Ready to make a home purchase in California? Here is some vital information you may want to know before applying for financing.

Washington Housing Market Stats

In Washington, the average rate for a 30-year conforming mortgage was 3.11% at the end of 2021, but since then, rates have jumped over 1.5%—the largest increase since 1987, according to Western Washington Real Estate Market Trends’ Gardner Report Q1 2022.

This increase in rates signifies a recent slowing of house sales in Washington. From Q4 2021 to Q1 of 2022, home sales were lower across all market areas in Washington, and in Western Washington they were down by 31.7%.

Although sales have been slower recently, the prices of houses in Washing still continue to increase. In Seattle, one of Washington’s biggest housing markets, single-family homes increased 12.3% from $890,444 in June 2021 to $1,000,000 in June of 2022. The median home value in all of Washington is $524,077, and home prices statewide were up 9.2% year-over-year in June.

Although 2022 has thus far seen a plateau of sales, the housing market is predicted to continue growing, making any time still a good time to buy or sell a home in Washington.

Pre-Approval Process

Once you know your home buying budget and you’ve decided what type of home loan will work for you, it’s now time to get your loan Pre-Approved.

Pulling together all the documents for a Pre-Approval can be time-consuming. But what you’ll get will be worth it. Along with the Pre-Approval Letter stating how much the lender is willing to lend you, you’ll also get a good idea of the interest rate, fees, and other costs associated with buying.

A Pre-Approval letter also shows sellers and real estate agents that you are a serious buyer who can get financing, which can give you a crucial edge over competing home shoppers. And no, it’s not the same as being Pre-Qualified, that’s just a rough estimate of what the lender might let you borrow.

Top 5 Tips For Home Buyers

The 3 Most Important Aspects of Buying a Home

Buying a property to occupy or as an investment property can be exciting. There are some general factors to keep in mind when shopping for a loan product.

1. Choose a Loan Type

If you are buying the property for yourself or your family there are many options to choose from:

FHA
These kinds of loans are for a primary residence, and 1 – 4 unit properties. They have some of the lowest down payment programs.

Conventional
They require more for a down payment compared to an FHA loan. But if you can put at least 20% of the purchase price down then you would not need mortgage insurance. So that is a good threshold to shoot for.

Non-Prime
You would need at least 10% down but these types of programs can be more flexible for credit and income documents. Although they can be more expensive in rates and fees than Conventional Loans.

Veterans
This program allows you to buy a home for yourself with no down payment but there are some eligibility requirements.

2. Credit Scores

500 – This is what is typically referred to as, Non-prime, and would likely require a 35% down payment, and would be offered at a higher-than-normal interest rate.

600 – This score opens the door to GSE-type loans like FHA and VA loans.

620 – This is usually the score needed to get a Fannie, Freddie Mac-type loan.

If you are purchasing the property for investment purposes, underwriting guidelines for Credit Scores are not as formulated, but factor into the investor’s analysis of the property and the terms they are willing to offer.

3. Income

If you are purchasing a home for yourself then you must show your ability to repay your loan. That is typically based on a 43% Debt-to-Income Ratio. There are some products that will go as high as a 50% Debt-to-Income Ratio.

Complete a quick loan inquiry, and we can help you determine how much home you can afford.