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How To Prepare For Purchasing A Home In Washington State

How to Prepare for Purchasing a Home in Washington State

Summary: From budgeting to deciding on location, a lot goes into preparing to purchase a home in Washington state. We put together our best advice for getting ready to buy a home so you can be as prepared as possible. In this post we go over deciding what you want in a home, what to budget for, improving your credit score and first steps in the home financing process.

Whether you are deciding where you want to live to establishing a budget for a new home, there is a lot to think about when it comes to purchasing a home in Washington state. There can certainly be challenges when it comes to buying a home such as saving up for a down payment or the time spent trying to find the perfect house to start a family, but getting the keys to a place of your own is well worth it and could signify beginning a new and exciting phase of life. If you’re ready to settle into a place of your own, here are ways to prepare for purchasing a home in Washington state. 

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Decide what you want in your ideal home in Washington state

Purchasing a home is not only one of the most financially impactful purchases of your life, it is also the place where you will make memories, and life will happen, so you need to make sure your home is a good fit for you. First, think about how long you will live in the home and what all will happen in that timeframe. This can help you decide on the size of home that would be ideal for you. Do you plan on beginning a family, so maybe you will need multiple bedrooms and a backyard? Or maybe you’re an empty nester and it’s time to downsize to a smaller home with less maintenance.  

Next, think about the location of your home. If you have children, you’ll want to consider the quality of the school system in the area. Think about the neighborhood and the ambiance that you want to live in such as a quieter street or the hustle and bustle of a more urban environment. Another important thing to take into consideration is your commute to and from work. Will you need your home to be close to bus stops or a park and ride? Or maybe you don’t mind a longer commute if your home is located in a more secluded area. Also take into consideration the condition of the home you would like to purchase. Would you like something brand new? Or would you enjoy a fixer-upper so you can add your own personal touches on your home? All of these elements can help you decide what kind of home is right for you and help you establish a budget.

Related: How to choose the Right Neighborhood in Seattle

Determine your budget for your new home in Washington state

After you get an idea of what you want and need in a home, you will need to determine how much home you can afford. This entails comparing average home prices of houses of your ideal size in your desired location and figuring out if it is financially realistic for you. You’ll then figure out how much you will need for your down payment and how much you can afford on your monthly payments. The price of homes in Washington state vary significantly based on location so this will factor into your budget. Work with a loan officer to find out what kind of budget and home is realistic for you.

Start saving up

Once you have determined your budget and what you want in a home, start saving up. There are many online budgeting tools that you can use to help you put together a plan for saving up for your down payment and tracking your progress. Keep in mind the typical minimum down payment amount is 3.5% of the home price. Ideally you will want to save up 20% of the home price for your down payment to avoid paying mortgage insurance which can add up abundantly over time. Besides saving for a down payment you will also want to put money aside for closing costs. You can talk to a loan officer to learn about what you should expect to pay in closing costs. As a home owner, you will also be taking on the responsibility of the maintenance of your home so it will also help to have an emergency fund for any unplanned home repairs. 

Boost your credit

One of the most important things you can do to prepare for a buying a home is to boost your credit score. There are a few things that factor into building up your credit score, such as paying down your current debt and making monthly payments on time. Your credit score plays a key role in determining the interest rate you receive on your mortgage. A lender sees you as less of a risk in paying back the loan if you have a higher credit score and will most likely be able to offer you a lower interest rate.  If you qualify for a lower interest rate you could save thousands of dollars over the life of your home loan. 

There are three credit bureaus that you can use to find your FICO credit score; those are Experian, TransUnion, and Equifax. Look over your credit report for accuracy and take action to make any needed corrections or improvement. Improving your credit score is something that takes time so make sure you factor that into your timeline before applying for home financing if you need to. There are many websites out there that you can use to receive weekly updates on your credit score such as Credit Karma or Credit Sesame.

Pay down debt

Besides saving up for purchasing a home, try to pay down any debt you may have on student loans, car payments, or credit card debt, etc. before applying for a home loan. This will improve your debt to income ratio which could increase the amount of financing you are approved for. To calculate your debt to income ratio, add up all of your monthly debt payments, such as student loan or car payments and divide that number by your gross monthly income. You can expect the maximum accepted debt to income ratio to be 43%.  

Stay up to date on your income taxes.

Make sure you are up to date with your income taxes. Home loan lenders will ask for documents outlining your financial history and typically look for one-two years of personal tax returns, business tax returns if you own your own business, or W-2s or 1099s. Your income taxes will help determine how much you can afford now and through the life of the loan.

Shop around

After you’ve reached your savings goal and have a credit score you’re confident with, it’s time to shop around for home financing. Make sure you find the right home loan lender for you. A loan officer will be able to find the best loan program for you and answer any questions you may have about the home financing process. Once you’ve been approved for home financing you can then work with a real estate agent to start shopping for your dream home!

Ready to make your dream of homeownership come true?

At Sammamish Mortgage, we’ve been in the mortgage industry since 1992 and are ready share our expertise about purchasing a home in Washington state. We will walk you through each step of the home financing process so you can put in an offer on a home with confidence. Your dream of owning a home may be closer than you think so contact us today!

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