If you’re thinking about buying a home in Washington State, this article can help you decide whether now is the right time to move forward or whether it makes more sense to pause and prepare first. There is a big difference between technically qualifying for a mortgage and being truly ready for the ongoing costs and responsibilities of homeownership.
Many buyers focus on whether they can get approved, but approval is only part of the picture. You also need to be comfortable with the monthly payment, upfront cash needs, repair risks, and the day-to-day reality of owning a home in Washington.
If any of the signs below sound familiar, waiting a little longer could put you in a stronger position before you buy.
Let’s cut to the chase, it may seem like you make enough money to purchase a home. However, there are a lot of costs associated with homeownership that you may not expect. You not only need money to cover the monthly payment, but you also need money for a down payment and you should have significant savings to support unplanned eventualities. One thing you don’t want to do is figure out you don’t make enough after you have already made a home purchase. Don’t take anything for granted, Sit down and crunch the numbers. Talk to a trusted mortgage professional and really get down to the dollars and cents.
Even if the base mortgage payment looks manageable, the full cost of owning a home in Washington State can be higher than many buyers expect. Property taxes and homeowners insurance can vary from one area to another, and some homes may also come with HOA dues.
It is also smart to budget for utilities, routine maintenance, and the occasional larger repair. On top of that, your commute and transportation costs can have a real impact on monthly affordability, especially if you are considering a location that changes how much you spend on gas, tolls, parking, or vehicle wear. Before buying, make sure the total cost of ownership fits your budget, not just the principal and interest payment.
Steady income matters just as much as income amount. If your employment or earnings are still changing, now may not be the best time to buy a home.
For example, you may want to slow down if you recently changed jobs, started a new role and are not yet sure it is the right fit, or moved from a predictable paycheck to income that varies from month to month. The same can be true if you are self-employed, earn commissions, rely on bonuses, or are still building a track record of documentable income.
This does not automatically mean you cannot get a mortgage. It does mean you should be honest about whether your income feels stable, predictable, and easy to document. Buying a home is a major commitment, and it can be wise to wait until your work situation feels more settled before taking it on.
You may not be rich, but before making the decision to purchase a home, it’s a wise idea to make sure you have a good credit score. Read this article for resources you can use to check your credit score for free. Just because you may be able to purchase a home with a low credit score doesn’t mean you should. Here’s a quick snapshot of credit scores and how they translate to potential creditors.
Not only will you have a difficult time finding a good rate with poor credit but bad it can prevent you from qualifying for a mortgage at all. If you have a credit score of 620 or lower, you may still be able to find lending resources. However, the fees and interest rates will likely cost you thousands over the life of the loan.
Higher interest rates mean higher mortgage payments. If your credit is on the fringe, it may be good to hold off and take some time before purchasing. Use the time to understand and improve your FICO credit score and properly prepare for a home purchase.
Your FICO credit score ranges between 300 and 850. Your FICO credit score is based on many things but the company is open about 5 major components. Let’s take a look:
Makes up about 35% of your credit score. FICO considers past payment behavior as a strong indicator of future expectations. The best way to ensure a good score here is to commit to making regular timely payments on all of your revolving credit balances.
Credit utilization simply refers to the amount of credit you are using in ratio to the amount you have available. The best way to maintain a good score here is to maintain low or no balance on any of your credit cards.
If you have no credit history, you can’t have “perfect credit”. The length of credit history refers to the amount of time each credit account has been open. It makes up about 10% of your overall score and also takes into account how long it has been since action on any open accounts. For new borrowers here, the name of the game is to establish and maintain a good history with creditors. For long term borrowers, maintain those long-standing accounts and commit to regular timely payments.
A subset of credit history length, new credit refers to how many new credit accounts you have and makes up about 10% of your overall score. The recommendation here is to only open new credit when it’s needed. Don’t open multiple credit lines in order to establish a history.
Credit Mix refers to the different kinds of credit accounts you may have and makes up about 10% of your overall score. Different types of credit accounts may include student, and auto loans, credit cards, and mortgages.
One of the 7 signs you’re not ready to buy a home in Washington State is too much personal debt. An existing mortgage is an additional (albeit different) form of debt. If you already have a large amount of debt, you might not be able to handle an additional loan. A classic investment rule tells us to never let housing costs exceed 30% of your income. That includes mortgage payments, taxes, insurance, upkeep, etc.
There are different kinds of debt; Some forms of debt that people might have include student loans, credit card debt, and car loans. Cutting down or eliminating some of this debt before applying for a mortgage will make you more competitive when applying for a mortgage. Here’s a look at two different types of debt.
Unsecured debt is any debt that has no collateral associated with it. It is obtained on the lender’s “good faith” in your ability to pay it back. Because lenders have no guarantee of repayment, unsecured debt usually comes with a higher interest rate. Some examples of unsecured debt include credit cards, medical bills, membership contracts, or signature loans.
Revolving debt refers to any credit agreement where the consumer can borrow up to a certain amount on a recurring basis. Lines of credit or credit cards are a good example of unsecured revolving debt. However, a home equity line of credit is an example of secured revolving debt.
