How to Buy a House in Washington: A Homebuyer’s Guide

Contribution by 1 expert

Updated: November 3, 2023

Advertising & Editorial Disclosure

According to Zillow, the average value of a house in Washington is around $610K, which is much higher than the national average. The average value of houses across the U.S. is roughly $358K, so purchasing a house in Washington is more expensive than in most states. The value of homes in Washington has gone up by 11% over the past year.

The small towns of Roslyn and Malaga are the cheapest places to buy a house in Washington, with average home values of $467,250 and $492,476, respectively. The affordability of a house is based on what you’re looking for in a home and how much you’re willing to spend. It’s important to understand the homebuying process to prevent being buried in debt from mortgage loans.

Key Takeaways

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The average cost of a home in Washington is quite expensive at $610K.

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Depending on the type of mortgage loan you're applying for, you may be required to meet specific requirements for credit scores, income, employment, etc.

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You need to start by finding the best place to buy a house in Washington for your budget and needs. Then, you can apply for a loan, make the down payment, perform a home inspection and close the loan.

Choose an Ideal Location

In the course of your research, you’ll probably consider the famous phrase “location, location, location” at least once. The property’s location has a big impact on the cost of a real estate transaction. In addition to costs, you should also factor in the culture of the community, accessibility to amenities and activities and other elements that affect your quality of life.

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WORK WITH A REAL ESTATE AGENT

A real estate agent can be incredibly helpful as you navigate the process of buying a home in Washington. They provide plentiful information about the property without requiring you to put in the extra legwork. They can also show you houses that fit your taste based on their assessment. The traits to look for in a real estate agent are:

  • Honesty: An honest real estate agent discloses even the downsides of a house.
  • Reliability: Your agent should know how to manage their time, meet their obligations and stay true to their word.
  • Knowledge of the area: You want to choose an agent that knows the fine details of real estate values and transactions in Washington.
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CALCULATE THE COST OF LIVING

Your cost of living depends on your location. Here are a few regular expenses that could affect your budget:

  • Groceries
  • Rent or mortgage
  • Education
  • Transportation
  • Utilities (electricity, water, internet)
  • Income and property taxes
  • Car and health insurance

Keep in mind that these costs, as well as the cost of homes, can vary considerably between locations in the same state. MoneyGeek’s cost of living calculator provides you with your potential budget in your chosen city in Washington.

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CONSIDER AFFORDABLE NEIGHBORHOODS

Real estate properties are significantly more expensive than the national average in Washington. If it’s a bit out of your budget, you can look for more affordable areas within this state. Suburbs and rural areas tend to have cheaper homes and a lower overall cost of living.

Your money goes farther when you’re living in cheaper neighborhoods. On the downside, important establishments, like hospitals and schools, may be far from your house. Make sure the trade-off of reduced access to amenities is worth it for you.

Calculate Mortgage Rates

Homebuyers can pick from a range of mortgage lending choices, including conventional, VA, USDA and FHA loans. The prices, terms and eligibility requirements of these loans vary. It's crucial to consider the benefits, drawbacks and overall prices of these loans before starting the application process.

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SEE YOUR MORTGAGE OPTIONS

Every loan has unique rates that are largely based on the borrower's profile. If you satisfactorily meet the lender’s requirements, you’re more likely to receive favorable rates. For instance, an individual with a good credit score may be qualified for lower rates and larger loan amounts than one with a poor credit score.

Currently, the average mortgage interest rates for each type of common mortgage loan are:

Some of these loans are only accessible to those who meet the lender’s specific eligibility requirements. VA loans, for example, are only for veterans and active military personnel.

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USE A MORTGAGE CALCULATOR

By calculating mortgage rates, you can plan your expenses better while you’re paying off your mortgage loan. It also gives you an idea of what your finances will be like in the next few years. This will help give you a holistic view of your financial situation and determine if you can afford the loan.

You can check your potential monthly payments using MoneyGeek’s mortgage calculator. If you’re choosing between an FHA loan or a conventional loan, you can take a look at your possible expenses using MoneyGeek’s FHA vs. conventional loan calculator.

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KNOW YOUR QUALIFICATIONS

A borrower’s profile is a significant factor that influences loan rates, terms, amounts and other pertinent details. Because of this, every person’s mortgage loan may have different rates and terms. Lenders consider these factors when approving loan applications:

  • Credit score: Your credit score, which is based on variables such as your payment history, regularity and amount of outstanding debt, reflects your level of financial responsibility.
  • Debt-to-income (DTI) ratio: It measures how much of your gross monthly income goes toward paying down your debts each month. A low DTI ratio suggests that you have the financial means to pay off your debt.
  • Down payment: A higher down payment results in a cheaper interest rate, reducing the cost of your loan.
  • Income: The higher your income, the more likely you are to repay the loan successfully.

