Mortgage Rates Washington: Compete In A Seller’s Market
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Washington State’s population grew by almost 15% over the past decade, most of which is attributed to migration. Due to high housing demand from new residents, Washington’s median home price is $70,000 higher than the national median.
High demand can make it tough to find good home deals in the Evergreen State. However, knowledge of mortgage & refinance rates in Washington can help you land that dream home easier.
Find out how to get the best home deals using this guide. Read on for the latest Washington mortgage rates and up-to-date information on the state’s homebuyer assistance programs!
Mortgage Options In Washington
There are three main loan options when it comes to buying a home in America. Each has its own pros and cons, so it’s important to understand them in detail before you choose which one fits your needs.
Conventional Home Loan
Offered by banks and private lenders, conventional loans are the most common mortgages for homebuyers. These loans have limits set by the Federal Housing Finance Agency, which differs by state and county.
Most of Washington State has conforming loan limits set at the national average of $548,250. However, King, Snohomish, and Pierce counties have a higher conforming loan limit of $776,250.
We can further break down conventional mortgages into three loan types by their rate schemes and terms, which are:
As the name implies, a fixed-rate mortgage features static interest rates. These rates do not change according to market conditions, which means your monthly payment amounts will stay the same.
The predictability and stability of fixed-rate loans make them very popular with new homebuyers and long-term financial planners. As a caveat, fixed-rate mortgages tend to have higher rates compared to other loans.
The most popular fixed-rate loan term lasts 30 years. However, you can choose shorter 15-year or 20-year loan terms which have lower rates but higher monthly payments.
Adjustable-Rate Mortgage (ARM)
The interest rate on an adjustable-rate mortgage fluctuates based on market index movements. This means that, every year, your rates may rise or fall.
To provide borrowers with some stability, lenders usually offer an introductory period with fixed interest rates at the beginning of an ARM. Since this introductory period usually has low rates, adjustable-rate mortgages are a good option for short-term savings.
The naming scheme of ARM loans defines the length of its introductory period. For example, a 5/1 ARM means you have 5 years of introductory rates before it shifts into the adjustable phase.
Because they can exceed local loan amount limits, jumbo loans are usually used to buy more expensive homes. However, lenders take more risk on a jumbo loan, which leads to higher rates.
Government-Backed Loan Programs
The U.S. federal government backs three special loan types designed to stimulate homeownership in select demographics, like veterans and rural residents. The three government loan programs are:
FHA loans: These loans are designed for low-income borrowers with their lower credit score requirement. However, these loans have mandatory mortgage insurance fees for the life of the loan.
USDA loans: USDA loans have strict area requirements because they’re meant to boost rural homeownership. As a tradeoff, USDA borrowers receive a zero-down loan with reduced mortgage insurance premiums.
VA loans: Military members who qualify for a VA loan receive a zero-down loan with no mortgage insurance. However, you must pay an upfront cost called a VA funding fee. This fee is worth 2.3% of the loan, but it can be lowered if you provide a down payment.
A refinance entails taking out a new loan to repay your current mortgage. There are two refinance loan types that you can choose from depending on your goals:
Rate and term refinance: This type of refinancing changes your loan’s length or type. For example, you can shorten your 30-year fixed-rate loan to pay it off faster or lengthen a 15-year mortgage if you can’t afford the high monthly payments. Rate and term refinances also allow you to convert an ARM into a fixed-rate loan to avoid unpredictable rate adjustments.
Cash-out refinance: Cash-out refinancing converts your home equity into cash. In this type of refi, you get a loan that’s larger than your current mortgage balance. Any money left after repaying your old mortgage can be used for other needs.
Compare Mortgage Rates In Washington
Average mortgage rates in Washington have stayed under the national average since the start of the millennium. Use the table below to find current mortgage rates in the Evergreen State. All the rate & APR information listed here is taken from the nation’s top lenders.
Today’s Mortgage Rates in Washington
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These rates may change without prior notice. Your actual rates may vary depending on your financial circumstances.
Input your financial details into the tool at the top of this page for a personalized estimate of your Washington mortgage & refinance rates.
First-Time Homebuyer Programs In Washington
The state offers two homebuyer assistance programs through the Washington State Housing Finance Commission (WSHFC): Home Advantage and House Key Opportunity. Similar to other states, you must have not owned a primary residence in the last three years to qualify as a first-time homebuyer in Washington.
