You are probably familiar with the various down payment assistance programs available. These programs assist with homebuyers mortgage down payment and the various closing costs required to purchase a home.
These programs are referred to as:
first time home buyer programs
home buyer assistance programs
down payment assistance (DPA) programs
Down payment assistance programs (DPAs) are typically meant for first-time home buyers. However, a repeat home buyer often counts as a “first-time buyer” if they haven’t owned a home in the past three years. Other requirements might include income caps and buying a home in a qualified area.
Every down payment assistance program is a little different. The exact requirements to qualify will depend on the programs that are available.
Various sources fund DPAs. Money may come from federal, state, city, county and non-profit organizations. And each of these are free to set its own eligibility criteria and rules.
Now, let’s get to the original questions– Do I Qualify For Down Payment Assistance in MD if I Live In DC (and vice versa)?
Typically, programs that are available in Maryland are for anyone wanting to purchase a property in Maryland. If you live in Washington, DC, but you want to move to Maryland, you would qualify for a Maryland homeownership program.
And vice versa….
Programs that are available in Washington, DC are for anyone wanting to purchase a property in the District of Columbia. If you live in Maryland, but you want to move to DC, you would qualify for a DC homeownership program.
To qualify for most a down payment assistance programs, it is based on where you want to live, not where you currently live.
Congratulations! You have submitted all the required documentation and now you have that Pre-Approval for your new home.
So… what’s next?
As you continue to move along in the home buying process, you will only be charged for the services you used, such as a title search or home appraisal if down the road you decide you do not want to continue buying the home.
Please, please— Do not buy furniture, a car, or open any new lines of credit during the mortgage process, because it will increase your debts, impact your credit, and could disqualify you from receiving your home loan.
Also, do not change jobs during the process. An employment change will affect the job t history portion of your pre-approval application, which directly ties into your ability to repay your home loan.
Unfortunately, I’ve had this happen to clients and it only complicates things and extends the buying process much longer than it has to be.
It is great that you are pre-approved for a home loan and now know your mortgage budget, but there are three essential things you must know before the home search begins.
First before you contact me to see your 1st property, find out what your monthly mortgage payment will be so that you will not overextend on your mortgage payment. Many times I have had a pre-approved buyers look at homes, want to put in an offer on a home, and then find out they have to discuss the monthly payment with their mortgage advisor before moving forward.
This can bring the entire process to a halt and while clients are going back and forth with their mortgage advisor. Someone could come in with an offer and buy a home they love right out from under them. Ugh, that would be sad!
Second, you want to know your allowable taxes for the year. This will help you save time by bypassing the homes that are not within your allowable tax budget. Please note that allowable yearly taxes are not always set in stone. For example, if you are allowed $8,000 per year in taxes and the home you are interested in has taxes of $8,400 per year, your mortgage advisor can likely adjust the figures on your pre-approval to qualify you for the home.
Third, you want to know exactly what funds you are earmarking for your down payment, closing costs, and out of pocket costs associated with home buying. To keep things moving in a positive and forward direction, staying on top of fund allocation prior to looking at homes is key.
Many of our first-time homebuyer clients are not aware of the wide variety of financing options, such as down payment assistance available to them. We saw this as a clear opportunity to both educate and debunk common down payment myths that might be keeping buyers on the sidelines longer than necessary.
So, what is a down payment?
A home down payment is simply the part of a home’s purchase price that you pay up front and does not come from a mortgage lender via a loan. Suppose you want to buy a house for $400,000. For example- If you bring $12,000 towards the purchase price, or put 3% down, the mortgage lender provides $388,000.
Ok, not let’s clear up a few myths concerning down payments…
Myth #1: You need 20% down to buy a home.
Many new and potential homebuyers believe a large down payment is not required to purchase a home. In fact, there are many low down payment loans and programs available.
Having at least three months of mortgage payments is better measure of homeownership success than a large down payment. There are a wide range of homeownership programs that can help you with the down payment and closing costs to allow you to maintain a valuable cash cushion.
Myth #2: Down payment assistance is only for first-time homebuyers.