Prepare Down Payment Requirements

A down payment is the amount you spend out of pocket before buying a house. The amount you put down significantly affects the interest rate and total cost of your loan. The typical down payment is 20%, although your down payment requirements may vary depending on your mortgage loan.

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DETERMINE DOWN PAYMENT REQUIREMENTS

Your mortgage loan type determines how much you need to put down on your home. For conventional loans, a 20% down payment is standard. However, you can pay less than 20% if you buy private mortgage insurance (PMI).

However, some mortgage types, such as VA home loans, don’t need a down payment. Therefore, it all boils down to your lender, chosen loan type and creditworthiness.

Higher down payments can give you lower interest rates. When you have lower rates, your monthly payments and your loan's overall cost will be less expensive.

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CALCULATE MORTGAGE INSURANCE

Private mortgage insurance (PMI) reduces the risk for lenders in case a borrower stops paying their loans or dies, among other contingencies. The primary purpose of this kind of insurance is to protect the lender.

Borrowers who put down less than 20% of the purchase price on a conventional loan must buy PMI. For FHA loans, you must pay an upfront mortgage insurance premium, but PMI is not required. Similarly, USDA loans don’t necessitate PMI but do require you to pay a guarantee fee with your monthly payments.

Finally, VA loans do not require mortgage insurance.

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DOWN PAYMENT ASSISTANCE PROGRAMS

You might be able to get aid for your down payment in Washington. The government has initiatives to help those who want to purchase a house, especially first-time homebuyers. Take a look at the available programs for down payment assistance in this state.

  • Home Advantage: This program from the Washington State Housing Finance Commission (WSHFC) helps people qualify for good interest rates on home loans and also provides up to 4% down payment assistance.
  • Opportunity: The WSHFC also offers this second mortgage loan program that provides up to $15,000 in down payment assistance with a 1% interest rate, deferred for 30 years. In addition, veterans can qualify with no financial assessment.

Get Pre-Approved for a Mortgage

Borrowers can determine their creditworthiness for a mortgage loan through prequalification and pre-approval. Your basic financial information will be required for prequalification, although it might not be as extensive as a pre-approval, which is a much more in-depth assessment of your financial capabilities.

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GATHER NECESSARY DOCUMENTS

The pre-approval procedure will go more quickly and easily if you’ve already prepared your documents. Lenders typically want proof of your name, address and income. As a result, they may require you to submit these supporting documents:

  • Tax returns
  • W-2 forms
  • Pay stubs
  • Bank account statements
  • Investment statements
  • Driver's license
  • Social Security number

Keep in mind that your lender might require additional information beyond the listed items. For instance, self-employed individuals will likely need to submit documents detailing their income, profit, loss, accounts receivable and more. This is because self-employed people can have less steady and predictable income.

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TIME YOUR PRE-APPROVAL

Your pre-approval is a crucial step in the process. It verifies your creditworthiness and informs lenders that you’re a good candidate for a loan. However, it doesn’t guarantee that you will be approved for a mortgage.

Pre-approval requires proof of your identification and credit history. Your pre-approval letter will typically be available within 10 business days of submitting these documents. In most cases, this letter is good for up to 90 days.

During this period, you can use the letter as a supporting document when viewing and making offers on homes. This letter indicates the maximum loan amount that you can borrow, helping you make an appealing offer on a house.

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RECEIVE PRE-APPROVAL LETTER

A pre-approval letter will specify your maximum loan amount. It indicates that a lender has looked through your credit record and determined that you may move forward with your loan application. As a result, sellers may deem you to be a serious and trustworthy buyer.

The duration of the pre-approval letter means that you should find a house within this period. The letter has a 90-day maximum validity period, although some pre-approvals are only valid for up to 60 days. If you need more time to shop for a house, you can seek a renewal. You can be pre-approved by multiple lenders, but they can conduct a hard credit check which can negatively affect your credit score.

Conduct a Home Inspection

To guarantee that your new home is safe and that there are no hidden damages within it, a home inspection is necessary. Through a home inspection, you can evaluate the house’s structure, plumbing, mechanical systems and much more. This helps ensure that you won’t encounter unexpected problems in your home after you buy it.

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CONTACT A LICENSED INSPECTOR

A regular person could miss some issues when checking the house. A licensed home inspector can conduct a thorough check of the entire house for any potential problems. The parts of the house that need to be inspected include the following:

  • Roof
  • Exterior
  • Basement, foundation and crawlspace
  • Heating
  • Cooling
  • Plumbing
  • Electrical
  • Fireplace
  • Attic, insulation and ventilation
  • Doors, windows and interiors

By conducting a proper home inspection, you can set aside your worries about the home’s safety. Hiring a licensed home inspector can assure you that the house is free from significant flaws that can lead to further problems after you move in.

