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Home buyers in Washington State tend to have a lot of questions about the mortgage loan process. Below, we have rounded up some of the most frequently asked questions relating to mortgage financing, and what it takes to qualify for a home loan in Washington State.
As a home buyer in Washington, it’s important for you to go into the process armed with as much information as possible, and answering a few questions can help you do that. So, what types of questions should you ask?
For cash buyers, affordability is limited only by the amount of money in the bank. But for home buyers who plan to use a mortgage loan, there is another variable that determines the amount of house you can buy — and that’s the mortgage approval amount.
This is why it makes sense to get pre-approved for a home loan before shopping for a house. It will help you establish a specific price range for a more efficient house-hunting process.
When determining how much you can borrow for a home loan, banks and lenders review your current income and debts. This is one of the primary factors that will determine how much you can borrow. The industry term for this is debt-to-income ratio, or DTI.
The maximum debt-to-income ratio can vary depending on the type of loan you are using and other factors. With that being said, the bar is usually set at 45% to 50%. This means that if your combined debts (including the mortgage loan) use up more than 50% of your income, you might have trouble qualifying for a loan.
On the other hand, having a lower DTI ratio will improve your chances of qualifying for mortgage loan.
Related: How much can I afford to buy?
This is another common question among home buyers and mortgage shoppers in Washington State. The answer depends largely on the type of home loan you are using. Different mortgage programs have different requirements, when it comes to the minimum down payment that is needed.
The main point here is that you don’t necessarily need a down payment of 20% to buy a house in Washington State. That is a common misconception. Some people choose to make a down payment of 20% in order to avoid paying mortgage insurance. But it’s not an across-the-board requirement. There are lower down payment options available, as shown above.
There are a lot of variables that can affect a home buyer’s closing costs. So it can vary widely from one borrower to the next.
With that being said, most buyers in Washington State pay somewhere between 1% and 3% of the home’s purchase price in closing costs. This is a collective term that actually includes a lot of individual fees and charges.
This is another common question among home buyers and mortgage shoppers in Washington. The general consensus among housing analysts and economists is that mortgage rates will get close to the 4% mark between now and the end of 2022.
Over the last few years, mortgage rates were “held” at historically low levels largely due to policies and actions of the Federal Reserve. And things have remained as such over the past year or so.
As of the writing of this article, the mortgage rate for a 30-year fixed-rate mortgage is 3.79%. That’s relatively low, making now a great time for buyers to get into the market and save a great deal on interest.
Will you need mortgage financing to buy a home? We offer a wide variety of mortgage programs and tools with flexible qualification criteria. We serve the entire state, as well as the broader Pacific Northwest region that includes Oregon, Colorado, and Idaho since 1992. Please contact us today with any financing-related questions you have.
Whether you’re buying a home or ready to refinance, our professionals can help.
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No Obligation and transparency 24/7. Instantly compare live rates and costs from our network of lenders across the country. Real-time accurate rates and closing costs for a variety of loan programs custom to your specific situation.