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Buyer Tips Buyers

6 Tips for Buying a Home in a Sellers Market 2021

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Me (Dana Ash-McGinty) and the ASH MCGINTY & Co. team assist first-time and experienced homebuyers in one of the nation’s most competitive (and blood thirsty) markets — the Washington, DC metropolitan area. With the real estate market continuously trending toward rocketing sales prices and even fewer days on market, many buyers are reasonably frustrated. Creating strategies for buying a home, most importantly buying a home in 2021, navigating multiple offers on a house, and building a cooperative environment with listing brokers and sellers. This is a strong suit for ASH MCGINTY.

Below I have provided six homebuyer tips for anyone buying a home in an ultra competitive market. (I’ve also sprinkled in a little knowledge on various African languages, just for fun.)

#1 [nọmba ọkan]
(“Number one” in Yoruba – With over 30 million speakers and various dialects, it is one of West Africa’s most spoken languages. Also associated with the Yoruba Ethnic Group, which is one of the largest West African ethnic groups.)

Get pre-approved and pre-underwritten. 

Yes, it’s time to get those financial docs together! I know that the requirements for underwriting is substantial compared to a pre-approval, but you will need to do this work anyway. So, let’s submit the required documents to the lender and finalize your loan. Doing it upfront will allow you to relay to the seller the certainty of your funding. (We are consistently seeing sellers choose an offer for this reason.)

#2 [ቁጥር ሁለት]
(“Number two” in Amharic – One of the main languages in Ethiopia with over 20 million speakers. After Arabic, it is the second most spoken Semitic language (language that originated from the Middle East).

Appraisal gaps are a reality in today’s market.

Although most of our offers will include an appraisal contingency, it is important for homebuyers to be aware that they may still have ground to cover. The reality is that there is a high likelihood of any given home selling above the listed price. (Actually you should expect this.) And… if there is a gap in the appraisal, you may need to be prepared to make up a portion or all of the difference. (Wait what?) Yes, you may need to be prepared to make up that appraisal gap. Therefore, it is a good practice to make sure that the top end of the home search price range is less than the top end of the budget.

#3 [namba tatu]
(“Number three” in Swahili – Also known as the Bantu language, Swahili is the most spoken language in all of Africa with well over 100 million speakers. It is the official language of the Democratic Republic of Congo, Kenya, Tanzania, and Uganda.)

Be open-minded to multiple neighborhoods and floor plans.

Of course you may have a preference, we all have preferences. But, you should really consider being open to touring various neighborhoods and floor plans. Open-minded homebuyers often have a less stressful experience than those that are hyper-focused on a particular neighborhood or zip code. You never know– You may discover a great buying opportunity by taking a look at an adjacent area or different floor plan with slightly less interest.

#4 [lamba hudu]
(“Number four” in Hausa – This is one of Nigeria’s official languages with well over 40 million speakers around the continent of Africa.)

Be open to PMI. 

Homebuyers, especially first time home buyers should be aware that most home loans include PMI (private mortgage insurance). Down payments of less than 20% down is more common than you may think. Here’s one advantage of a smaller downpayment– Less of a downpayment will give you more flexibility if you have to cover an appraisal gap. With today’s super low mortgage interest rates, your mortgage payment even including the PMI, will still remain very reasonable.

#5 [inombolo yesihlanu]
(“Number five” in Zulu – A widely spoken language in South Africa with over 10 million speakers. Zulu is also the largest Ethnic Group in South Africa.)

Offer quickly with your strongest offer. 

Even with unprecedented levels of homebuyer competition, there are still some buyers tempted to test how low they can go. This is absolutely not a winning strategy. Instead of testing the market, assume the seller won’t counter and will simply move on to the next offer. Being ready to make your highest and best offer quickly is key to winning a real estate bidding war in an ultra competitive market such as the Washington, DC metropolitan area.

#6 [numéro six]
(“Number six” in French – Spoken by well over 120 million people in Africa, including various North African countries and the 26 African states that make up “Francophone Africa”- these countries include Cote d’Ivoire, Gabon, Mauritius, and Senegal.)

Work with an experienced agent you like and trust.

My most important homebuyer tip is to work with an agent that (1) is experienced, (2) you connect with, and (3) you trust. This simple strategy will allow you to work with an agent that truly has your best interest in mind. This agent will be sure you follow the above tips (and more) on your next home purchase.

black owned real estate companies, black real estate agent

We take the stress out of buying a home.

Let’s talk! Contact us for assistance with buying a home in 2021.

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Buyers Condos

House, Condo or Co-op?

