Real Estate
Know before you owe
Changes coming for loan applications, closing on new homes
Applying for a loan and closing on a new home is about to change in October.
In November 2013, the Consumer Financial Protection Bureau (CFPB) combined the Real Estate Settlement Procedures Act (RESPA) and Truth in Lending Act (TILA) disclosures and regulations. This means that all settlements for real estate in the United States must now use new closing disclosure forms.
Initially, the new TRID forms and procedures were to be implemented on Aug. 1, 2015. However, because of the vast amount of changes to the lender industry, these changes were delayed to begin on Oct. 3. This date is now considered final, and these changes will be coming.
Homeowners who have been through the buying and selling process will see some changes at the closing table starting with any purchases originating after Oct. 3. A new Closing Disclosure and Loan Estimate will replace the HUD-1, the settlement statement used in all real estate transactions. This new Closing Disclosure will be more detailed and give the purchaser a much more in-depth look at the costs associated with both their loan and closing costs. As the CFPB has stated, the goal is for the purchaser to, āknow before you owe.ā
In addition to new forms, there will also be changes to the closing process and review of the approved loan. For example, starting on Oct. 3, all closing forms must be ready three days prior to closing. This is a drastic difference from our current practice and home purchases can be closed once the final HUD-1 statement is produced (normally two days prior to settlement).
Because of these changes, most Realtors, lenders, and title companies are now recommending that buyers get everything needed to the lender at least seven days before closing. This way, the three-day review period will not provide any surprises.
What are the implications of these new rules and regulations? As David Toaff, loan officer with First Home Mortgage, describes it, consumers should expect a slightly longer time from contract to close. Whereas the traditional contract period is about 30 days, TRID changes will likely push the contract period to 45 days because of the increase in review period after loan approval. This number of days may shorten eventually to 40 days, but the first months of implementing new forms and review periods will need a conservative number of days to close.
For buyers who are interested in purchasing a home over the next month, there should certainly be an understanding of being prepared in the loan process. These procedures are certainly not a surprise to the industry, but they will take time to adjust for all parties.
Sellers who are putting their homes on the market this fall should understand how these changes might affect their sale. While the D.C. market is primarily seller focused, offers that include financing may automatically be geared toward a 45-day close to protect the buyer.
In all, these new TRID guidelines are in place to protect the purchaser from predatory lending. This initial rollout of new forms and rules will certainly take time for the market to respond, but as lenders, buyers, sellers, and agents better understand them, the market will adjust accordingly.
Tim Savoy is a real estate agent with Coldwell Banker Residential Brokerage, Dupont Circle. Reach him at 202-400-0534 or at [email protected]. David Toaff is a loan officer with First Home Mortgage. Reach him at 610-348-3772 or at [email protected].
Real Estate
Avoiding the basement blahs
Renovating a lower level can add significant value to your home
Sadly, we have waved goodbye to summer and are now slowly shifting from enjoying outdoor activities to things we can do indoors. If you are lucky enough to have a basement, renovating it into livable space can be a great winter project to dramatically increase the functionality and value of your home.
Basements come with unique challenges due to their location below ground level, and overlooking critical aspects can lead to long-term problems. They are particularly vulnerable to dampness. Failure to address moisture can lead to mold growth, structural damage, and health hazards.
To tackle moisture control, start by checking for water leaks or seepage through the walls and floor. If moisture is present, you may need to apply waterproofing solutions to the exterior or interior walls of your home. Installing a vapor barrier is advisable to prevent condensation from damaging insulation and walls.
Make sure the basement has proper drainage systems, such as a sump pump and foundation drainage. The sump pump can remove water that collects around the foundation, while an effective drainage system redirects water away from the home. Installing a dehumidifier can also help.
Basements also tend to be colder than the rest of the house. Proper insulation in the walls and floor helps regulate temperature, reducing heating costs in winter and maintaining a cool, comfortable, and energy efficient environment in summer. Insulating the ceiling can reduce noise transfer between the basement and the upper floors, making the space quieter and more private.
Before any significant work begins, it’s crucial to assess the basement’s structural integrity. This includes checking the foundation for cracks or signs of shifting, which could indicate a bigger problem, particular with the plethora of old houses in the area.
If you notice any large cracks or signs of movement, consult a structural engineer or foundation expert to determine whether repairs are needed. Small cracks can be sealed, but larger ones may require reinforcement or more extensive foundation work.
Depending on local building codes, you may need to install egress windows if you are adding bedrooms or turning the basement into a rental unit. Egress windows provide an escape route in case of emergencies and allow more natural light to enter the space, making it feel more welcoming.