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FOLLOW WASHINGTON-SPECIFIC INSPECTIONS

Typically, you aren’t legally required to conduct a home inspection before buying a house in Washington. However, it’s a smart move to have one since it can expose hidden problems in the house. Some lenders might also ask for a house inspection as part of the application process.

In Washington, home inspectors have to follow certain guidelines to receive their licenses and maintain them. They need to have 40 hours of field training and experience, take exams and complete at least 120 hours of education courses. They also need to renew their licenses every other year. Therefore, hiring a licensed home inspector gives you the assurance that your home is thoroughly checked by a professional.

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GO THROUGH APPRAISAL

Home appraisal and home inspection are two different things. In short, an appraiser is concerned with the market value of the house, while an inspector focuses on the home’s safety.

The value of the home in relation to its current condition is important in appraisals. Appraisers also take into account the cost of homes on the local market as well as the current cost of building a similar house.

Mortgage lenders will always require a home appraisal to make sure the home is worth as much as the buyer wants to borrow. If the appraisal comes in low, the transaction may encounter delays. The lender can even cancel the transaction if there is too much of a difference in prices.

Close Your Mortgage Loan

When you reach this step, it means you’re one step closer to becoming a homeowner. Closing your mortgage involves a lot of paperwork and more expenses. Before signing forms, contracts and other documents, carefully read the terms and go over the details. Since closing costs involve several fees, make sure to account for them in your budget.

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SIGN ALL DOCUMENTS

You need to prepare and sign a bunch of documents. Have the following documents ready when closing your mortgage loan:

  • Deed of trust
  • Property deed
  • Closing disclosure
  • Promissory note
  • Proof of wire transfer or a cashier’s check

Processing this paperwork in advance can save you time, effort and headaches when closing your mortgage loan. More importantly, check the details of every document that you sign. This will prevent unwanted issues in the future. It’s best to make sure that you don’t overlook anything — not even the tiniest detail of the agreement.

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PAY CLOSING COSTS

Closing costs are normally between 2% and 6% of the price of your home, although these rates can vary. Some of these expenses you can expect when you close your mortgage loan include:

  • Credit report fee: This covers the expenses for the lender to pull your credit report.
  • Discount points: You can buy upfront discount points to lower your mortgage interest rate.
  • Prepaid interest: You will owe interest accrued between the closing date and the end of the month.
  • Appraisal fee: This is the amount you will pay to have an appraiser assess the home.
  • Origination fee: You may need to pay this fee to the lender in exchange for having them set up your mortgage.
  • Third-party fees: These can include legal fees, specialty inspection charges, recording fees, title insurance premiums and more, depending on the specifics of your transaction.
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COMPLETE YOUR HOME PURCHASE

Before moving into your new home, you must finish the entire process of closing your mortgage loan. Important documents need to be submitted to your lender, and several costs need to be covered.

Taking out a mortgage loan is a long-term commitment, and your obligations don't end when you get the money. You are required to pay back your debts on a monthly basis during the loan period. Therefore, it’s important to take the necessary steps to manage your finances.

You also need to maintain your home, a process that will always require at least a little bit of your time and attention. It’s a good idea to save some money for unexpected repairs and maintenance expenses.

Washington Homebuying Details

There are a lot of similarities with the homebuying process in all the states. However, some intricacies may be present in every state. These details can help you decide if you want to purchase a house in Washington.

1
Dual agency

A single real estate agent can act as both the buyer and the seller's representative. In Washington, as long as both the buyer and the seller have written authorization, it is entirely lawful.

2
Seller's disclosure

A seller must include a property disclosure statement that details the house's issues as well as its construction, improvements and additions.

3
Property taxes

The effective property tax rate in Washington is 0.94%. You need to pay your property tax every year. Upon buying the house, your tax will be calculated from the date of the mortgage loan closing up to the end of the tax year.

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Natural factors

Certain natural phenomena may be common in Washington. For example, the state spends a significant amount of money on flood management and damage control. The Department of Ecology has estimated that there can be more than 10 flood events in a year in Washington.

Frequently Asked Questions About Buying a Home in Washington

MoneyGeek answered commonly asked questions about purchasing a house in this state. Our answers may give you more information on how to buy a home in Washington. These can help you have a better understanding of the state's property costs and how this purchase may affect your budget.

What are the most important questions to ask when buying a house in Washington?
Is buying a house in Washington a good idea?
Is it wise to buy a house in Washington in 2023?
How much income do I need to buy a house in Washington?
How much is property tax in Washington?
Which Washington city is the cheapest to buy a home?

Experts' Advice About Buying a Home in Washington

  1. What are the key factors to consider when buying a house in Washington?
  2. What are some common mistakes that home buyers make when trying to purchase a property in Washington, and how can they avoid these pitfalls?
  3. Are there any programs available to help first-time home buyers in Washington?
Robert Van Order, Ph.D.
Robert Van Order, Ph.D.Professor of Finance & Economics at George Washington University - School of Business
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