Take the time to understand your existing credit and how it may affect your borrowing potential.
In addition to the ongoing necessity of debt reduction and management, building substantial personal savings is essential. The first savings factor that many people consider is the need to have enough money for the down payment. It is highly unlikely that a lender will hand out a loan to someone who is not able (or willing) to put up any personal capital. Another less understood savings factor is the need for “lender required cash reserves”.
This one may surprise you as it doesn’t fit into the category of direct closing costs. Most lenders require that you have a cash reserve or “x” amount of savings after the home is purchased and all other closing expenses have been paid. Lenders enact this policy in order to avoid buyers falling into a precarious financial situation after purchasing. In other words, the lender wants to make sure you have enough money set aside to make the mortgage payments.
So, How much should you have set aside? A common cash reserve requirement is 2 months worth. This means having enough in savings to cover two months of mortgage payments. As an example, if your total mortgage payment including principal, interest, taxes, and insurance is 2,000 dollars a month, the cash reserve requirement would be 4,000 dollars.
In addition to cash reserve requirements, maintaining personal savings is essential to cover potential home maintenance, repairs, personal emergencies or unexpected eventualities. So, how much is a good amount to have in your personal savings?
Most financial planners will tell you you should sock away enough cash to cover 6 to 8 months of expenses. This means If you need $4,000 per month to get by, your savings goal should be 24 to 36,000 dollars. Why so much? Experts say 6 to 8 months is about how long it takes the average person to find another job. Having extra savings set aside brings a degree of protection should you need to secure employment in the future.
Let’s get real. If you think you want to purchase a single-family home as your primary residence, and you think you are doing it as an investment you may want to take a pause. Just because a home’s value appreciates, does not make it an investment. True, real estate values have risen historically, and you only make mortgage payments for a fixed amount of time. However, when you factor in additional costs such as taxes, upkeep, and maintenance, it’s easy to see that your primary residence eats a lot of the equity it gains over time.
Another sign you’re not ready to buy a home in Washington State is if you don’t know you will be staying in Washington State long term. People move from place to place. It is a reality of school, employment, relationships, and more. At the same time, it is hard for someone to buy a house if they don’t know where they want to live.
Purchasing a home is a big decision with long term consequences and while it might seem obvious, it’s a factor that is frequently overlooked. Think about where “home” is going to be before deciding to buy. Consider the overall cost of living in that location, possible homeowner associations, the potential commute and think about your personal future plans. If you aren’t ready to “settle down” you may not be ready to buy a home.
Sammamish Mortgage can help. We serve clients across Washington, Idaho, Colorado, Oregon, and California. Since 1992, we’ve been providing several mortgage programs and products with flexible qualification criteria to borrowers across the Pacific Northwest. Visit our website to get an instant rate quote or to use our online mortgage calculator. Or, reach out to us if you are ready to get pre-approved for a mortgage.
Common signs include not making enough to comfortably handle the full cost of ownership, not having stable employment yet, having a low credit score, carrying too much debt, lacking enough savings, viewing a primary residence mainly as an investment, and not being sure where you want to live long term.
A buyer is usually more ready when income feels stable, monthly housing costs fit the budget, debt is manageable, savings are in place for the down payment and reserves, credit is in better shape, and long-term location plans are reasonably clear.
A recent job change does not automatically prevent a home purchase, but it can be a sign to slow down if income is still changing or the new role does not yet feel stable. It is wise to wait until earnings feel predictable and easy to document.
The article notes that a score of 620 or lower can make borrowing more expensive and may limit mortgage options. Even when approval is possible, higher fees and interest rates can cost thousands over the life of the loan.
Too much debt is any amount that leaves little room for a mortgage payment and the other costs of homeownership. The article points to the idea that housing costs should not exceed about 30% of income and explains that reducing personal debt can make a buyer more competitive.
Savings should cover more than just the down payment. Many lenders want cash reserves after closing, and the article gives a common example of two months of mortgage payments. It also recommends keeping personal savings for maintenance, repairs, emergencies, and other unexpected costs.
Yes. The full cost of ownership can include property taxes, homeowners insurance, possible HOA dues, utilities, routine maintenance, larger repairs, and transportation or commute costs. Affordability should be based on the total cost, not just principal and interest.
If you are unsure where you want to live or whether you will stay in Washington long term, waiting may make sense. Buying a home is a major commitment, and uncertain location plans can be a sign that you are not ready yet.
Preapproval and readiness are not always the same thing. A buyer may technically qualify for a mortgage and still not be financially prepared for the ongoing costs, reserves, repair risks, and responsibilities that come with owning a home.
Major red flags include stretching your income too far, buying before employment is stable, applying with weak credit, carrying too much debt, having too little savings, treating a primary residence like a guaranteed investment, and choosing to buy before deciding on a long-term location.
Our loan officers are ready and waiting to help you apply for your home loan.
Learn more about the people behind Sammamish Mortgage
Whether you’re buying a home or ready to refinance, our professionals can help.
Mortgage Support — 24/7
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.
Adjust the parameters based on what you want to track