When adding a bathroom or kitchen, youāll find that installing plumbing in a basement can be more challenging because of the need to pump wastewater upwards. You may need a macerating toilet system or a sewage ejector pump to manage this. I learned this the first time I found that, contrary to what we have been told, water can indeed travel up.
Adding more outlets, lighting, appliances, and ventilation systems may necessitate electrical upgrades. Since basements are often unfinished, you may have exposed wiring, which should be properly enclosed or rerouted to meet code. Depending on the scope of the renovation, you might need to upgrade your homeās electrical panel to handle the increased demand.
Proper ventilation is often overlooked in basement renovations but is essential for maintaining air quality and preventing the buildup of stale air or harmful gases. Installing mechanical ventilation, such as an HRV (Heat Recovery Ventilator) or an ERV (Energy Recovery Ventilator), can help ensure a consistent flow of fresh air in the basement.
Radon, a naturally occurring radioactive gas, can enter homes through cracks in the foundation. Since radon exposure is a leading cause of lung cancer, itās wise to test for it before beginning the renovation. If elevated levels are detected, you may need to install a mitigation system.
Once the technical aspects are addressed, focus on creating a functional and aesthetically pleasing layout. The design of your basement will depend on how you plan to use the space, whether itās a guest room, home theater, office, workout area, or game room.
Since natural light is limited in basements, it is important to plan your lighting carefully. Recessed lighting is a popular choice because it doesnāt take up ceiling space, but you should also consider adding floor lamps and sconces to make the space feel brighter and more inviting.
Choose flooring that can withstand moisture, such as vinyl planks, tile, or sealed concrete. Since basements can double as storage areas, consider incorporating built-in shelving, closets, or under-stair storage to maximize the available space.
Whether doing it yourself or hiring professionals, renovating a basement is a rewarding project that can add significant value to your home, but it comes with challenges. From moisture control and insulation to plumbing and air quality, careful planning is crucial to ensure a comfortable, functional, and safe space to enjoy indoor hobbies and emerge from winter free from the Basement Blahs.
Valerie M. Blake is a licensed Associate Broker in DC, MD & VA with RLAH Real Estate / @properties. Call or text her at (202) 246-8602, email her at DCHomeQuest.com, or follow her on Facebook at TheRealst8ofAffairs.Ā
As interest rates begin to cool off for the first time in a few years, prospective āfirst time homebuyersā may have their wheels spinning again about whether itās a good idea to buy a home. Still, the idea of home ownership may feel out of reach for some; historically, the prevalence of homeowners has been low in certain subsets of the population. It wasnāt until the 1900ās that laws were enacted to grant women and people of color equal access to property ownership:
1968: The Fair Housing Act prohibited discrimination in home buying, homeownership, and rental real estate based on sex, race, religion, and other protected classes.
1974: The Equal Credit Opportunity Act (ECOA) prohibited discrimination in consumer credit practices based on sex, marital status, and other factors. This made it easier for women to buy homes by allowing them to apply for loans and credit without a male co-signer.
Even with these laws in place, socioeconomic disparities and lack of access to generational wealth have slowed progress in this area. Generational wealth occurs when resources are passed on to family members when the family homeowner or the head of household passes away. In areas like D.C. this type of asset can be worth hundreds of thousands of dollars, and can be used to pay off student loans, help younger members of the family purchase their first or second homes wherever they live, or be invested in other ways.
While this may have been the key to buying property in the past, people today are pursuing homeownership for themselves and their own means ā especially women. Many real estate agents in the D.C. metro area can testify that they are working with individuals who are the first in their family ā and often the first woman in their family ā to buy a home. The days of waiting until marriage to invest in property are slipping away; these days people marry later, may not stay married, or may choose not to marry at all. āI didnāt consider buying a home at first, because I didnāt really see myself as a ātypicalā homeowner; I was single and wasnāt sitting on a stockpile of cash,ā says Jordyn White, a D.C. resident who bought her first home at 29. āA trusted friend encouraged me to explore first-time homebuyer programs, and Iām glad I did. My monthly mortgage payment is similar to what I would likely pay to rent in the same area, and now I have created a path to generational wealth for my children.ā
The rates of homeownership for people of color and women are steadily rising. A 2023 Pew Research Center survey using 2022 census data found that single women owned 58 percent of the nearly 35.2 million homes owned by unmarried Americans, while single men owned 42 percent. Single homeowners have peace of mind in knowing that they own assets by themselves.
