Real Estate
Alternative ways to deal with high interest rates
Rental units, house hacks, and more
Amid all the news this week about whether or not the movie “Bros” was a blockbuster, we still hear about fluctuating mortgage rates. This is obviously detrimental for my business. I have a dog to feed and I like to eat. So let’s look at some alternative methods of combating the higher mortgage rates. If you have read my previous columns (I hope you have) then you will know I am a huge fan of sass and more importantly, controlling your controllables! Let’s outsmart these interest rates, hunny.
ENGLISH RENTAL UNITS
Obviously we cannot change the interest rates, we don’t set those. But we do set and control our destiny. If you have been in the market for a row house in D.C. but don’t truly NEED all of that space – perhaps shift your search to include row houses that have an English basement. This means that it’s a basement that has means of egress from the front and the back. Here in D.C. there are requirements in order to make it a legal rental and have a certificate of occupancy, which include, but are not limited to, means of egress and ceiling height. That ceiling height aspect is truly a very important part.
By shifting your search to include a full basement with a front and back entrance and adequate ceiling height you also might notice that you have increased your budget a bit more. However with these units you are able to charge more in terms of monthly rent than you would for just having a roommate. The market is shifting and buyers are able to be a bit more methodical with their purchases and with that comes some negotiation power as well.
That means that you likely can find a row home with an English basement for around what your budget (as long as it is realistic) is and now you have the ability to rent out the basement and you can use those funds to offset the higher interest rate – until the rates drop again and you can refinance. At the end of the day please remember that in this market we are “Marrying the house and dating the rate” meaning that if you find THE house for you — buy it, don’t wait. It will cost you more in the long run if you wait. In a few months or a year you will be able to refinance and lower your loan – and if you’ve bought this row home with a rental basement unit then you can just pocket a bit more money since you now have a lower rate. Or turn one bedroom into the walk-in-closet of your dreams.
HOUSE HACK
Let me start by saying this option is NOT for everyone, including me. But I would be remiss if I did not mention it. Think of having roommates but on steroids. House hacking is the idea of buying a home with the sole intention of renting the bedrooms out. For example, this means that your buying criteria would be looking for a bathroom for each bedroom in order to make this work. Ideally a three-bedroom, three-bathroom is the minimum for this to be a lucrative method. In addition to reading everywhere that mortgage rates are increasing I am sure that you have also seen that rents are on the rise as well, which is good for this house hack option. If we look at numbers – say your mortgage is $5,000/mo for a three-bedroom, three-and-a-half bath home. The upstairs has three bedrooms and two baths and the basement has a full bath and open space. You can assume that you would likely be able to rent one upstairs bedroom + bath for about $1,000 and then I would estimate the basement space, which is similar in space to a studio apartment, for around $2,000. This means you would receive about $3,000 in rent without renting out that third bedroom and even thinking through possibly renting out your two parking spaces behind the row home. Looking at your mortgage of $5,000/mo and subtracting the $3,000 in rent you receive that means you are paying $2,000/mo for your home. Again, this is NOT the right choice for everyone, however, it is a great option for those that are looking for a great investment and might not need the extra space now but are looking to grow into a space. (These figures are estimates, and are on the lower end of what rent amounts could be expected, and it also depends on which area of D.C. you are living.)
BUY DOWN RATES
This trend has picked up traction in the past few months. You can effectively “buy down” your interest rate by purchasing points. One point equals 1% of your total mortgage amount. If you buy down a point then this means that if your interest rate was 6% it will now be 5%. Please keep in mind that you do NOT have to buy down one full point but instead can buy down a half point etc. Fees and figures depend on your lender, so keep that in mind as well. The most important part of this equation is to take into consideration how long you will be in the home. If you are only planning to live in this home for five years then it might not make sense to buy down your rate if you are not in the home long enough to recoup the cost associated with the buy down. For example, if you are buying your “forever home” then I would suggest buying down a point or so in order to lessen your monthly mortgage payment. Alternatively, if you are buying a one-bedroom condo but know this will only suit your lifestyle for a short period of time, less than 10 years, I would suggest “Marrying the home and dating the rate” with the mindset that you can refinance at a later date.
