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Don't assume that you can't buy a home just because you lack perfect credit, don't have the resources to come up with a 20% down payment, or because you think that affordable housing is out of the question in the DC area. Home ownership is an American dream providing many financial and personal benefits to individuals and families. And with the help of a knowledgeable and experienced Realtor^®, you may indeed be able to make this dream a reality

It really wasn't that long ago that for the average low or middle class working couple, finding a decent, affordable home in DC was a challenge if not just a pipe dream. But thanks to the dedicated and hard work of the DC government with a focus on affordable housing within DC, this situation has been turned around, and you may indeed qualify for one of the many government-backed programs in place to stimulate home ownership in DC.

But even today, navigating through the maze of the government programs can be very confusing. These programs can be complex and are continually changing. That is why you'll want to start with a Realtor^® who will take the time to help you navigate through the complicated maze of government backed programs to see if one may be a good match for your circumstances. And right now, there are a lot of good programs available to the DC residents.

 It is a common misconception that these programs are only for those with very low incomes (many are). But actually, there is a great mix of tax credits, low interest loans, down payment assistance and government grant money which is available to a variety of individuals and family's looking to purchase their first home in America's capitol city.

 You may be surprised at the number of state and local programs that are available for homebuyers in DC. For instance, you may have recently read in the paper that Shaun Donovan, Secretary of HUD announced the award of $2 billion of funding to state and local governments.  [January 15, 2009]. Well, that boils down to $193 million being awarded to the local DC Housing Finance Agency (DCHFA). Read press release. This is money awarded by the federal government to stimulate affordable housing opportunities in Washington DC.

"This is simply good news all around," said Harry Sewell, executive director of DCHFA. He goes on to say "we are also able to reactivate our single-family mortgage program to be competitive with the current interest rate environment. This agency is working hard and is committed to make sure that the dream of owning a home in the nations capital is attainable not just for the upper class residents but for many low - middle income homebuyers. The DCHFA offers free homebuyer education workshops; credit and budget counseling referral assistance; and affordable mortgages. And DCHFA is only one example of the many great programs/ options available to DC residents interested in buying an affordable home.

 Don't miss out on out on the great current opportunities in place to stimulate affordable home ownership in Washington DC. And you don't have to go it alone. Call Rachel Valentino to help you navigate through the home buying process. She will help you step by step from dreaming to holding the keys to your very own home. You can take the first step today by contacting Rachel or visiting her Atlantic Coast Connection website

Typically, you hear the financial terms "leverage" and "OPM" or Other People's Money when discussing big time real estate investing. But regular every day home buyers can also learn from the basic principles of leverage and the art of using other people's money when buying a new home. For an investor, real estate investing in the D.C. market can lead to tidy profits, but even the average homebuyer can take important steps towards financial success and personal wealth building by buying a new home in the DC real estate market.

Imagine how long it would take to buy even a car, yet alone a house if you had to save enough money to make the purchase in cash. Especially when considering a home, saving to the whole amount might take years, so typically people put out a small amount of their own money and borrow the rest.  This is leveraging as you achieve your home owning goal with the help of using other people's money (OPM).  The smaller the down payment you have to pay means you have more liquidity to do other things such as invest or save - more leverage.

If you want to create wealth, you need leverage because leverage equals ease and speed. Leveraging to buy a home means you will want to spend a little to buy a lot. Mastering the art of leverage in real estate, you can build your wealth by putting other people's money to work for you, which you try to do at the lowest cost.  Learning and applying the basic principles of leverage and using OPM can give you power when buying a new home.

We are not talking about buying more home than you can reasonably afford here. Buyers who bit off more than they could chew used funny-money loans with irresponsible lenders.  We're advocating that you work with an excellent Realtor & lender, so you legitimately qualify, maximize your leverage & can safely afford the payments.

Lessons Learned From Real Estate Investors:

Lesson One: You may have heard ads on TV about buying property with no money down.  The people behind these infomercials usually are promoting a system. Lots of times these systems are flawed or borderline illegal but the premise is good: Don't go it alone. Get the advice of and work with an expert such as Rachel Valentino who knows the subject of real estate. She has a background in finance and can help you evaluate your options.  Leverage her knowledge to increase your understanding of how best to leverage your money.

"A single conversation across the table with a wise man is worth a month's worth of books" Chinese Proverb

Lesson Two: A long lever works easier and faster than a short one. This can be translated into buying a new home:

For example, if you put 10% down on a $200,000 home that goes up in value by 5% in one year, then the property is worth $210,000. You get the leverage not only on your $20,000 but also on the remaining $180,000 that you have borrowed. Your $20,000 investment has earned you $10,000, a 50% return on your money.

When you are able to buy real estate for no money down and it goes up in value, you have created a return totally on someone else's money. Of course, some time and effort are involved to find such a deal. However, computing a financial return on no money invested shows an infinite return. This is a case of infinite leverage.

A good case scenario for a new homebuyer would be a "middle of the road" situation. This may be a FHA loan if you qualify. These programs will let you buy a home with as little as 3.5 percent down. Or it could mean a low interest loan from your local bank or credit union. So if you're trying to find a way to become a homeowner with a small down payment, work with a Realtor^® such as Rachel Valentino to take a look at these loans and other available options.

