Connect with us

Real Estate

A guide to mortgage pre-approval for potential homeowners

Review your credit report to ensure there are no errors

Published

on

There are seven key steps to follow when seeking a mortgage.

For many potential homebuyers, the mortgage pre-approval process can be a daunting and confusing experience. However, obtaining a mortgage pre-approval is an essential step in the home buying process, as it demonstrates your financial readiness and helps you stand out as a serious buyer in a competitive market.

In this article, we will outline the exact steps for getting pre-approved for a new mortgage loan, so you can confidently embark on your home buying journey.

Step 1: Research potential lenders. There are various mortgage lenders to choose from, including banks, credit unions, and non-bank lenders. Take the time to research and compare interest rates, fees, and customer reviews to find a lender that best suits your needs. Referrals are always great, and the real estate professionals at GayRealEstate.com can refer you to LGBTQ mortgage lenders they trust and have a relationship with.

Step 2: Review your credit report and score. Before starting the preapproval process, it’s essential to review your credit report and score to ensure there are no errors or discrepancies. Your credit score plays a significant role in determining your eligibility for a mortgage and the interest rate you’ll receive. If necessary, take steps to improve your credit by paying down debts, disputing errors, and making timely payments.

Step 3: Gather necessary financial documents. Lenders will require a variety of financial documents to assess your creditworthiness and ability to repay the loan. Some of the essential documents you’ll need include:

Recent pay stubs

W-2 forms or 1099s from the past two years

Federal tax returns from the past two years

Bank statements from the past few months

Asset statements (e.g., retirement accounts, investments)

Proof of any additional income sources

Step 4: Determine your budget.  Before seeking pre-approval, it’s crucial to determine how much you can afford. Your GayRealEstate.com Realtor will help you to crunch the numbers. Together, you’ll consider your monthly expenses, debt-to-income ratio, and desired down payment to establish a budget for your new home. Be realistic and remember to factor in additional costs such as property taxes, homeowners’ insurance, and maintenance expenses.

Step 5: Submit your mortgage pre-approval application. Once you have chosen a lender, complete their mortgage pre-approval application. This will typically involve providing your financial documents, Social Security number, and permission for the lender to perform a credit check. Be prepared to answer questions about your income, employment, and financial history.

Step 6: Await the lender’s decision. After submitting your application, the lender will review your financial information and credit history to determine your eligibility for a mortgage. This process is pretty quick and often happens the same day. If approved, the lender will issue a pre-approval letter, which outlines the maximum loan amount, loan type, and interest rate you qualify for.

Step 7: Keep your pre-approval up-to-date. A mortgage pre-approval is typically valid for 60-90 days. If you don’t find a home within that time frame, you may need to update your pre-approval with your lender. Be sure to maintain your financial stability during the home search process, as any significant changes in your credit, income, or debt could affect your pre-approval status. (Don’t make any new large purchases like furniture, cars, boats, etc.)

By following these steps and obtaining a mortgage pre-approval, you’ll be well-prepared to navigate the competitive real estate market and confidently make an offer on your dream home.

(Jeff Hammerberg is a distinguished entrepreneur and broker, and the founder of GayRealEstate.com. For more than 25 years, he has been a prolific writer, coach, and author who has been instrumental in advancing the cause of fair, honest, and equitable representation for all members of the LGBTQ community in real estate matters. GayRealEstate.com, which he established, is the largest and longest-running gay real estate agent referral service in the nation, boasting more than 3,500 LGBTQ Realtors who operate in cities across the United States. His commitment to promoting inclusivity and accessibility in real estate has earned him a reputation as a passionate advocate for the LGBTQ community.)

Jeff Hammerberg is founding CEO of Hammerberg & Associates, Inc. Reach him at 303-378-5526 or [email protected].

Advertisement
FUND LGBTQ JOURNALISM
SIGN UP FOR E-BLAST

Real Estate

Thinking of renting your place short-term in D.C.?

Here are some key factors to consider

Published

on

You’ll need a license if renting your place in D.C.

Summer is coming, and in D.C., many homeowners turn their attention to generating revenue from their primary D.C. residence while they are away for the summer. Due to the way some D.C. employers enable staff to work remotely and permit longer vacation schedules in the summer months, many owners can find extra income annually by considering short-term rentals. Here are a few key things you should know before getting started.  

In 2021 the D.C. Department of Consumer and Regulatory Affairs announced it was “finally ready to start implementing and enforcing ” a law passed three years earlier for short-term rentals (AirBnB, VRBO, etc.). According to DCist, the agency started accepting license applications for short-term rentals on Jan. 10 last year and started enforcing the law’s provisions in April 2022.

According to Martin Austermuhle’s “D.C. to Start Restricting Airbnb and Other Short-Term Rentals” he wrote for DCist, “The law applies specifically to short-term rentals, those lasting less than 30 days at a time. Under the new law, any D.C. homeowner who wants to rent out a bedroom, basement, or entire home on Airbnb or any other platform has to get a short-term rental license from DCRA. (The two-year license costs $104.50.)”