Please keep in mind – that the house hacking and English basement options rely heavily on RENTAL INCOME and that is NOT always a guarantee – so there is innate risk with these methods. Also, my lawyer wanted me to mention that I am not a mortgage broker and you should always speak with a lender to see if these options would work for you. Regarding the actual market and what is out there and currently happening on the streets in D.C., Maryland, and Delaware, you should reach out to me.
Justin Noble is a Realtor with Sotheby’s International Realty licensed in D.C., Maryland, and Delaware for your DMV and Delaware Beach needs. Specializing in first-time homebuyers, development and new construction as well as estate sales, Justin is a well-versed agent, highly regarded, and provides white glove service at every price point. Reach him at 202-503-4243, [email protected] or BurnsandNoble.com.
Real Estate
Down payment strategies: Financing your home purchase
Understanding the options key to unlocking the door to a dream home
Navigating the path to homeownership can be a complex journey, especially when it comes to accumulating the necessary down payment. For members of our LGBTQ community, understanding the available options for saving and financing this crucial aspect of home buying is key to unlocking the door to their dream home. Let’s explore effective methods and resources specifically designed to support LGBTQ individuals on their path to homeownership.
Traditional Savings Strategies
Saving for a down payment often begins with traditional methods such as setting aside a portion of your income into a dedicated savings account. High-yield savings accounts and automated savings plans, some offering up to 5% interest in today’s market, can expedite the process, providing a disciplined approach to accumulate funds over time. Additionally, exploring investment opportunities that match your risk tolerance can offer potential growth for your down payment savings.
Down Payment Assistance Programs
A variety of down payment assistance programs exist to help homebuyers with their initial costs. These programs often offer grants or low-interest loans to first-time homebuyers or those who haven’t owned a home in the past three years.
It’s essential to speak with a GayRealEstate.com agent to determine what programs may be available, plus online research into local and state assistance programs, as many are designed to support individuals in specific communities, including the LGBTQ+ community.
For medical professionals, police, teachers, firefighters, and other community heroes, there are several special loan and assistance programs designed to help with home purchases, often offering benefits like down payment assistance, reduced closing costs, and more favorable loan terms.
The Hero Home Loan Program provides first responders, including police officers, firefighters, and paramedics, with benefits such as lower interest rates and reduced closing costs. This program aims to make homeownership more accessible by offering more flexible credit score requirements and down payment assistance .
For educators, firefighters, law enforcement officers, and medical professionals, the Everyday Hero Housing Assistance Fund (EHHAF) offers closing cost assistance through gift funds. This program is designed to support those who serve their communities by making homeownership more affordable, with no repayment required for the grant funds.
The HUD Good Neighbor Next Door Program offers up to 50% off the list price of homes for law enforcement officers, pre-Kindergarten through 12th-grade teachers, firefighters, and emergency medical technicians. This initiative aims to encourage community revitalization by assisting these professionals in homeownership within the communities they serve.
Homes for Heroes provides assistance specifically to first responders and offers significant savings through Hero Rewards when buying, selling, or refinancing a home. On average, participants save $3,000, with the program offering real estate and mortgage specialist connections tailored to the needs of first responders.
LGBTQ-Friendly Lending Options
Finding a lender that understands and supports the unique needs of our LGBTQ community can make a significant difference. Some lenders and organizations specialize in offering inclusive financial products and resources to assist LGBTQ+ homebuyers. These may include specialized mortgage products, financial planning services, and guidance through the home buying process.
The journey to homeownership is a milestone that requires careful planning and support. Remember, every step taken towards saving and financing your home purchase brings you closer to the dream of homeownership.
(GayRealEstate.com offers valuable resources and advice tailored to meet the unique needs of our LGBTQ+ community in their journey towards homeownership. For more comprehensive guidance and support in navigating the home buying process, visit GayRealEstate.com choose an agent and start a no-obligation conversation today.)
