Seattle rents are some of the highest in Washington State and the country as a whole. Considering this, it might make more sense to buy a home and pay a mortgage instead, especially with interest rates still being relatively low.
With Seattle rents rising steadily in 2022, a lot of renters in the area are now eyeing homeownership as a possible alternative.
And here’s an important point to consider. Homebuyers who use fixed-rate mortgage loans to buy a house can enjoy a monthly payment that never goes up. The same cannot be said for renting a house or apartment.
Would you be better off buying a home in Seattle with a fixed-rate loan or continuing to rent? Here’s some information to help you decide.
Seattle Rents Still Among the Highest in the Nation
Seattle-area rents are still very high compared to other markets in the state of Washington and the nation as a whole. As of February 2022, the median rent price in Seattle is $2,197.
And it’s not just in Seattle proper. High Rising rents are a common trend across the entire metro area. For comparison purposes, the median rent in Tacoma alone is $1,321, and in the entire US, it’s $1,124.
New construction should bring additional rental units onto the market over the coming months. But probably not enough to reverse the trend of rising rents in the Seattle area. It’s a market reality: rental prices will likely continue rising, on a year-over-basis, especially in the latter half of 2022.
Rising rents have prompted many Seattle-area renters to explore the possibility of homeownership. There are a lot of variables to look at when considering whether you should rent or buy a home. Monthly costs are one of the most obvious factors.
But here’s something a lot of renters don’t consider. When you buy a home using a mortgage loan, you have the ability to “fix” your monthly housing payments so that they stay the same. This can be done by using a fixed-rate mortgage loan.
Fixed-Rate Loans Allow You to ‘Lock’ Your Monthly Payments
A fixed-rate mortgage loan is exactly what it sounds like. It is a home loan with an interest rate that remains fixed — or unchanging — for as long as you keep it.
For example, the 30-year fixed mortgage carries the same interest rate for the full 30-year repayment and amortization period. Unless, of course, the homeowner sells or refinances the home before then, in which case the original loan is replaced with a new one.
Consider the difference:
- Seattle rents have been rising steadily, and they could continue along an upward trajectory for the foreseeable future. We don’t really know what they’ll do in the coming months, so there’s a lot of uncertainty.
- A person who buys a home in Seattle using a fixed-rate mortgage loan will have the same monthly payments for as long as he or she keeps the loan. There are no surprises down the road. In terms of cost, it’s a more stable and predictable housing situation.
A distinction should be made here. Some home loans have an interest rate that can change over time, usually once per year. These are known as adjustable-rate mortgages or ARMs. But a fixed mortgage lives up to its name, keeping the same interest rate for the full repayment term.
Of course, there are pros and cons to all types of home loans. But if you’d like to combine the joys of homeownership with a monthly housing payment that stays the same, consider using a long-term fixed-rate mortgage.
Interest Rates Near Historic Lows
According to Freddie Mac, the interest rate for a 30-year fixed-rate mortgage is 3.69% as of February 14, 2022. That’s higher than the same time last year, though still relatively low compared to a couple of years ago. At the same time last year, rates were at 2.73% over the same week.
Low rates make home buying more affordable for buyers, even with home prices being as high as they are in Seattle. As of February 2022, the median home price for a home in Seattle is $900,084. What’s more, prices are expected to increase over the foreseeable future. That said, now might be the best time to buy a home in Seattle, while the rates are still somewhat low.
Have Questions About Home Loans in Seattle?
Sammamish Mortgage is a family-owned and operated Mortgage Company who has been proudly serving the Pacific Northwest since 1992. We currently lend in all of Washington, Oregon, Idaho, and Colorado. With their wide offerings in mortgage programs and flexible qualification criteria. Get in touch with Sammamish Mortgage today!