WSHFC Home Advantage Mortgage & Down Payment Assistance Programs
Washington State’s Home Advantage program helps first-time homebuyers qualify for low-interest mortgages. To qualify for Home Advantage, you must fulfill these requirements:
Complete a homebuyer education course
Have a score of at least 620 on your credit report
Earn less than $145,000 annually
Home Advantage loans have no property restrictions, but loans valued above $548,250 will be subject to a high balance fee.
Washington residents who qualify for Home Advantage can also qualify for down payment assistance (DPA) worth up to 4% of the first mortgage. This assistance comes in the form of a no-interest 30-year deferred loan.
WSHFC House Key Opportunity
The state’s House Key Opportunity program features a low-interest loan for lower-income homebuyers. The loan’s annual income limits range between $75,000 and $140,000 depending on the area. This program also has purchase price limits ranging from $265,000 to $575,000.
This program can be combined with up to $10,000 worth of DPA, in the form of a 30-year deferred second mortgage with a 1% rate.
Buying A Home In Washington
Washington is a seller’s market, which means that there are more buyers than available homes. Knowing how to find affordable homes and how to make a good offer is essential to compete in this market.
Follow this guide to learn about the home buying process!
Step 1: Get A Pre-Approval Letter
Most sellers won’t entertain any offers without a pre-approval letter. You can get a pre-approval letter by passing a lender’s credit checks and initiating the mortgage process.
Your pre-approval letter contains the key details of your mortgage, like its maximum loan amount, interest rate, APR, and loan type. It also acts as a budget guide and can signal to sellers that you’re financially ready to buy a home.
Step 2: Search For Experienced Realtors
A real estate agent with local experience can help you in many ways. They can find the best housing deals and provide key details of the area, like the average home price and property taxes. Essential things to look for in a good realtor include their years of experience and rank in real estate rating websites.
Step 3: Start House Hunting
Begin your search at the neighborhood level. Pick a neighborhood that fits your budget and lifestyle, then search local listings for the most affordable homes there.
If you can’t find any homes that are a perfect fit, try looking for fixer-uppers instead. You can use the money you saved to make home improvements.
Step 4: Make A Purchase Offer
Making the first offer doesn’t guarantee that you’ll purchase the home. To catch the seller's eye, you need to be quick and make a great offer.
Consider making a bid above the listed property value to sweeten the deal. Consult with your realtor first on how much you should offer so you don’t overpay.
Step 5: Schedule Inspections & Appraisals
Don’t waste the chance to examine your new home prior to closing. Hire home inspectors and appraisers to help you check the purchase. If they find that the home is overvalued or needs serious repairs, you can try to negotiate a new deal with the seller.
Step 6: Close The Deal
Prepare the money to pay your origination fees before scheduling a closing date. On the day itself, run all the closing paperwork through your realtor before signing to ensure you understand all the details.
How To Get Better Washington Mortgage Rates
Mortgages are lengthy and expensive. Reducing your rate by a few points may not look like much now, but these savings add up and may result in thousands of dollars saved in the future.
Follow these three tips to reduce your mortgage rate & APR:
Opt For A Shorter Loan Term
Shorter loan terms translate into better rates because lenders take less risk on them. Additionally, you make fewer mortgage payments on shorter loans – reducing your interest expenses.
Provide A Larger Down Payment
Larger down payments paint you as a less-risky borrower and may encourage lenders to give you better rates. Putting more down also reduces your main loan balance, which means your monthly payment amounts will be reduced.
Compare Offers From Multiple Lenders
Many lenders try to sweeten the deal by offering lower rates or discounted closing costs and lender fees. Shopping around can help you find good deals that you otherwise wouldn’t have found.
Request standardized loan estimates from each lender’s loan officer so you can compare their offers side-by-side and find the one that gives you the best value.
Washington's constant influx of new residents means you’ll likely face stiff competition for good housing deals. However, knowledge of the local mortgage rates and the home buying process can increase your odds of getting a dream home in Washington.
If you’re planning to find the best-valued mortgage in Washington, Wesley LLC is here to help. Reach out to our team for a personal mortgage consultation!