People often associate homeownership programs with first-time homebuyers, but eligibility is actually broader. The official definition of a first-time homebuyer — according to HUD — is someone who has not owned a home in three years.
Approximately 41% of homeownership programs do not have a first-time homebuyer requirement and are available for eligible repeat homebuyers.
Myth #3: Down payment programs aren’t available in my area.
Down payment programs are available in every market across the country. Nearly 70% of programs are available in a specific local area, such as a city, county or neighborhood and 30% of programs are available state-wide through state housing finance agencies.
The states with the greatest number of down payment programs remain consistent —California, Florida and Texas are the top three with Maryland being #4 and the District of Columbia being #35.
% with Funds Available
Down Payment Program Data By State
Myth #4: It’s too expensive to buy a home in my market.
Down payment assistance is available in every market, including high cost areas in the District and Maryland.
Approximately, 11% of these programs offer incentives and even specific programs for educators and first responders, including police officers, firefighters, and healthcare workers.
More than 6% of the available programs have benefits for veterans, members of the military and surviving spouses. These programs can also be layered with zero down payment VA loans.
One-to-four unit multi-family properties can also qualify for down payment help. Twenty-five percent of programs allow buyers to purchase a multi-family property as long as the buyer occupies one of the units, which allows the homeowner to earn income from their rental units to help pay the mortgage.
Myth #5: Down payment programs make home financing more difficult.
Across the country, there are 2,451 homeownership programs available and 83% currently have funds available to eligible homebuyers. Exploring home financing options should be the first step for prospective buyers, however, you don’t have to go it alone — We’ve got your back! Check out the Down Payment Assistance Resource.
Congratulations! You’ve decide to purchase a home. This is an exciting time, but there is work to do before you pop the champagne.
The first step toward purchasing a home is getting pre-qualified for a loan.
Your loan officer will review your financial information and determine how much you are qualified to borrow and what financial programs you may want to consider.
A lender pre-qualification with a lender will answers the following questions:
What is the best type of home loan for me?
How much money will I need to put down?
What will my payments be?
Be sure your loan officer/lender answers any additional questions you have. You want to be confident that you understand your loan.
Loan pre-approval and the accompanying pre-approval letter will typically be required to put an offer on a property. Keep in mind– A seller, before they take their home off the market, will want to know that you are already approved for financing.
As a pre-approved buyer, your offer on a home is much more likely to be accepted. So, be prepared to get that pre-approval letter before you start looking at any properties.
A pre-approval will require a credit check and documents that prove your income and assets.
Loan Prep Checklist
Depending on your unique situation, there are several documents you might need when you apply for a home loan, but here are the basics.
“Don’t sweat it, just gather the documents in the loan prep checklist in advance so you are prepared.”
Dana Ash-McGinty, ASH MCGINTY Prinicpal Broker
You’ll likely need to provide a photo ID, such as a driver’s license. This is simply to prove you are who you’re claiming to be.
Social Security number
In order to assess you as a borrower, lenders will need to pull your credit report.
You may need to explain any blemishes on your credit. Blemishes may include a previous short sale or a foreclosure.
You should be prepared to fully explain any negative items on your credit report. This helps a lender evaluate what kind of risk you are. Lenders may look at one-time unavoidable circumstances differently from habitual delinquency.
Checking and savings account statements
When assessing your risk profile, lenders may want to look at your bank statements and other assets.
Lenders typically request these documents to make sure you have several months’ worth of reserve mortgage payments in your account in case of an emergency. They also check to see that your down payment has been in your account for at least a few months and did not just show up overnight.
Pay stubs, W-2s or other proof of income
Lenders may ask to see your most recent pay stubs from the past month or so. Your tax returns help give them a clear idea of your overall financial health, while pay stubs help them gauge your current earnings.
If you’re self-employed or have other sources of income (such as child support), you may need to show your lender proof through 1099 forms, direct deposits or other means.
Federal tax returns with W-2s, K-1’s, 1099 for the past 2 years
Mortgage lenders want to get the full story of your financial situation. You’ll probably need to sign a Form 4506-T, which allows the lender to request a copy of your tax returns from the IRS.
