After many years of renting in the District, as well as a marriage and two kids later, my husband and I joined the world of grown-ups and bought our first place. This was quote an undertaking as we’re committed city dwellers and would never even consider moving to the suburbs. As a friend of mine once said, “It is rude to live in Northern Virginia.”
If you’re in the same spot we were, then you’re probably a little put off by advice to get your finances in order so you can start dealing with the smarmy real estate agents, the ridiculous prices, and the escalation clauses that you will undoubtedly face in this hot market. We put bids on two row houses (one with stay-up-all-night renovation risk) and three condos before we got our place.
But as our financial hero Mike Lynch (you might remember him from Reason magazine) says, “If you’re looking at staying in town for two or more years, you’ve got to get in the game.” And he showed us just how to do it. Of course, everyone says it’s ideal to pay off your credit card debt before you buy a house, but if you’re young, underpaid, and living above your means, this just isn’t going to happen.
We paid Mike a smallish fee to motivate us to budget, and then he held our hands line by line so we would know how much debt we could carry and still pay for a mortgage. He spent hours with my husband’s HR rep to figure out how we could borrow from our 401(k) without killing our retirement. And he also created this really nifty spreadsheet that put us on top of it. He then became the liaison to our mortgage banker and worked out all the ugly details of how much we could afford to buy.
Our mortgage banker Pat Mancuso is another old friend of AFF. Pat was an AFF board member and treasurer at one point. He can do numbers in his head, is young like us, and is there at the weirdest hours to answer your tiniest questions. In the end, he’s the magic maker who gives you the pre-approval that you need to shop around and then lowers your payment so that you’re not hurting once you’re in. And as far as your down payment goes, there are so many programs out there where you can put down as little as 5%, and if your house is under a certain amount, you can even get in for free. So don’t worry about the down payment. Pat can help you figure it out.
Knowing the market and exactly what you want and what you’re willing to sacrifice is key. We were willing to live in certain parts of Logan Circle and even Shaw, but it’s on a block-by-block case in some places. Light, high ceilings, and hardwood floors are more important than having two bathrooms and a gas stove. Luckily, we knew exactly what we wanted, having lived in the city and browsed the real estate section of The Washington Post and The City Paper for more than a decade. We were also very skilled at using www.homesdatabase.com. It’s a great service where you plug in all your variables of how much you can afford and what neighborhood you want to live in, and then, poof, a magical listing (the same one that real estate agents use) appears in your inbox.
Then there’s the hunt and finding the right real estate agent. And that’s the nastiest part of all. We went through a half-dozen real estate agents, each giving us their cheap two-cents on what we should buy and what was right for our family, dragging us to hundreds of cheesy places that didn’t come close to meeting our requirements. We finally settled on the gallery-owner next door, Andrea Marinkovich, who had just gotten her real estate license. Now this is a girl who understands art and beauty, and is incredibly savvy, having started her own successful art gallery at age 35. She genuinely wants to help cool people find a place of their own and doesn’t mess around with anything that you won’t like and she won’t waste your time. The time factor is key when you’re lugging two toddlers around to open houses. She worked non-stop around the clock and found us our condo four weeks after signing on with her. She also went out of her way to work with Mike and Pat to make the deal happen.
The bottom line is do business with people you trust, who really want to spend time with you, and who are the best at what they do. Having these people with you does not eliminate any work or the decisions you have to make but it can make the process more clear and the choices easier to bear.
Mary Siddall is a stay-at-home mom and co-founder of AFF.
The Siddall’s House Buying Team:
Michael Lynch, financial planner MetLife 203-513-6032 email@example.com
Pat Mancuso, branch manager Fidelity & Trust Mortgage 703-404-0474 www.mancusomortgage.com firstname.lastname@example.org
Andrea Marinkovich, real estate agent Tutt, Taylor & Rankin 202-285-8338 www.burtonmarinkovich.com email@example.com
Source: AFF Doublethink Online | Andrew Stiles
Source: AFF Doublethink Online | Kathlyn Ehl