Charlotte Perry, owner of LUXbnb, a property manager specializing in furnished short-term rentals in D.C. for more than 15 years, is a trusted partner to Columbia Property Management. She shared her expertise and guidance with me on short-term rentals. Her business, LUXbnb, punches above its weight in the D.C. area, bringing owners greater opportunity to realize the gains they hope to make. She brings deep insight into what you can expect if you were to go down this path with your property. 

Companies like hers function like any other property manager might. LUXbnb collects the rents, “hotel” taxes, security deposits, departure cleaning, and any other applicable feeds on behalf of the owner. They manage turnover between guests including cleaning and any needed repairs. And at the end of each month, they release the rental income earned less the management fee and any repair costs or new purchases.

In the District, if the owner resides at the house during the rental, s/he can host short-term renters all year long with no consequence. However, if, like many of Charlotte’s clients, the owner is renting their property while they are gone during the summer or while on assignment for, say, the World Bank, those owners can only do so for a total of 90 days for the entire year. Owners like these will want to consider that under the new law, you cannot rent out your second home as an Airbnb/VRBO short term rental, and so knowing the regulations can save you a lot of headaches.

Registration Requirements  

Did you know all short-term rental hosts in D.C. are required to obtain a Short-term Rental License? 

According to the Office of Short-term Rental Licensing, “In order to operate a short-term or vacation rental in the District, the property must be owned by an individual, and serve as a homeowner’s primary residence – with the owner being eligible to receive the Homestead Tax Deduction. ”

To be eligible for such a license the home must be your primary residence and owner-occupied.  You will need to provide DC’s Office of Short-term Rental Licensing (DLCP) the following:

Specify whether you currently have a Homestead Exemption on the property.

Proof of your liability insurance with a minimum of $250,000 in coverage. (See below for more details).

A Certificate of Clean Hands issued within the last 30 days in the property owners name must be obtained from the Office of Tax and Revenue.

The owner, or “host,” must attest to the habitability of the property.

If the rental is a co-op, condo, or if the property is in a community where there is a homeowners’ association, the owner must attest that the bylaws, house rules, or other governing documents of the homeowner/condo/ cooperative governing board or association allow short-term and/or vacation rentals, do not prohibit owners from operating short-term rentals and/or vacation rentals, or that they have received written permission from the association to operate a short-term and/or vacation rental at the address.

Once you have successfully registered with DLCP, you will be provided with a license. You will then upload this Short-term Rental License number into your property profile in both Airbnb and VRBO. Those sites will then provide bookings for “under-31-nights” on your property.  

By working with an experienced rental property manager specializing in furnished temporary stays, you can ensure that you’re operating your short-term rental legally and safely. Better yet, you can avoid any penalties or fines that could result from non-compliance with District regulations.

Some factors you might want to consider on your journey to short-term rental success:

Cleaning Fee and Preparation Service

Perhaps you’ll want to have a cleaning service at-the-ready in case your renters have a slight disaster while they’re there. Or maybe you’ll want a service to clean prior to arrivals and directly after departures, so you can quickly turnaround the property for further rental. 

Pets

Do you want pets in your home while you’re away? If so, you might want to add in an automatic post-stay pet cleaning fee to cover the expense of hair and other less pleasant odor removal.

Insurance/Accidental Damage

Charlotte’s company takes out a $3,000 accidental damage insurance policy on every stay in lieu of holding a damage deposit. The cost to the guest is $39 per rental. This insurance is a safe-guard for the guest, property owner and her company, of course. This insurance policy “allows for the equitable transfer of the risk of a loss, from one entity to another – in this case the insurance company. It is a simple way for all parties involved to mitigate risk, and most importantly, provides peace-of-mind.”

Liability Insurance

As you saw above, the District requires all owners to possess a liability insurance policy with a minimum of $250,000 in coverage to gain a license in the District. A variety of companies can help, according to the Motley Fool’s “The Ascent” newsletter, but some do this faster and better than others. And they even recommend ones that are best for Airbnb and VRBO rental owners. The Ascent’s best homeowners insurance for short-term rentals include the following:

Allstate Insurance: Best for possessing a large network of agents

Proper Insurance: Best for Airbnb and VRBO owners

Nationwide Insurance : Best for bundling policies

Farmers Insurance : Best for vacation rentals

Steadily Insurance: Best for getting coverage quickly

Safely Insurance: Best for fast claims processing

Should you have further questions or seek to explore the option of short or mid-term rentals, do not hesitate to contact Charlotte Perry directly at 202-341-8799 or [email protected]

Scott Bloom is senior property manager and owner of Columbia Property Management. 

For more information and resources, visit ColumbiaPM.com.