Lesson Three: While a real estate investor looks to build profit from the real estate deal, a home buyer can look to build equity. In many cases, home equity is the most important factor in one's personal net worth. The equity portion of your mortgage payment can be looked at as a form of automatic savings. Building your wealth or equity also gives you stability because you have something to borrow against in times such as an emergency.

Basically, to find the home equity of your home, subtract the remaining mortgage balance from the current value of your home. But although it sounds simple, it is better to consult an expert in the DC real estate market such as Rachel Valentino to help guide you through the process.

Lesson Four: Don't squander your valuable resources. Leverage your own time, energy and money by working with an expert who knows the DC area real estate market and can help you weed through the financing options. Contact Rachel Valentino with any questions you may have about leveraging and using other people's money when buying a new home.

In closing, many people are scared to learn about financial subjects such as leveraging. But each of us has experienced, witnessed, or used leverage in some aspect of your life. So it doesn't have to be scary. Don't try to go it alone and learn it yourself - embrace leverage as a foundational strategy and as your friend in life. Learn more about this subject and how it relates to buying a new home by contacting Rachel, one of DC's top real estate experts at The Atlantic Coast Connection today.

Ideally, the best way to buy a new home in the Washington D.C. area would be to walk into the deal with a large bag of money. But since you are probably like most Americans, no matter how great that sounds, that option will always be just a dream. The average American living and working in the D.C. area will never have enough cash on hand to purchase a new home without having to borrow money. So, the average buyer without a big bag of money must educate themselves and carry a big bag of options from which they can optimize the best deal.

Most Commonly Suggested as The Best Way to Borrow Money is of course, to deal with a trusted local bank or mortgage lender who can give you the best prevailing rate and loan package that is currently available. Unfortunately, there are many people out there in today's economy who want to buy a home but just don't qualify under the current lending guidelines for such typical loans. Or maybe they just can't raise the needed down payment by themselves with today's economy and rising prices.

So how can this group of potential homeowners, young and old, save or raise enough money to get them out of the renting cycle and help put them into a new home?

Typically, there is no single magic solution. That is why it is so important to work with a Realtor^® like Rachel Valentino who is willing to help you "think out of the box." You will need a Realtor® on your side who believes in "if there is a will, there is a way" without putting you at great financial risk. In these cases, each case should be looked at individual; just like you are an individual with purpose and meaning.

Here are some examples of various examples of non-conventional financing:

Assumptions: This is where the buyer assumes the owner's existing mortgage and the seller's mortgage payments, if the seller's lender agrees. The buyer may or may not take over the seller's interest rate, depending on the individual circumstances.

 Mom Pop Mortgages: Here are just a few of the variations.

•  If your parents are in a solid financial position, it is possible that they may purchase the home and resell it to you at a much better rate than you were able to obtain elsewhere.

•  In some cases the parents may purchase a life insurance policy that meets or exceeds the mortgage price. When they die, the proceeds are used to pay off the mortgage with the non-taxable insurance money.

•  If your parents are in a solid financial position, it is possible that they may offer you a cash gift to be used in purchasing a new home. Lenders will want to see a legal document or letter showing all demands for such a gift is waived.

•  Parents with strong financial profiles often make great co-signers. This is a good option for people who basically fit the qualifications but are buying in an area where housing prices are high. Also when the deal is "on the edge," having such a co-signer may just make the deal happen.

Borrow the Down Payment. This can be from a traditional source such as a Credit Union or from a non-traditional source such as a relative or other known person. This may create an additional financial burden in addition to the mortgage, but this is an option when someone finds the right home and doesn't have the entire down payment saved up.  

You May Consider Equity Sharing where someone agrees to partner with you. They help make the down payment and share costs. You make monthly payments, keep up the property and make the necessary improvements as they arise. When you sell the property, you divide the profits with your partner. Sometimes family members are able to pull together to make this happen.

Investigate Tax-Free Bonds. Local and state governments often develop this solution to provide low interest loans to low-income people. Work with a Realtor^® such as Rachel Valentino to investigate whether this option may be for you.

And don't forget about the First Time Home Buyer Tax Credit. If you qualify and act before Oct 15^th to put your buying process into motion so that it's completed before Dec 1, 2009 - You may just have the additional $8,000 that you needed to make your dream a reality. Check out available homes in the DC area.

Ask your Realtor^® about other options that may pertain or be available to you. Some of these more untraditional resources may come with higher risk so it is important to work with an expert you can trust to explain each option fully to you.

The moral of this story is that if you really want to be a homeowner, you can be! Contact DC's top real estate expert Rachel Valentino today to discuss your options. She is #1 in the DC market for a reason - she loves to help others achieve their homeownership dreams. Let her help you by contacting her with any questions you may have.

