Summary: Are you looking to buy your first home in Washington in 2020? If so, you’d be well-advised to get familiar with the home buying process. This article will provide you with valuable information regarding what all first-time home buyers should know when buying in Washington State in 2020 and into 2021.
If you’re a first-time homebuyer, then buying a home is completely new to you. As such, you need all the information you can get to make a sound homebuying decision. There’s a lot of advice online for first-time home buyers in Washington State. But you’re in a hurry. So we’ve selected five of the most important things you should know about buying your first house in Washington in 2019 or 2020.
5 Things Washington First-Time Home Buyers Should Know in 2020
Home prices in Washington have risen steadily in recent years, and they continue to do so. In fact, the housing market in Washington State is currently very hot right now. That means prices are on their way up, demand is high, limited inventory is tight, and competition is heavy.
But mortgage rates are extremely low right now and are expected to remain low throughout 2020. That’s good news for buyers, as it makes homebuying more affordable and gives buyers more purchasing power.
Those are a few of the things you should know, as a first-time home buyer in Washington State. So let’s explore these topics…
1. It’s easier to get a mortgage loan these days.
The mortgage industry has loosened up a bit over the last few years. As a result, it’s slightly easier to qualify for a mortgage loan today than it was in the past.
For example, many first-time home buyers in Washington think they have to save up 10% or more for a down payment. But that’s not accurate. Today, there are mortgage programs available that allow for down payments as low as 3% (or 0% if you’re military).
Further, certain borrowers may be able to qualify for a mortgage with a higher DTI, or debt-to-income ratio, which is a measure of how much of your monthly income is dedicated to paying off your monthly debt. Now, some people may be able to quality with a DTI of 50%, instead of the previous maximum of 45% for FHA-backed mortgages.
The point is, you shouldn’t make assumptions about your ability to qualify for a home loan. Contact us today, and we’ll review your financial situation to determine if you’re a good candidate for a mortgage loan.
2. Home prices are still rising in Washington
Washington State home prices are still on the rise, and the pace of growth is quite strong these days. According to the real estate information service Zillow, the median home value in Washington rose by 5.72% from March 2019 to March 2020. Their economists expect prices to rise by another 4.9% over the next 12 months, extending into the spring of 2021.
As a result of these trends, first-time home buyers in Washington will encounter higher housing costs than those who purchased over the last couple of years. So be sure to research the market ahead of time, and go into it with a realistic view of what you can afford.
3. Housing inventory is still tight in many cities.
The primary reason why home prices have risen so fast in Washington over the past few years has to do with inventory – or the lack of it. In most cities across the state, the current supply of homes is falling short of demand. This is especially true in the Seattle metro area, where supply is severely limited, though the supply situation is easing up somewhat. Seattle – and the surrounding King County area – has just around a 1-month supply of housing available for buyers at this current time.
What does this mean to you, as a first-time home buyer in Washington? It means you should be prepared for some competition, and be ready to move quickly when the right house comes along.
4. Sellers’ market conditions persist across the state.
We talked about the lack of inventory above, and how this affects you as a first-time home buyer in Washington. In 2020, most of the major cities across the state are experiencing sellers’ market conditions. In short, there aren’t enough homes for sale to meet the current level of demand.
This is an important factor to remember when it comes time to make an offer and negotiate with sellers. The reality is that current real estate market conditions favor sellers over buyers — at least in most parts of the state. Competition is strong right now, and bidding wars are not uncommon. That’s why it’s important to put your best foot forward and make sure your finances are in check before you start housing hunting.
So it’s probably not the time to argue with the seller over “nickels and dimes,” especially in certain markets, like Tacoma, where the housing market is very hot right now and prices are rising quickly. If you find a home that checks most of your boxes and falls within your budget, you’ll want to move on it quickly with a strong offer.
5. Mortgage rates are expected to stay low throughout 2020.
Right now, the interest rate for a 30-year fixed-rate mortgage currently sits at 3.5%. That’s extremely low, making mortgages more affordable for buyers.
According to Freddie Mac, mortgage loan rates are expected to average 3.7% this year. Granted, this is just an educated guess based on current trends. But it’s still an important consideration for Washington first-time home buyers. The anticipation of rising home prices and mortgage rates makes a compelling argument for buying a home sooner rather than later.
Have Mortgage Questions?
Are you a first-time homebuyer looking to purchase a home in Washington State in 2020? If so, Sammamish Mortgage can help you get the mortgage you need. We are a local, family-owned company based in Bellevue and have been helping first-time home buyers in Washington since 1992. We offer a variety of mortgage programs in Washington, Oregon, Idaho, and Colorado Please contact us if you would like to receive a rate quote on a loan, or if you have any mortgage-related questions.