilities, pet restrictions and more, the better you define and prioritize your criteria, the more efficient your agent can be in identifying matches and helping you meet your goals.
Timeline Communicate your timeline clearly to your real estate agent. It will help determine how your property search progresses.
Closing Costs In addition to down payment, DC real estate buyers are required to pay for transaction closing costs, which can be estimated at approximately 3% to 3.5% of the purchase price of the home. Transaction costs vary based on loan product and type of home, as well as purchase price. Ask your lender for a worksheet detailing costs with set values. This will allow you to make apples-to-apples comparisons between lenders. The worksheet should be as close as possible to a Closing Disclosure. Provide your lender with some basic information, using the top price (worst case scenario) you’re willing to pay for a home, condo fee if applicable, tax zip code and loan type. It is recommended that you obtain three pre-approvals and three worksheets for best comparison. Be sure to use the same criteria on each for best results in estimating closing costs.