Lenders generally want to see one to two years’ worth of tax returns. This is to make sure your annual income is consistent with your reported earnings through pay stubs and there aren’t huge fluctuations from year to year.
Your lender’s goal is to assess you as a borrower and ensure you can make your mortgage payments on time.
Your goal is to provide them with documents that paint an accurate picture of your creditworthiness.
Since everyone’s situation is unique, additional documentation might be required. Your Loan Officer will let you know exactly what is needed.
Real Estate Agent vs. Real Estate Broker: What’s the Difference When You’re A Buyer?
Written by: Dana Ash-McGinty
Both real estate agents and brokers are licensed to assist you with your real purchase. Real estate brokers have additional certification which requires more experience, additional training and further state testing. However, in some states, the word “broker” and “agent” are used interchangeably.
Real Estate Broker Duties
Real estate brokers are licensed to do everything a real estate agent does, including negotiating and writing property transactions.
Additionally– Because brokers have a higher level of licensing, real estate brokers are also licensed to supervise agents and oversee all real estate transactions for a brokerage. This includes assisting agents if an issue occurs during any part of the sales transaction.
When purchasing a home, you’re more likely to work with an agent. Most brokers spend their days overseeing the real estate brokerage and supervising individual agents.
Brokers use various names, depending on the size of their brokerage and their role and responsibilities:
Principal Broker – Owner of a real estate brokerage. Managing Broker – The broker that manages a real estate brokerage. Broker Associate – A real estate broker that works under another broker and has no ownership or management responsibilities for the brokerage.
A Real Estate Brokerage Defined
A real estate brokerage is a stat licensed firm where a broker, teams, agents and assistants work. The chain of command at a real estate brokerage is broker, then team leader (if there are teams of agents), then agents, and then assistants.
At a small boutique real estate firm, such as ASH MCGINTY, the broker (me) might be the owner of the company and may also take clients. (This describes my current role at ASH MCGINTY.)
At a larger real estate firm, the broker is the person who oversees the office. (This was the model at my previous real estate brokerage in which I managed 600+ agents. I was both the Principal Broker and the Managing Broker. )
Types of Real Estate Agents
There are several types of real estate agents, based on the roles they take on for their clients. Most real estate agents offer more than one type of real estate service:
Listing Agent: represents the seller Buyer’s Agent: represents the buyer Dual Agent: represents both the seller and the buyer in a transaction, called dual agency Transaction Agent: When dual agency is not legal, a transaction agent oversees the transaction timelines and paperwork for both parties, but they don’t give advice or represent either side.
Real Estate Agent Duties
When working with buyers, real estate agents oversee the sales process, from the initial home search all the way to your closing. Some real estate agents go above and beyond the following list, but these are the key responsibilities of most professional buyer’s agent:
Help you to figure out your purchasing power: A good agent will guide you through the financing pre-approval process, suggest lenders and help you determine the right budget.
Choose the ideal neighborhood and school districts: Your agent can help you explore neighborhoods based on your budget, lifestyle and commute.
Find available property listings based on your wants and needs: An agent will send you an initial set of listings to review, then new listings regularly so you can determine if a property is worth seeing in person. Agents sometimes have access to off-market or pre-market listings that you wouldn’t be able to find on the local MLS.
According to Zillow:
82% of buyers use an agent at some point during their home search. And when buyers are determining the right home to buy, 53% say their agent’s evaluation of the home is very or extremely important to them.
Submit offers: Once you’ve found a house you love, your agent will help you determine an offer price, suggest the terms of your offer and submit the offer to the listing agent or owner.
Negotiate on your behalf: Your agent will negotiate with the other party on the final sales price and contract terms, including the earnest money deposit. Your agent will continue to negotiate on your behalf as you move toward closing, especially on things like inspection and financing contingencies and closing credits.
Make professional recommendations: Agents are also a great resource for referrals of home inspectors, home warranty companies, title companies, real estate closing attorneys, etc.
