This is part one of my series on trying to become a homeowner in Washington, D.C.
You may recall that at the end of last year I wrote about my shock and dismay at what I perceived to be the extreme unattainability of homeownership in the DC/Maryland/Virginia area (and many other metropolitan areas across the country). In the research I had done, it seemed even with a decent income, I had no choice but to shell out a ridiculously high amount of money to get a home (down payment + closing costs + a bunch of other fees), or else have less money upfront with a massive monthly payment. I also felt I was in that perfect middle income storm, being above most housing program income limits, but clearly not rich enough to go buy a nice house with what I currently have in the bank.
Let this be a lesson to you all -- don't use Google to answer all your questions lol.
Even though I was feeling pretty discouraged about the whole idea I was still spending all my free time looking through Zillow.com imagining my future DC abode and my soon-to-be-adopted dog running in the small back yard.
So it did not take much for me to get extremely excited when I stopped by a friend's birthday brunch and met a real estate agent friend of her's who started telling about me real estate and encouraging me not be discouraged about homeownership. I eventually went to his office and he gave me the whole first time buyer consultation which pretty much blew my mind with how much I misunderstood about the process. Then he connected me with a mortgage lender who further blew my mind by explaining how much I actually can afford and how many options I have because my credit is great (I always have to thank my daddy for instilling the importance of good credit into me). A few of the biggest misconceptions they unraveled for me:
You can get a conventional loan, even if you don't have 20% down
I had always thought "conventional loan" meant "20% down" but that is not the case. You can get a regular loan, without a first time homebuyer program or any special financing or any income limits/limits on where you can live, for 3% down.
You can basically call your shots if you have good credit
Typically if you put less than 20% down, you have to pay mortgage insurance. Basically, a monthly payment for no reason (in my humble opinion). However, if you have good enough credit, you can get that waived in exchange for a slightly higher interest rate, which is worth it because a) it usually comes out a bit cheaper and b) if it doesn't, you can always refinance later vs. being stuck with that fixed monthly insurance payment.
DC has a lot of hidden gem neighborhoods
I was extremely set on two areas - Hyattsville, MD (which is just outside the District) and Northeast DC. Not all of Northeast either, just the parts by my current apartment. Dassit. Don't tell me 'bout no other neighborhoods. Turns out I was being a little too close-minded. My agent took me on a tour of a few neighborhoods I had never considered and really did indeed open my eyes. I had always heard that Southeast DC was a little too rough around the edges. I had visited a few times for some community service and didn't necessarily love what I saw. But on our tour I saw specific neighborhoods such as Hillcrest and Shipley Terrace and it completely changed my view. Not to mention the development near those areas is actually moving a lot faster than what's happening in my current neighborhood.
I guess none of this is rocket science, but when you experience it you do realize how much you can't really understanding about home buying until you talk to some experts and see things for yourself. Plus it reminded me of my past podcast about black people having fear of black neighborhoods -- I don't want to fall into that trap and look down on neighborhoods that are totally fine, just underdeveloped because they're predominantly black.
So with all that said -- I am officially looking for a house!
I've been looking at properties around DC and might even be making offers...stayed tuned! I'll be sharing my updates.