Want to buy a home in the Evergreen State soon? If so, you probably have plenty of questions about the home buying process, including how to select the best mortgage and lender. We’ve broken down everything you need to know about current mortgage rates, factors that go into determining your rate, and how to select the best mortgage lender to help streamline the buying process.
Best Mortgage Lenders in Washington
Now that you know more about different mortgage types, mortgage rates and average costs in the state, you’re ready to look for the right mortgage lender. To help you get started, we’ve listed the top lenders in the Evergreen State.
What is a Mortgage Rate?
Once you’re ready to select a mortgage, you’ll want to understand how mortgage rates work. Your mortgage rate is the percentage of interest you’ll be responsible for paying over the duration of your loan. In general, you want to lock in a lower mortgage rate to avoid paying a high amount of interest.
Let’s say you take out a $250,000 mortgage at 4.5% interest. You’ll need to pay back not only the principal ($250,000) but also the 4.5% interest rate. The length of your mortgage will also determine how much interest you pay.
Now that you understand the basics of mortgage rates, let’s look at other factors that affect your mortgage rate.
What Factors Impact Your Mortgage Rate?
Many different factors can impact the mortgage rate you’re offered. Here are some of the most common:
- Credit score: Your credit history and score will play a large role in setting your mortgage rate. Lenders look at your credit score to figure out how you pay off debt. Higher scores typically indicate you pay off your debt on time, which leads to lower mortgage rates. You’ll want to check your score to understand where you fall before applying for a mortgage.
- Loan-to-value ratio: Your loan-to-value (LTV) ratio shows lenders how much you plan on borrowing versus the value of your home. A high LTV is a red flag, indicating your loan might be riskier. The lower your LTV, the lower your mortgage rate is likely to be.
- For instance, if your home value is $200,000 and you put down $20,000, your mortgage value would be $180,000. Your LTV would be 90% ($180,000 / $200,000). If you put down only $10,000 on the same home, your LTV would be higher at 95% ($190,000 / $200,000).
- Lender: Your lender plays a large role in determining your mortgage rate. Some lenders might advertise low rates, but may have high credit score and down payment criteria. You can capture the best rate by comparing mortgage lenders’ rates.
- Location: Where your home is located also impacts your mortgage rate. Your local housing market’s health sets the tone for whether mortgage rates are high or low. If your market is weaker, you should expect higher rates. The market is hot in Washington, with home values on the rise. That means you’re more likely to lock in lower rates.
- Mortgage type and term: There are many types of mortgages. The type you choose can impact your rate. Some first time homebuyer mortgages have lower rates than other options, for instance. Your term or mortgage length also determines whether your mortgage rate will be low or high.
Let’s take a closer look at how mortgage types can affect your rate.
What is a Mortgage Type?
Before committing to the first mortgage you’re approved for, you’ll want to understand the different options available in Washington. Learn more about Conventional, FHA, USDA and VA loans below.
- Conventional: This mortgage type is funded through major financial institutions, like banks or credit unions. They tend to have higher mortgage rates than other types because they’re considered riskier loans. However, conventional loans often have more flexible eligibility requirements.
- FHA: This mortgage type is funded through the Federal Housing Administration and backed by the federal government. FHA loans are great for first-time homebuyers since they offer low rates and low down payment terms (as low as 3%). Credit score requirements are also low (as low as 580), but you’ll need to purchase mortgage insurance if you put less than 20% down on your home.
- USDA: This mortgage type is funded through the U.S. Department of Agriculture for homes that are located in designated rural parts of the country. You can find out if your home qualified for this type of mortgage online. USDA loans offer no down payment options and more flexible credit requirements.
- VA: This mortgage type is funded through the Department of Veterans Affairs to help former or current military personnel and their families afford home financing. VA mortgages are available through private and conventional lenders and offer no down payment options and low mortgage rates. You also won’t have to worry about paying for mortgage insurance, though you’ll have to pay about a 1% origination fee.
What is a Mortgage Term?
Your mortgage term is the length of your home loan and can impact your mortgage rate. We’ll look at 3 common mortgage terms to help you understand how they might affect your rate.
- 30-year fixed: This common mortgage term means you’ll pay a fixed rate for 30 years. Since your term is more spread out, you can expect smaller monthly payments, but a higher interest rate. You’ll end up paying the highest amount of interest with this loan than with other shorter-term fixed mortgages.
- 15-year fixed: This is the second most common mortgage term, allowing you to pay a fixed rate for 15 years. While your rate will be lower than with a 30-year fixed mortgage, you’ll ultimately pay less interest, since you’re paying over half the amount of time.
- 5/1 ARM: Adjustable-rate mortgages are mortgage types that don’t have a fixed rate. The 5/1 ARM is one of the most common, locking in your introductory rate for 5 years. After that, the rate will fluctuate based on the local market. You’ll often end up paying the most amount of interest with this mortgage but might choose this type if you plan on selling after 5 years.
Current Mortgage Rates in Washington
Below you’ll find the current mortgage rates in Washington. Keep in mind, the housing market fluctuates from month to month, so Benzinga constantly looks at the local market trends to bring you the most updated information.
Calculating Interest in Washington
Although your specific mortgage rate depends on the factors mentioned above, looking at average rates can help you set financial expectations. Benzinga has compiled the average home values and mortgage rates for Washington to help you better calculate how much interest you can expect to pay on your home.
|City||Average Home Value||Loan Term||Current Rate||Downpayment (20%)||Monthly Payment||Total Interest Paid|
Lender Credit Score Minimums in Washington
You’ll want to know your credit score to help you determine your pre-approval chances. Your credit score will also help you gauge your anticipated mortgage rate. Here’s a list of the minimum credit score requirements from a few top Washington mortgage lenders.
Get the Best Rates in Washington
When buying a home, you’ll need to understand how the local market, your credit score and your spending habits affect your mortgage rate. To increase your chances of scoring a low rate, work on improving your credit or saving for a larger down payment.
Be sure to talk to your real estate agent to help weigh your mortgage options before committing to a lender. You can also start by using Benzinga’s database to get a personalized purchase quote or refinance quote for your Washington home.
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