Perhaps you’re thinking about buying a home in Washington, DC, and unsure where to start. The market is competitive right now, and many homes receive multiple offers and go under contract quickly after listing. This article will break down the entire process of buying a home in Washington, DC, in detail so that you know exactly how to proceed when you find a home that you love.
Why should you buy a house in Washington, DC?
Thriving economy
Living in Washington DC provides residents with numerous employment and career advancement opportunities. Many people find jobs in the federal government, but this isn’t the only prominent industry in the DC area. There are jobs working in education or technology, while others will get involved with area nonprofits.
Excellent public transportation
The WMATA (Washington Metropolitan Area Transit Authority) is one of the best public transportation systems in the entire country. It’s easy to get around the DC area even if you don’t own a car.
Rich culture
As the nation’s capital, DC has many important landmarks and essential government buildings. There are also a number of free activities in town, including all the Smithsonian museums. Foodies love DC because of the many local restaurants serving various types of cuisine.
Top three neighborhoods in Washington, DC
Georgetown
Georgetown is an affluent neighborhood along the Potomac River. Georgetown residents love the area’s historic charm and high-end shopping boutiques and restaurants.
Dupont Circle
Dupont Circle is a vibrant neighborhood that is a great fit for anyone who wants to enjoy the area’s great nightlife and fabulous culture.
Capitol Hill
Many government officials and employees live in Capitol Hill. The historic neighborhood is filled with mature trees, and residents enjoy a strong sense of community and proximity to the US Capitol building and other important government facilities.
What to know about buying a house in Washington, DC
Median house price
The average home in Washington DC sells for around $630,000. This is substantially higher than the national median home price. The cost of living in DC can be high, but most jobs pay an increased wage in order to compensate.
Closing costs
Closing costs in the DC area normally range between three and five percent of the home's total sales price. Remember that some buyers will negotiate the responsibility for paying closing costs into their home contract. They may ask the seller to pay their share of the closing costs out of the home sale proceeds in exchange for a higher price on the home. If you go this route, you’ll have to take out more in financing, but you won’t need to bring as much cash to the table to close. You will still need to have your down payment ready, and most loans require a down payment of at least three percent.
Property taxes
Taxation can be a hot-button issue in the DC area, but the area’s property taxes are slightly below the national average. Residents pay 85 cents per $100 of assessed value, lower than the national average of 99 cents. Taxes are due twice a year — once in March and once in September.
Money-saving tips for buying a home in Washington, DC
Find the best mortgage rate
Once you decide you’re ready to shop for a home, one of your first steps will be to contact a mortgage lender to go through the steps to receive a pre-approval letter. You’ll want to do this early on in the process since many real estate agents will only work with buyers who are pre-approved, and sellers often won’t accept an offer unless you can provide a pre-approval letter. It’s important to remember that each lender will offer a different loan amount and interest rate, so it’s a good idea to shop around from multiple providers to see who can offer the best deal. Even a small difference in interest rates can save you thousands of dollars when you are paying back your loan.
Use a bigger down payment to keep monthly payments down
Many first-time home buyers are surprised to learn how much they spend on interest when making monthly mortgage payments. You can decrease the interest you accrue over time by including a larger down payment when you initially purchase your home. It may hurt to spend more cash upfront, but you’ll thank yourself later as you save money on interest.
Increase your credit score
Perhaps you’re unsatisfied with the initial interest rate offers that you receive. One of the best ways to improve your financial standing is to work on raising your credit score. This is one of the key factors that lenders consider as they evaluate you for a loan. You probably won’t notice a quick improvement, but your score will gradually increase if you commit to simple steps like paying off your bills on time and using less than your available monthly credit balance.
As you can see, there are many steps that go into purchasing a home. Many people find the process easier (and more enjoyable) if they can team up with a local real estate agent during their search. The experienced and knowledgeable agents with The Foley Group are experts in buying a home in Washington, DC.
Contact their team if you have more questions about buying a home in Washington, DC, or are ready to start shopping. They would love to help you find your dream home!
*Header photo courtesy of Shutterstock