Jeff Hammerberg is founding CEO of Hammerberg & Associates, Inc. Reach him at [email protected].
Real Estate
Turn your bare walls into captivating focal points
Paint, wallpaper, statement installations and more
Are you tired of gray walls and white kitchen cabinets with white granite or marble countertops? Have you gone back to the “Builder Beige” that was popular in the ‘90s?
Your walls are the blank canvases of your home, waiting to be transformed into stunning expressions of your personality and style. Whether you prefer vibrant artwork, paint, eye-catching wallpaper, or statement walls, there are countless ways to adorn and decorate your walls to elevate your space. Here’s a guide to help you turn those bare walls into captivating focal points.
Wallpaper: Wallpaper has again become a versatile option for adding texture, pattern, and color to your walls. Whether you prefer subtle designs or bold prints, there’s a wallpaper to suit every taste.
It now even comes in peel and stick rolls, so you don’t have a mess of water and paste. For some new designs, check out www.spoonflower.com.
Before selecting wallpaper, consider the scale of your room and the atmosphere you want to create. For small spaces, opt for light, airy patterns to make the room feel more spacious. Conversely, in larger rooms, you can go bold with intricate designs or vibrant colors to make a statement. Don’t be afraid to mix and match wallpaper with paint, or even wallpaper the ceilings for a unique and dynamic look.
Statement Walls: Statement walls are a bold way to add personality and drama to any room. From accent paint colors to textured finishes, the possibilities are endless. Consider using a contrasting color or texture to highlight a specific wall and create visual interest. For a contemporary touch, try incorporating geometric patterns or asymmetrical designs with strips of wood. Hand-painted murals are another option for creating striking statement walls. Choose a mural that reflects your interests or transports you to another world for a truly immersive experience.
Paneling/Brick: The shiplap phase may be dying out, but there are still many ways to use wood and paneling in your wall décor. Reclaimed wood is a popular option, as are wood slats such as the ones found at www.woodpanelwalls.com. Use them on walls or ceilings, or as a background for wall-mounted televisions and sconces. Amazon also has lots of options for wood veneer available and exposed brick is popular in many contemporary homes. If you don’t have a brick wall to uncover, select from options such as lightweight faux brick or stone.
Artwork: Art has the power to breathe life into any room. When choosing artwork, consider pieces that resonate with you personally and complement your existing décor. Experiment with a mix of styles, sizes, and mediums to create visual interest. Hang artwork at eye level to ensure it is easily visible and balanced within the space. Enhance gallery walls by arranging multiple pieces in a cohesive layout. Remember that art is subjective, so whether you choose an inexpensive poster or a gallery quality painting, select pieces that speak to you.
Photo Displays: Showcase your favorite memories and moments with a curated photo display. Whether it’s a collection of family photos, travel snapshots, or artistic prints, arranging photos on your walls adds a personal touch to your space. Try out different frames, sizes, and layouts to create a gallery-style display that reflects your unique style. It makes a nice presentation on that odd wall going up your stairs.
Mirrors: Mirrors are not only functional but also serve as decorative accents that can enhance the visual appeal of any room. Strategically placing mirrors on your walls can create the illusion of space, brighten dark corners, and reflect natural light. Choose mirrors with interesting frames or shapes to add an extra layer of style to your décor. Try different sizes and arrangements to find the perfect balance between form and function.
Textile Hangings: Textile hangings are a bohemian-inspired alternative to traditional wall art. From tapestries to woven rugs, textile hangings add warmth, texture, and color to your walls. Hang a large tapestry behind your bed as a dramatic headboard alternative or layer smaller textiles with framed artwork for a cozy, eclectic look. Consider mixing and matching different textures and patterns to create visual depth and dimension.
