There several tips to keep in mind when searching for the right Spokane mortgage lender, such as shopping around, comparing rates, and asking the hard questions.
Do you plan to buy a home in Washington State sometime soon? If so, you probably have questions about the many steps that are involved. You’ll find answers here. Below, we’ve provided a step-by-step overview of the home buying process in Washington State.
Note: Your home buying experience may differ slightly from the one outlined below, due to a variety of factors. With that being said, most home buyers in Washington State will go through most of the steps outlined below.
In This Article:
11 steps to buying a home in Washington State:
- Start saving money to cover your expenses.
- Establish a monthly housing budget.
- Review your credit reports and scores.
- Determine which type of home loan meets your needs.
- Shop for a loan and get pre-approved.
- Find an experienced real estate agent.
- Start looking for a suitable home.
- Make a purchase offer and negotiate as needed.
- Get a home inspection.
- Secure a homeowner’s insurance policy.
- Close the deal and get your keys!
Step 1. Start saving money for your home-buying expenses.
When you buy a home in Washington State, you’ll encounter a variety of upfront expenses including down payment and closing costs. In a typical real estate transaction, these costs must be paid on or before closing the day.
Depending on the type of home loan you use, your down payment might range from 3% to 20% of the purchase price. An exception to this is the VA loan program, which offers 100% financing.
You’ll also have to pay closing costs, and these can add up to thousands of dollars. In some cases, the seller might agree to pay the buyer’s closing costs, or the mortgage lender might offer a “credit” to cover them. But the point is, most home buyers encounter some form of closing costs when buying a house in Washington State. So start saving now.
Step 2. Establish your housing budget.
This is an optional step in the Washington State home buying process, but we highly recommend it. Having a basic housing budget on paper will help you shop accordingly.
The good news is, you don’t have to be a financial planner to create a basic home buying budget. You just need to examine your monthly income and your recurring expenses.
Write down your monthly net income (or take-home pay), and then subtract all of your non-housing monthly expenses from that figure. You can exclude your current rent or mortgage payment from this calculation because the point here is to determine how much you can spend on your housing costs going forward.
Here’s a more in-depth look at the budgeting process.
Step 3. Review your credit reports and scores.
Mortgage lenders will review your credit reports and scores to see how they’ve borrowed and repaid money in the past. This is a standard part of the home buying process in Washington State. You can review these items for yourself before you apply for a loan. Having good credit improves your chances of qualifying for a home loan. It could also help you secure a lower mortgage rate.
You can get your credit reports for free by visiting AnnualCreditReport.com (the official website). You might have to pay a small fee to obtain your scores, usually around $20 per score.
Step 4. Decide which type of mortgage loan you want to use.
Elsewhere on our website, you’ll find an in-depth review of the different types of mortgage loans available these days. Here’s the short version:
You have two primary questions to answer when choosing a type of loan: (1) Do you want to use a fixed or adjustable-rate mortgage? (2) Do you want to use a conventional or government-backed loan?
The 30-year fixed-rate mortgage is the most popular type of home loan in Washington State. That’s because it offers the most stability and predictability. With a fixed-rate loan, your interest rate and monthly payments will stay the same for the entire term.
Adjustable-rate mortgage (ARM) loans work well in certain situations, particularly when the buyer expects to sell the home and move within a few years. ARM loans usually have lower rates than their fixed counterparts, at least for the first few years.
Step 5. Shop for a mortgage and get pre-approved.
If you’re planning to make an all-cash offer on a home, you can skip this step. It doesn’t apply to you. But if you’re like most home buyers, and you need a loan to complete your purchase, then a mortgage pre-approval would be in order. It’s the next logical step in the Washington State home buying process.
Pre-approval is when a lender reviews your financial situation (and documents) to determine how much they are willing to lend you. Knowing this enables you to shop for a home accordingly, within a realistic price range. But that’s not the only benefit. Having a pre-approval letter also shows sellers that you’re a serious buyer, and that’s important in a competitive real estate market.
Step 6. Find a real estate agent.
It’s a good idea to have professional help when buying a home in Washington State, especially if it’s your first time. The seller usually pays the real estate agent commissions. So, as a buyer, there’s really no reason to fly solo. An experienced agent can help you navigate the latter steps of the home buying process, especially #7 and #8 below.
Step 7. Start shopping for a house.
For many people, house hunting is the most exciting step in the purchasing process. But you’ll notice it’s step #7 on our list. There’s a reason for this. If you follow the steps outlined here, you’ll have a budget on paper and a pre-approval from a lender — before you start house hunting. This is a logical sequence when buying a home in Washington State. Once you’ve completed the preliminary steps, you’ll be able to shop confidently for homes that fall within your price range.
Step 8. Make an offer / negotiate with the seller.
When you find a home that meets your needs, it’s time to make an offer. But how much should you offer? It’s wise to base your offer on comparable sales, or “comps.” These are similar properties that have sold recently in the same area. Consider current market conditions when making an offer. For instance, are you in a sellers’ market, a buyers’ market, or somewhere in between? Remember, the seller’s asking price might be realistic or inflated. You won’t know until you review the comps and study the market. When the offer has been accepted, the buyer and seller have entered escrow.
Step 9. Have the home inspected
You’re not required to have an inspection when buying a home in Washington State. But it’s still a wise investment, and therefore an important step in the buying process. A home inspection will give you valuable insight into the property’s true condition. It will also help you identify potential problems, maintenance issues, damage, etc.
Home inspectors typically examine the electrical system, the foundation, heating and cooling, plumbing and more. In Washington State, property inspections usually cost around $500 for an average-sized home. That’s a small price to pay for peace of mind.
Step 10. Get home insurance.
A homeowner’s insurance policy (also known as hazard insurance) protects you against financial losses related to your home. A thief steals your expensive electronics. Fire destroys part of your house. A tree branch crashes through the roof. A standard homeowner’s policy can protect you from these and other losses. On average, home insurance policies in Washington State costs around $955 per year. You can lower the premium by choosing a higher deductible if desired. Mortgage lenders usually require the first year’s premium to be paid by the closing date.
Step 11. Close the deal and get your keys!
Closing is the final step in the Washington State home buying process. It’s also referred to as a settlement. This process involves a lot of paperwork and the final distribution of funds. The real estate agents receive their commissions. The seller gets paid, if applicable. The lender’s fees will be paid. You’ll sign a series of documents. And, ultimately, you’ll walk away with the keys to your new house!
Need a Mortgage Loan?
If you are in need of the assistance of a seasoned mortgage broker, Sammamish Mortgage can help. We are a local, family-owned company based in Bellevue, Washington. We serve the entire state, as well as the broader Pacific Northwest region that includes Idaho, Colorado, and Oregon. We have been offering a wide variety of mortgage programs and products with flexible qualification criteria, and we’d love to help. Please contact us if you have mortgage-related questions.