Are you thinking about moving to the beautiful city of Seattle this year? Seattle is known for its gorgeous nature, amazing job opportunities, and high quality of life- so it’s no surprise that nearly 1,000 people move to Seattle every week! The population of Seattle is 737,015, which is a 21% increase in the past decade! The median household income in Seattle is $105,391, which is much higher than the national average of $69,021. You’ll need the extra income when living in Seattle, as the cost of living is 67.8% higher than the national average and 45.9% higher than the Washington average.
If you are interested in buying a home in Seattle, then you need to know what you are getting into beforehand. The Seattle real estate market is very competitive. Due to a large number of people moving to Seattle every year, housing prices are high. During the pandemic, housing prices soared, but more recently, they have started to go down. In fact, the Seattle housing market is cooling down faster than any other U.S. city.
The home buying process can be intimidating and overwhelming at first, especially if you are doing it for the first time! However, if you take the time to perform the proper research, you can be living in your dream home in no time! Here’s everything you need to know about buying a house in Seattle.
The Steps to Buying a House in Seattle
Whether you are a seasoned expert or a first time home buyer in Seattle, there are a few things you need to keep an eye on. The real estate market is constantly changing, and therefore the process of buying a home is slightly different every year in every city. Here’s a step-by-step guide to buying a house in Seattle.
How Much Does It Cost to Buy a House in Seattle?
Buying a home is a serious commitment, so getting your finances in order is the first step you should take. When buying a home in Seattle, you not only need to consider mortgage, property taxes, and homeowner’s insurance but also day-to-day expenses such as food, health care, gas, and utilities.
To begin planning your budget, you first need to determine your gross income as well as your monthly debt payments. When applying for a mortgage, most lenders require you to have a debt-to-income ratio of 36% or lower. Your debt-to-income ratio is the percentage of your income that you will spend on your mortgage. Your homeowner’s insurance, property taxes, HOA fees, and interest are included in your final mortgage payment amount.
An easy way to determine what you are able to afford is to use an affordability calculator. Assuming you have the Seattle average household income of $105,391 along with a monthly debt of $500 and a down payment of $20,000, the affordability calculator reports that you can afford a house of up to $340,480. This comes out to $2,649 per month. Of course, if you have a higher household income or a lower amount of debt, you can afford a more expensive house.
Remember that on top of this, you need to also consider the average cost of living apart from housing. The Cost of Living Index in Seattle is 167.8. This means that Seattle is 67.8% more expensive than the national average of 100. Day-to-day living in Seattle is expensive, so it is important to make sure that you have money to spare after purchasing a house in the area.
After buying a house in Seattle, you can expect to pay an average monthly utility bill of $249.99, an average closing cost between 2% to 5% of your purchase price, and an average HOA fee of $360.
When living in Seattle, you will have to pay property taxes each year. Because the city of Seattle does not collect or assess property taxes, the property tax rate is determined by King County and is based on the location and assessed value of your home. In 2022, property taxes in Seattle ranged anywhere from $1,800 to $32,000, depending on location.
What Is the Average Home Price in Seattle?
The Seattle WA median home price is $760,000, which is up 4.1% compared to last year. The market is cooling down, however, as homes are sitting on the market for an average of 43 days compared to 19 last year. There were 366 homes sold in Seattle in January 2023, compared to 640 in January of 2022. So, while prices remain high, the market is not quite as competitive and is slowing down from a major boom in recent years.
Wondering where you should buy a home in Seattle? Some of the most affordable areas in Seattle include SeaTac (median home price of $616,500), Mountlake Terrace (median home price of $604,500), and Bremerton (median home price of $435,000). A few of the most expensive areas include Montlake (median home price of $1.72 million), Broadmoor (median home price of $3 million), and Harrison (median home price of $2.95 million).
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Find the Right Mortgage and Get Pre Approved
Once you have determined a budget, then it’s time to qualify and get pre-approved for a mortgage. Getting pre-approved for a mortgage lets the seller know that you are serious about purchasing a home and makes your offer more likely to get accepted.
