Michael Curry
The Seattle housing forecast shows a higher inventory of homes on the market and the appreciation for homes in Seattle are projected to increase. If you’re in the market for a new home, here is our three-step plan to purchase a home in Seattle. By outlining what you are looking for in a home, saving up, and working with a Seattle mortgage lender and real estate agent you trust, you will be on your way to a place of your own.
Decide what you want in your ideal home in Seattle
Purchasing a home is not only one of the most significant purchases of your life, it is also the place where you will make memories, and life will happen, so you need to make sure your home is a good fit for you and what you see in your future. When beginning the home purchasing process, first think about what you want out of your home, about how long you will live there, and what all will happen in that timeframe. This can help you decide on the size of home that would be ideal for you. Do you plan on beginning a family, so maybe you will need multiple bedrooms and a backyard? Or maybe you’re an empty nester and it’s time to downsize to a smaller home with less maintenance.
Next, think about the location of your home. If you have children, you’ll want to consider the quality of the school system in the area. Think about the neighborhood and the ambiance that you want to live in such as a quieter street or the hustle and bustle of a more urban environment. Another important thing to think about is your commute to and from work. Or maybe you don’t mind a longer commute if your home is located in a more secluded area. Also take into consideration the condition of the home you would like to purchase. Would you like something brand new? Or would you enjoy a fixer-upper so you can add your own personal touches on your home? All of these elements can help you decide what kind of home is right for you and help you establish a budget.
Financially prepare and save up
After you get an idea of what you want and need in a home, you will need to determine how much home you can afford. This entails comparing average home prices of houses of your ideal size in your desired location and figuring out if it is financially realistic for you. You’ll then figure out how much you will need for your down payment and how much you can afford on your monthly payments.
Once you have your budget outlined, it’s time to start saving up. There are many online budgeting tools that you can use to help you put together a plan for saving up for your down payment and tracking your progress. Keep in mind the typical minimum down payment amount is 3.5% of the home price. Ideally you will want to save up 20% of the home price for your down payment to avoid paying mortgage insurance which can add up significantly over time. If you are selling your current home to purchase a new one, take into account how much you will receive from the sale of your home and how much you will put towards your down payment. Besides saving for a down payment you will also want to put money aside for closing costs. As a homeowner, you will also be taking on the responsibility of the maintenance of your home so it will also help to have an emergency fund for any unplanned home repairs.
One of the most important things you can do to prepare for buying a home is to boost your credit score. There are a few things that factor into building up your credit score, such as paying down your current debt and making monthly payments on time. Your credit score plays a key role in determining the interest rate you receive on your mortgage. A lender sees you as less of a risk in paying back the loan if you have a higher credit score and will most likely be able to offer you a lower interest rate. If you qualify for a lower interest rate you could save thousands of dollars over the life of your home loan.
There are three credit bureaus that you can use to find your FICO credit score; those are Experian, TransUnion, and Equifax. Look over your credit report for accuracy and take action to make any needed corrections or improvements. Improving your credit score is something that takes time so make sure you factor that into your timeline before applying for home financing if you need to.
Besides saving up for purchasing a home, try to pay down any debt you may have on student loans, car payments, or credit card debt, etc. before applying for a home loan. This will improve your debt to income ratio which could increase the amount of financing you are approved for. To calculate your debt to income ratio, add up all of your monthly debt payments, such as student loans or car payments and divide that number by your gross monthly income. You can expect the maximum accepted debt to income ratio to be 43%. Speak with a loan officer to determine what kind of budget and home is realistic for you and what kind of rates you can expect.
Shop around
After you’ve reached your savings goal and have a credit score you’re confident with, it’s time to shop around for home financing. Make sure you find the right mortgage lender for you. A loan officer will be able to find the best loan program for you and answer any questions you may have about the home financing process.
Once you’ve been approved for home financing you can hire and work with a real estate agent to start shopping for your dream home! There are many benefits to working with a real estate agent because they are knowledgeable in the real estate market, skilled in negotiation, and there to help you through the home purchasing process. Working with a real estate agent could actually save you money as well. Just like that, you are on your way to your new home!
Your new home may be closer than you think
Ready to make the move to a new place of your own? The experts at Sammamish Mortgage have over 25 years of experience in the mortgage industry and are happy to share their knowledge with you so you can find your next home. They are happy to discuss possible rates, your down payment, and more. And when you’re ready, they’ll work with you to find the loan program that is best for you. Contact Sammamish Mortgage today and you’ll be one step closer to getting the keys to your new home.