An elderly couple in the DC area, after much consideration, decides to downsize. They make the decision to move into a condo and put their home up for sale. After researching, they decide on a fair market value of $275,000. The Realtor® installs a ‘For Sale' sign in the yard. Meanwhile, a young couple in MI comes to the D.C. to buy a home as they are planning to relocate for work. They see the sign, tour the home, and fall in love with it. They put down a down payment, make an offer near the asking price, and start the buying process. Then the appraisal comes in  at $260,000.  The retired couple does not want to drop their price another $15,000 and starts rethink their decision to move.  The lender, of course, does not want to write a mortgage for more than the home is "worth."  The young buyers are not in a position to pay more down payment to get the amount financed in line with the bank's requirements.  A "perfect deal" is put at risk.

What's Going on Here?

What is happening here a result of new regulations recently put into effect.  Following the financial meltdown in the US, guidelines were put into place regarding home appraisals and some specific lenders. These rules were set up to protect the consumers against shady and unethical practices involving appraisers and fraud in the mortgage industry. The rules were meant to stop collusion between lending institutions and appraisers.

Effective May 1, 2009 all home mortgages being sold to Fannie Mae and Freddie Mac must follow the new Home Valuation Code of Conduct (HVCC). HVCC sets new guidelines on how appraisals must be ordered and who can have contact with the appraisers. This regulation does not apply to FHA or VA loans. Even though it only applies to loans sold to Fannie Mae and Freddie Mac, it will affect all conventional home loans.

But, only 3 months after these rules took effect, the regulations have backfired, causing quite a stir across the nation. They are having a negative impact not only on mortgage brokers, realtors, and lenders, but anyone who is applying for a new mortgage loan, those trying to refinance and those trying to sell a home - the very people the rules were intended to protect. It is a good example of a well-intended law that is causing more problems than it solves.

Why were the HVCC regulations written? The HVCC regulations were written to deal with some felt were shady and unethical practices of pressuring appraisers to "come in at the value needed." They evolved from a potential lawsuit by the Attorney General of New York (Andrew Coumo) against Fannie Mae and Freddie Mac. On March 3, 2009 the Attorney General, Fannie Mae, Freddie Mac and the OFHEO reached a settlement agreement regarding the issues of appraisal coercion and independence in exchange for the Attorney General dropping the investigation.

Consumers are confused. They hear new rules are in effect for appraisals, but wonder "How do the HVCC guidelines affect the appraisal of my home?" Here are 3 of the most commonly-heard complaints:

 Out-of-Area Appraisers Are Performing Appraisals

This could possibly result in a low appraisal on your home.  Appraisers who don't know the neighborhood or have little experience are far more likely to produce an under-valued appraisal or otherwise incorrect appraisal.  Neither the Realtor® nor the lender is able to interact with appraiser to point out neighborhood factors or extenuating circumstance or to challenge inaccuracies.

 Transactions are Falling Apart Because Appraisals Are Too Low

When an appraisal comes in less than the sales price, many sellers refuse to or can't afford to negotiate and buyers don't want to pay the higher price. So the pending sale blows up. The seller loses the buyer, and the buyer loses the home. It is a lose-lose situation. There are other ways to deal with a low appraisal, but cancellation of the transaction is common.

Adding to all these problems, internal bank underwriters are sometimes complicating the problem by lowering values as well.

 The Consumer Pays an Increased Cost for the Appraisal - and has to pay upfront.

Because the Appraisal Management Company that selects the appraisers must be paid, consumers bear the cost. Part of the appraisal fee goes to the Appraisal Management Company. Somebody has to pay the fee to the Appraisal Management Company. And it is ultimately the consumer who eats the cost.

Consumers are also potentially having to purchase multiple appraisals when shopping for a mortgage; previously, lenders sometimes accepted appraisals ordered by others. Now, they will not accept these appraisals ordered by others because they can't be sure the other lenders are following the HVCC rules. Consumers may have to change lenders in hopes of getting a better appraisal.  This is sometimes worthwhile; in one extreme example, a buyer whose appraisal was $170,000 lower than the selling price successfully got an appraisal for this amount from a new lender.  Lender shopping at this point means additional costs for buyers in application and appraisal fees, as well as extra time involved to jump through more hoops.  Both the fees and the time are disruptive to anyone on a strict budget and a moving schedule.

Previously appraisal fees were a part of closing costs which the buyer paid at the end of the process.  Buyers now have to pay the appraisal company (or companies) in advance - a costly inconvenience to buyers.

Recently, lobbyists have urged Congress to support a bill that would impose an 18-month moratorium on the new appraisal guidelines. But, this measure is still working its way through Congress.  

Ultimately, until Congress enacts changes, what can buyers and sellers do to avoid the sting of these new rules and regulations?  

•     Allow ample time between contract and closing to address all these issues. Contact Rachel Valentino who is an experienced Realtor to help you address any time constraints that may apply to you and your home buying experience.

•     Work with a knowledgeable, experienced Realtor like Rachel Valentino who is up to date on the latest rules will ensure that your transaction is structured appropriately to avoid any closing delays due to these new regulations.

•     Rachel Valentino also has first hand experience in helping others navigate through the financing to help achieve your goals if an appraisal does come back lower than expected. By contacting her, you increase your chances of achieving your home ownership dreams even with these stricter rules in place.