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You’ve decided, you’re committed, you’re serious, and ready to make a significant financial investment in a home. The catalyst for your decision could have come from a number of things: starting or expanding your family, receiving a promotion at work, or just tired of paying rent.

Whatever your personal reason to purchase a home, it’s now time to think about your real housing needs. Studio, 2 bedrooms or 3? Hmmm, do you really need that 3rd bathroom?

Let’s think about it– a three-bedroom fixer-upper could fit into your budget more than a modern, four-bedroom with all the upgrades. Smart home buying will always require give and take on your housing needs vs. housing wants, especially when working within a mortgage budget.

What you want will sometimes end up costing more than what you need. I don’t want to rain on your parade, but you can always make improvements on the home you purchase over time.

Now that you have assessed your living needs and willing to be flexible on your housing needs vs. housing wants, it is time to see what type of property is right for you.

“It is in your moments of decision that your destiny is shaped.”

Tony Robbins

If landscaping, painting the exterior of your home, and fixing the roof sounds like torture, a condo or a co-op might be the answer. Condos and co-ops have monthly maintenance fees (also called HOA dues/fees) in addition to your mortgage payment.

The interior of the condo or co-op have few restrictions when it comes to making changes to the property, so you are somewhat free to customize your living space. Keep in mind that most condos and co-ops do not accept FHA loans, so you will need to use a conventional loan.

A condo or co-op may not have extra storage space, and you will be limited on the amount of parking spaces allowed for your unit, if any.

To be a co-op owner you will also need to be approved by the co-op board, which involves an interview process, giving personal/business references, and showing personal financial documents. Depending on what state you live in, the co-op board does not have to tell you why you were turned down, if that was the outcome.
 
Single family attached and detached houses, on the other hand, offer the most freedom when it comes to various types of renovations. This includes stand alone house, row houses and certain townhomes.

If you wanted to paint the exterior of the home blue among red homes in the neighborhood, you can. With Single family attached houses and row homes, there are no set maintenance fees, but if maintenance issues do arise, i.e. a leaky roof, landscaping, or driveway repair, snow removal you must take care of them at your own expense.

So, which property is right for you – House, Condo or Co-op? Let us know!

We can also assist you with getting pre-approved for a mortgage and if needed, finding a down payment assistance program.

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Dana Ash-McGinty

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”.

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Buyer Tips Buyers Credit creditscore

How Lenders View FICO Scores

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Let’s take a look at FICO scores and how they’re calculated.

Your FICO score is a numerical representation of the odds that a consumer will default 90 days or more or a credit card or loan.

It’s really that simple.

The lender wants to know what the odds are that you’ll stop paying for 3 months or more.

Here’s the breakdown:

800+1485 to 1
720 -799659 to 1
680 – 719112 to 1
620 – 67947 to 1
Below 62015 to 1

Using the chart above, this mean that for every 47 consumers with with a 625 score that a lender lends money, on average 1 will default in 90 days.

That means for the lender to make money, they have to charge more interest to those with lower scores to offset the losses of the 1 who defaulted.

How your scores are calculated are based on 5 criteria:

  • Payment history (35%) – Do you pay your accounts on time?
  • Amounts owed (30%) – How much of your credit are you using out of your available credit?
  • Length of credit history (15%) – How old are your accounts? Generally, older his better.
  • Credit mix in use (10%) – What’s your ratio of credit cards, retail accounts, installment loans, finance company accounts and mortgage loans.
  • New credit (10%) – Opening several credit accounts in a short period of time represents a greater risk – especially for people who don’t have a long credit history.

Wait! Before you go signing up for just any old credit monitoring service, here’s what you should know.

All credit scores are not the same.

Lenders currently use FICO scores. You can get your FICO scores from myfico.com.


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Buyer Tips Buyers

What Happens After Being Pre-Approved?

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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!

Down Payment Assistance

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.

If you currently have a Pre-Approval and/or you already to get started with finding a home, contact us or complete our Buyer Questionnaire.

TTYL

Maryland Mortgage Program

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Buyer Tips Buyers First Time Home Buyers

5 Items You Need To Qualify For a Home Loan

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5 Items You Need To Qualify For a Home Loan

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.

Pre-Approval

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

Photo ID

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.

Bottom line

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.

Need help? We will be happy to answer any questions and assist you with finding a lender. Give us a shout or schedule a call.


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Buyer Tips Buyers

Real Estate Agent vs. Real Estate Broker

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Real Estate Agent vs. Real Estate Broker: What’s the Difference When You’re A Buyer?

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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.

(If you’re ready to start exploring listings now, consider reviewing properties currently available for sale in Washington, DC.)

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).


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