Some of the most common types of loan types include:
- Conventional: Loan that is not insured or guaranteed by the government.
- Fixed-Rate: Loan with a specific interest rate for the entire term of the loan.
- Adjustable Rate: Loan with interest rate that adjusts over time based on the market.
Getting pre-approved for a loan depends on a variety of factors:
- Credit score: Your credit score determines your ability to get a loan as well as the interest rate on your loan.
- Estimated down payment: The higher the down payment, the better. Most lenders in Seattle require at least a 20% of the purchase price for a down payment.
- Mortgage payment: Lenders will look at your income and assets to determine the amount you can afford to pay back.
- 28/36 rule: This rule states that your total housing costs should not exceed 28% of your gross monthly income and your total debt payments should not exceed 36%.
The best time to get pre-approved for a mortgage is at least one year before you decide to purchase, so it is important to get everything sorted out as early as possible.
Seattle First Time Homebuyer Programs
Are you looking to buy a house in Seattle, WA as a first-time homeowner? A first-time homebuyer program can make the purchase of your home more affordable. Here are a few of the most popular programs:
- Office of Housing Program: Provides downpayment assistance to first-time homebuyers at or below 80% of area median income.
- Seattle Downpayment Assistance Loan Program: A second mortgage loan program that allows up to $55,000 in downpayment assistance with payments deferred for 30 years at a 3% interest rate.
To be eligible for the latter program, your household income must not exceed these limits:
Find a Seattle Real Estate Agent
Working with a Seattle real estate agent is the best way to find a home that suits your needs. A real estate agent in Seattle can show you homes, negotiate with the sellers, and give you expert advice throughout the buying process. We recommend that you work with a buyer’s agent rather than a listing agent as buyer agents are legally bound to help you as the buyer get the best deal. Listing agents represent the home listing and may not always have your best interest in mind.
To choose the best Seattle real estate agent, you should interview them to make sure they are a good fit for you and your home buying needs.
Go Seattle House Hunting
House hunting in Seattle is where all of the fun begins! Make a list of the features you want your home to include. Some factors to consider include schools, location, size of home, style of home, and proximity to downtown. You should also decide whether you are on the hunt for an older or newer home. By creating this list, you can narrow down your search to certain areas. This can also help your buyer’s agent get a better idea of where to look.
Check out these guides to help Seattle home buyers decide where to settle down:
- Safest Neighborhoods in Seattle
- Richest Neighborhoods in Seattle
- Most Affordable Seattle Suburbs
- Seattle, WA Crime Rate
There’s something for everyone in Seattle! There are many beautiful, affordable, and safe neighborhoods to plant your roots.
Submit an Offer!
After you have decided on a home in Seattle, it’s time to make your offer. Your buyer’s agent can help you to put together an application that will stand out to the seller. Your agent will also help you decide on a competitive offer price. It is important to remember that 14.5% of Seattle homes sell for above the list price, so you may not want to start off with your best offer.
More often than not, a seller will make a counter offer asking for a higher price or fewer contingencies. After you negotiate with the seller and get on the same page, it’s time to go under contract. Before the last day of escrow, you must complete an inspection and get an appraisal done. This ensures that if something was not disclosed by the buyer, then you get an opportunity to retract your offer.
If the inspection and appraisal is completed successfully, then you are ready to close the deal!
Close on Your New Seattle Home!
There are a few things to take care of before you close. Based on the inspection and appraisal, the lender will have to approve everything one final time. You will also have to go through underwriting to finalize your mortgage. You may also want to do a final walkthrough with the real estate agent to ensure everything is up to your standards. After these tasks are complete, then you are ready to sign the closing documents and get access to your new home! The closing process can take anywhere from 60-90 days, so be prepared to wait a few months.
Congratulations on buying a home in Seattle! Now that you have your new home, you need to decide how you are going to transport your belongings. All Ready Moving is the best Seattle Moving Company in the area. We can help with any and all of your packing, transportation, and storage needs. Give us a call today at (360) 507-2447 to discuss your moving needs and receive a free quote.