Compass real estate agent Katri Hunter has helped many of her clients buy their first home. She reports, āI find more and more that I have single clients that approach me in their early/mid-30’s and say that they thought they would be buying their first property with a significant other and then decided to take things into their own hands ā¦ I tell people all the time to consult an estate planner when and if they do decide to get married to discuss pre-marital assets and keeping those in their own name. I think people really take more pride and ownership buying property on their own rather than something they dread.ā
Katri Hunter can be reached at [email protected]. JosephĀ Hudson is a referral agent with Metro Referrals.Ā He can be reached at 703-587-0597 orĀ [email protected]
Real Estate
Ensuring safer water in rentals with āLead Free DCā initiative
An excellent opportunity for landlords to replace old service lines
Maintaining a safe and healthy environment for your tenants is a top priority as a landlord in the District of Columbia. One critical aspect of this responsibility is ensuring the water in your rental properties is free from lead contamination. The “Lead-Free DC” initiative, led by DC Water and supported by the District of Columbia, offers an excellent opportunity for landlords to replace old lead service lines and contribute to the broader effort of safeguarding public health.
Why Lead-Free Water Matters
Lead exposure is a serious health concern, particularly for young children and pregnant women. However, even in rental properties where no small children currently reside, lead in drinking water poses an ongoing risk to all occupants. Long-term exposure to lead can lead to various health issues, including cognitive impairment, cardiovascular problems, and developmental delays. As such, addressing lead pipes is not just a matter of compliance but a strategic investment in the long-term value and safety of your property.
Resources Available to Landlords
The District of Columbia, through DC Water’s “Lead-Free DC” initiative, provides several resources to help landlords replace lead service lines:
1. Free Pipe Replacement: DC Water offers free replacement of lead pipes on public property, such as the pipes running under streets and sidewalks. This service is available to all property owners, including landlords, and significantly reduces the cost burden of making your rental property lead-free.
2. Partial Replacement Assistance: For lead pipes on private property (e.g., those running from the property line to your building), DC Water offers partial financial assistance. The cost to replace these pipes is typically shared between DC Water and the property owner, reducing the overall expense.
3. DC Lead Pipe Replacement Assistance Program (LPRAP): This program specifically helps low-income residents replace lead pipes on their property at no cost. While it primarily targets homeowners, landlords with qualifying properties may also benefit from this program.
4. Federal Programs: The U.S. Environmental Protection Agency (EPA) and the Department of Housing and Urban Development (HUD) provide grants and low-interest loans to property owners for lead hazard reduction, including pipe replacement. These programs can further alleviate the financial burden associated with removing lead from your rental properties.
Strategic Value of Going Lead-Free
Investing in lead pipe replacement is a strategic move that offers significant long-term benefits:
ā¢ Increased Property Value: As awareness of lead-related health risks grows, properties with modern, lead-free infrastructure are likely to become more desirable and command higher market values.
ā¢ Tenant Retention and Attraction: Tenants increasingly prioritize health and safety in their living environments. A lead-free property can be a key selling point, helping you retain current tenants and attract new ones.
ā¢ Regulatory Compliance: As regulations surrounding lead in drinking water continue to tighten, staying ahead of the curve can save you from potential legal issues and costly retrofits in the future.
ā¢ Community Contribution: By participating in the “Lead-Free DC” initiative, you are not only protecting your tenants but also contributing to the broader effort of making the District of Columbia a healthier place to live.
Understanding Potential Costs
While much of the pipe replacement work is covered by DC Water and other programs, there may be some additional costs to consider. For example, once the old lead pipes are removed, the area where the pipes were accessed might need restoration. This could include patching up driveways, sidewalks, or landscaping around the foundation of your property. Although these costs are relatively minor compared to the health and safety benefits, it’s essential to budget for them when planning the work.
A “No-Brainer” Decision for Landlords
Replacing lead pipes is more than just a necessary updateāitās a no-brainer decision that will pay dividends in the long run. The peace of mind that comes from knowing your rental property is free from lead risks is invaluable, and the potential increase in property value and tenant satisfaction makes it a wise investment.
Take advantage of the resources available through the “Lead-Free DC” initiative and other programs to ensure your rental properties offer safe, lead-free water for all tenants, now and in the future.
Further Access Information for Readers:
DC Water – Lead-Free DC Program:
https://www.dcwater.com/resources/lead
This page provides detailed information about the Lead-Free DC initiative, including how to apply for pipe replacements and available assistance programs.
DC Water – Lead Pipe Replacement Assistance Program (LPRAP):
This page offers insights into the Lead Pipe Replacement Assistance Program, focusing on how low-income property owners can receive help in replacing lead pipes.
EPA – Lead in Drinking Water:
https://www.epa.gov/ground-water-and-drinking-water/basic-information-about-lead-drinking-water
This URL covers essential information on the risks of lead in drinking water and federal programs available to help property owners.
Scott Bloom is owner and Senior Property Manager of Columbia Property Management. For more information and resources, go to ColumbiaPM.com.