Summary: Are you looking to buy your first home in Washington in 2019 or 2020? You’d be well-advised to get familiar with the home buying process. Read on to find out what all first-time home buyers should know when buying in Washington State in 2019 or 2020.
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 2019/2020
Home prices in Washington have risen steadily in recent years, and they continue to do so. Mortgage rates are expected to inch upward in the coming months. The real estate market is competitive right now, due to limited inventory. As for good news, mortgage qualifications have loosened a bit. 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, though the pace of growth is not as strong as it was over the past year. According to the real estate information service Zillow, the median home value in Washington rose by 4.2% from July 2018 to July 2019. Their economists expect prices to rise by another 2% over the next 12 months, extending into the summer of 2020.
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.
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 2019 and 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.
So it’s probably not the time to argue with the seller over “nickels and dimes,” especially in certain markets, like Tacoma. 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 dip slightly into 2020.
According to Freddie Mac, mortgage loan rates are expected to average 4.1% this year, dipping to an average of 4% in 2020 for 30-year fixed-rate mortgages.
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.