Adorning and decorating your walls is a creative and personal process that allows you to infuse your space with personality and style. The key is to trust your instincts and have fun with the process. Use different techniques, colors, and textures until you find the perfect combination that speaks to you and transforms your walls into works of art. With a little imagination and creativity, you can turn any blank wall into a stunning focal point that reflects your unique taste and aesthetic.
Valerie M. Blake is a licensed Associate Broker in D.C., Maryland, and Virginia with RLAH Real Estate/@properties. Call or text her at 202-246-8602, email her via DCHomeQuest.com, or follow her on Facebook at TheRealst8ofAffairs.
Real Estate
No, you really don’t have to put down 20 percent
There are many options when financing your new home
I was just out at brunch this weekend (I know a gay in D.C. at brunch — groundbreaking). Anyway, I was at brunch and naturally the subject of real estate came up and your boy’s ears perked up and as the resident real estate expert at the table, some of the newcomers were making conversation about some open houses they had been to in the past few weekends, some trends they had seen that they hated that developers seem to continually do in the D.C. area, how unaffordable things are and some comments about where the best areas to invest are in D.C. I just sat and listened while eating my food, which was rather under seasoned, but I digress. The one comment that came up several times that really got me was the affordability comment and what it was based around. It might very well shock you.
When we speak about affordability in the District we are typically speaking to the price of real estate and how expensive it is to purchase a place here in D.C. However, for this conversation – the affordability factor in particular that I was hearing about that piqued my interest was the specific line item of “we have to put down X as a down payment to purchase a home.” The consensus at this brunch table and even when speaking to some buyers on a daily basis is that you must put down 20% to purchase a home. While there are some perks to this, yes. The fact that you MUST put that amount down is just not true. When my parents purchased their first home for $60,000 it was much easier to put down 20% versus a first-time buyer in D.C. putting down 20% for a $600,000 purchase. Furthermore, most buyers are staying in their homes for as little as six years, according to the National Association of Realtors. If you do the math – does it make sense, for your personal situation, to put down 20% versus 5% or 10%? Yes, that’s right – you can purchase a home for as little as 5% down and in some cases as little as 3% down.
When my husband, who was a first-time homebuyer in D.C., purchased his condo, he was able to put down 3% and qualify for a conventional loan. We will stay in this condo for under the average 7-10 years so putting anything more than 3% down for our personal situation just didn’t make sense. Now, because we didn’t put 20% down we pay what is known as PMI, or private mortgage insurance, however it was still worthwhile for him to save the capital and only put the 3% down and pay the small PMI amount monthly as he could put the rest of the 17% he didn’t put into a house in an investment account to yield more. Again, he was a first-time buyer in the District so he qualified for a 3% down loan and the numbers made sense for him. Everyone’s personal situation is different.
According to a 2023 report from the National Association of Realtors the average down payment for a home was 15% while the average down payment when looking at first time buyers was right around 5%. Again, each situation is specific to each person, their credit, finances, debt to income ratio etc., so there is really no recipe that fits every single buyer. It is important to work with a local lender to ensure that you are well qualified and understand which loan packages are out there for you that make the most sense for you so that when you do find that home you are ready to go.
I say all of this to say that gone are the days when you are required to put down 20% in most cases. Depending on the loan type and loan amount – you likely can get away with putting down 5-15% down and save some funds for upgrading from that tragic Ikea dresser from college or hiring a painter because let’s be real, you are not a professional. Like with most things in life you can pick and choose the things that are right for you and a mortgage and its down payment are exactly that same. If you would like to and can put down 20% for a mortgage then please do so – however if you want to get out from under the power and money hungry landlord and buy a condo where you are paying yourself back with equity – you can do so in a manner that is much more affordable than you may have thought possible – especially if you are a first-time buyer in D.C.
Justin Noble is a Realtor with Sotheby’s international Realty licensed in D.C., Maryland, and Delaware for your DMV and Delaware Beach needs. Specializing in first-time homebuyers, development and new construction as well as estate sales, Justin is a well-versed agent, highly regarded, and provides white glove service at every price point. Reach him at 202-503-4243, [email protected] or BurnsandNoble.com.