Continue Reading

Real Estate

Multiple options for buying a beach house meant for rentals

Consider going in with friends, making use of the off season

Published

on

Rehoboth Beach, Delaware (Washington Blade photo by Daniel Truitt)

As we near the summer season and you hear the beach calling and taste the orange crushes – let’s take a look at a few ways to make those dreams a reality. The real estate market across the U.S. is still very hot due to the lack of inventory and the higher interest rates. However, when looking at an investment property, it’s a little easier to stomach a higher interest rate when it is offset by rental income. Let’s take a look at a few of the options we have for rental styles.

The typical idea of a beach vacation is for a week right? While we wish it were longer (and it can be!) the usual summer beach vacation is a week long. In the Rehoboth and Delaware coast region – most homes rent for a week at a time in the summer season. While the idea here is to make the most you can in summer rentals – you as the owner, of course, can always block off weeks when you want to use the home for your personal use. Talk about the best of both worlds.

Short-term rentals are a great way to make some extra money. If you plan to use your beach house for most of the season but know you have a wedding weekend here and a week long vacation planned in the Bahamas – then put that on a short term rental site for those dates. This way you can make a little extra money. Most of the time, you can make as much or even more than a weekly rental scenario. Short-term rentals are great for the sporadic renter – if you want to use your home most of the time but you want to rent it out every other weekend and during the week all of August – you don’t have the need for the “my family rents this home the same week every week and has done so for three years now…” kind of dedicated renters. It is important to make sure that your community allows for short-term rentals or this option might not be possible for you.

If you know anything about the coastal regions in the Northeast – things in the winter are not like they are in the summer. In my humble opinion – they are better! But I digress. If you are looking at a rental pro-forma and wonder if it makes sense to winterize your beach house or to rent it out, I would say rent it. You can easily rent for long weekends in the “off season” and in most cases you can also rent to one person for the entire off season period as off-season rentals are hard to come by in most markets. In this case, you wouldn’t charge the same premium you do during the summer. 

I have mentioned this ownership option before. If you have a group of friends that love to kiki in Rehoboth then it might just be an option to get four together and buy a house. I would say this option is a risky one and one I would highly encourage you to speak to an attorney about. The idea here is that an arrangement would be formed to outline what party uses the home during which periods of time. Expenses would be split based on share of the home.

Oftentimes people forget that you can often provide your rental home to a charity event for example an item at a silent auction for your children’s school gala. A portion would be tax deductible and as such is a savings for you that year. Of course – speak with a CPA to ensure these items are true and correct for you.

The above options are all great ideas in black and white on paper — but what option will work best for you is based on what you want, where you want to be, and for the last option, how well you trust your friends who you might be interested in doing a group beach house option with. In this case I would highly recommend speaking with an attorney who can walk you through the pros and cons of a group purchase with multiple people on a deed and mortgage. 

Cheers to a happy, healthy, and fun 2023 summer season and hope you can make your beach house dream a reality – I’m here to help.

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.

Continue Reading

Real Estate

What makes for a successful real estate transaction?

There is no magic wand to make the process go smoothly

Published

on

Taking the time to explain any confusing concepts more than once can help put a buyer’s mind at ease.

A successful real estate transaction involves multiple parties all working toward the same goal. The goal is “purchase the house” or “get the house sold.” It is not a confusing or vague goal. One of the most satisfying aspects of being a real estate agent is to see a client reach their goals.  

What can really help a client to achieve their goal is to have a team of people seamlessly working together to help them reach the goal. The team can include, but is not limited to, a lender, a title company, a home inspector, the agents involved, and sometimes a spouse, a family member, a best friend, an estate attorney, or an appraiser. When all these parties involved are working together toward the goal, the goal can be easily achieved. “Working together” can mean:

Recognizing that time is of the essence – returning phone calls, emails, and texts in a timely fashion.

Blocking out time in their day to see properties, attend inspections, or finding a suitable stand in (family member or a friend) should work obligations get in the way.

Taking the time to explain any confusing concepts more than once, and sometimes to multiple people.

Ensuring that needed documentation and funds arrive at the desired location by the agreed upon time and date.  

Having a shared communication style that helps the others involved in the transaction to feel comfortable.

Paying close attention to the details specified in any addenda, disclosures, or wiring instructions, etc. 

There is no magic potion or wand to make a real estate transaction smooth and easy. But when many of these guidelines are followed by all parties involved in the transaction, any issues that do arise can usually be worked out. As in most exchanges in life, a little grace can go a long way. If you have more questions about achieving your real estate goals, don’t hesitate to reach out.

Joseph Hudson is a Realtor with the Rutstein Group of Compass. Reach him at 703-587-0597 or [email protected].

Continue Reading
Advertisement
Advertisement

Sign Up for Weekly E-Blast

Follow Us @washblade

Advertisement

Popular