Complete paperwork: There’s a lot of paperwork involved in buying a home. Your agent will draft the real estate contract and disclosures and work with your title company or real estate closing attorney to review all documents. They’ll also help with any other Federal and State required paperwork.
Facilitate inspections and repairs: Most agents will attend the home inspection with you (and help schedule additional inspections as needed, coordinate times with all parties and make sure contract deadlines are met.
Navigate you sale through closing: Your buyer’s agent should attend your closing to make sure there are no issues and handle any problems that arise.
How Do Real Estate Agents Get Paid?
While the role of a buyer’s agent is to help a buyer find a home, they’re actually paid by the seller. Sellers typically pay 5-6% of the sale price in agent commission, with the total amount being split roughly 50-50 between the seller’s agent and the buyer’s agent (50% of commission to each agent).
If you are currently looking to purchase or sell a home and would like to get a jumpstart on the process, check out these 5 handy apps that’ll help simplify your overall home buying or selling experience:
Zillow Real Estate & Rentals (Available on iOS & Android- Free) The Zillow Real Estate app allows home buyers to search a huge amount of properties. Zillow currently has data on 110 million homes throughout the nation. The app allows buyers to sort properties by selected criteria such as home design and nearby top-rated schools, and offers features such as bird’s eye view photos, home value changes and much more including information such as if a home has been remodeled. Additionally the app gives “Zestimates” which is Zillow’s estimation of a home’s market value.
Trulia Real Estate & Rentals (Available on iOS & Android- Free) The Trulia Real Estate & Rentals app allows you to easily search for homes on your smartphone offering such capabilities as maps that show top-rated schools, local features and more. Additionally you can contact an agent and save and share your favorite properties.
Homesnap Real Estate (Available on iOS & Android- Free) The Homesnap Real Estate app allows users to snap a photo of any home to find out more info about it.
iHandy Carpenter (Available on iOS ($1.99) & Android (Free) The iHandy Carpenter app is excellent for home staging assistance. The app features the following capabilities:
A plumb bob, the easiest way for you to verify the verticality of lines or walls*
A surface level, the best tool to level any flat surface
A bubble level bar, exactly as you can see in carpenter tool kit shops
A steel protractor, measuring angles from 0 to 180 degrees
A steel ruler, supporting both inches and centimeters
*Once calibrated, the plumb bob, surface level and level bar can also be used as an inclinometer/clinometer by reading the angles on the screen.
Docusign Ink (Available on iOS & Android- Signing is always free $10/month basic individual plan) For those who prefer paperless and are always on the go, the Docusign Ink app allows buyers and sellers to sign essential documents needed to finalize their transaction.
1) Have a Reason For Your Investment There are tons of reasons why a person decides to invest in real estate. Whatever the reason may be, be sure that you have a strategy. Knowing why you want to invest will encourage you to reach your goal.
2) Do Your Homework There are tons of people in real estate that will tell you numerous wonderful things about real estate investing. You have to do your own homework. Be sure you understand your investment numbers. Learn as much as you can before you move forward with any property.
3) Keep an Open Mind One of the most common mistakes a novice makes is being pessimistic or closed minded even before things start. There may be a learning curve in the beginning and you may need to make certain mind adjustments. For example, the approach to purchasing a home to live in can be very different than the approached used to purchase an investment property. Nevertheless, keeping an open mind will allow you to see opportunities that may not have been immediately apparent.
4) Have an Exit Strategy Before purchasing any investment property it is important to have a future exit strategy. What is your goal for the investment. Will the property be a long term investment? Or would you prefer to make repairs and immediately re-sell. Always start with the end in mind.
Principal Broker | Realtor® | “The Real Estate Maven”
Dana Ash-McGinty is the Principal Broker of ASH | MCGINTY, a Washington, DC Real Estate Brokerage. This real estate maven has 15+ years experience in residential, commercial and land sales in addition to multi-state residential renovation, re-zoning, and condo conversion projects. A sought after real estate authority, she has been featured on CNN and in various real estate and financial publications. Dana is married to the highly esteemed Dr. Dana W. McGinty, a Washington, DC based internal medicine physician. They are often referred to as “The Danas”.