Closing Costs Mistakes to Avoid When Buying a Home in Washington

May 2, 2023
Last updated:
May 4, 2023
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Home buyers in Washington tend to have a lot of questions about closing costs. It’s easy to understand why. After all, these fees and charges can add up to thousands of dollars. So you want to do some advanced preparation to avoid unpleasant surprises.

We’ve written about closing costs in Washington before, and from several angles. Today, we will explain some of the common mistakes buyers make when dealing with closing costs, and how you can avoid them to enjoy a smooth transaction.

Closing Costs at a Glance

“Closing costs” are the fees that buyers must pay when they purchase a home. They range from 2% to 6% of the purchase price, on average, and include a variety of expenses such as:

  • Title insurance
  • Escrow fees
  • Mortgage origination fees
  • Appraisal fees
  • Home inspection fees
  • Attorney fees
  • Recording fees
  • Prepaid interest

Closing costs represent a significant expense for home buyers in the state of Washington. So it’s important to factor them into your housing budget, early on in the process.

With that definition out of the way, let’s talk about some of the common mistakes to avoid when dealing with home buyer closing costs.

Mistake #1: Not Reviewing the Loan Estimate

When you apply for a mortgage loan, you will receive an estimate of your closing costs based on the type of loan you’re using and other factors. By carefully reviewing this document, you can better prepare for your closing day and budget accordingly.

On the other hand, if you only gloss over the estimate (or worse, neglect to read it), you could end up in a situation where you don’t have enough money to cover your costs.

Fortunately, this latter scenario can be easily avoided. Be sure to review every line of your closing costs estimate, and ask questions about anything you don’t understand. This will help keep the mortgage process on track and help you accomplish your financing goals.

Mistake #2: Not Budgeting for Closing Costs

We just talked about the estimate of closing costs you receive when applying for a mortgage loan in Washington. This document will give you a pretty good idea of how much you will have to pay to close your loan. You’ll receive another, more precise document shortly before closing.

But you don’t have to wait until then to start budgeting for these costs. In fact, you can start right now. The sooner you start budgeting and saving, the better off you’ll be when the time comes to close on the home.

Closing costs for home buyers in the state of Washington tend to range from 2% to 6% of the purchase price. Using this ballpark range, you can get a sense of how much you might actually have to pay on the day you close.

For example, if you think you’ll be purchasing a home in the $500,000 range, you could do some basic math to estimate your closing costs. Based on the percentages mentioned earlier, a buyer purchasing a house in the $500,000 price range might end up paying $10,000 – $30,000 in closing costs.

On a side note: While most mortgage lenders provide only a cost estimate, Sammamish Mortgage provides guaranteed closing costs. We guarantee not only the lender fees, but the costs charged by third-party service providers as well.

Mistake #3: Not Understanding What They Include

Some home buyers in Washington are surprised by the wide variety of closing costs associated with a home purchase. That’s one of the reasons why we work so hard to educate buyers, through our blogging efforts and other channels.

You’ll have a much easier time budgeting and preparing for your closing costs if you understand what items they actually include.

These costs can vary from one buyer to the next, for a number of reasons. For example, some home buyers choose to pay discount points to “buy down” their mortgage rate. Others might skip the points in order to minimize the total amount they have to pay up front.

Researching closing costs ahead of time can benefit you in many ways. It can help you with the budgeting process mentioned earlier, and also help you understand the options you have when choosing a mortgage loan.

Mistake #4: Not Asking Questions

There’s a good chance you will encounter something within your closing cost estimates or related documents that you don’t understand. This is especially true for first time buyers home buyers in Washington, since they’ve never been through the process before.

If you encounter some unfamiliar terminology within your loan documents, be sure to ask questions about them. You shouldn’t feel like you’re inconveniencing anyone. Its your loan officer’s job to make sure you understand every aspect of the lending process, including closing costs and related documents.

Mistake #5: Not Negotiating With the Seller

First-time home buyers in Washington are often surprised to learn that the seller can contribute money toward their closing costs. It’s true, and it’s something we’ve written about in previous blog posts. This is commonly referred to as a seller concession or contribution.

You might’ve heard the expression: “everything in real estate is negotiable.” This applies to the home buyer’s closing costs as well. In a slower real estate market, where sellers have to go above and beyond to attract offers, you might be able to negotiate a contribution toward your closing costs.

Just know that such concessions are less common in an active market. So you have to consider the current real estate scene in your area, before putting your offer on paper. This is something your real estate agent can advise you on. Just know that it’s possible to negotiate with the seller to have them pay a portion of your closing costs.

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What All of These Things Have in Common

Many of these closing cost mistakes (and their solutions) have something in common: education and research. The more you learn about the home buying process in the state of Washington, the more prepared you’ll be at every stage of that process. This applies to closing costs as well.

The good news is that much of this research can be conducted online, before you even enter the real estate market or apply for a loan. We have dozens of helpful articles on our blog, and our loan experts can answer any questions you have about mortgage financing in Washington.

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