Purchasing or refinancing a home can be complex, especially if you’re unfamiliar with the process or unsure how the local housing market is performing. According to the online real estate database Zillow, the median value of Washington homes stands at around $377,100, which is an 8.1 percent increase over the previous year.
Zillow rates Washington’s housing market as “very healthy,” earning an impressive 9.4 out of 10 on the company’s Market Health Index. Washington state is holding firm at $395,000 compared to the national median list price of $275,000.
National interest rates have a significant impact on Washington’s mortgage and refinancing rates, but local economic factors also play an important role. Among the variety of contributing factors, competition among lenders has a noticeable effect on the market as a whole.
We’ll explore this and other important mortgage components in detail and offer advice to help Washington homebuyers stay ahead of the curve.
Mortgage Rates in Washington
Mortgage Rate Factors in Washington
To secure the best mortgage and refinance rates in WA, it’s crucial to understand how lenders determine loan rates. Each rate is tailored to the specific financial standing of the borrower, but there are some important elements all lenders take into account:
Credit Score and History
Credit information serves as a baseline to judge whether a borrower will be able to make monthly payments on time over the loan term. When calculating mortgage and refinance rates, lenders will always take into account the borrower’s overall credit score and credit history.
Borrowers with high credit scores and lengthier credit histories are typically able to negotiate better rates and have more loan options. Buyers with low credit scores and shorter credit histories may be considered high risk, which can result in higher rates or fewer options.
While it will be harder to qualify for a mortgage if your credit score is low, you may be able to negotiate a favorable price with the right lender.
Loan Type and Term
Mortgage rates are also influenced by the loan type and term. Every lending institution offers, each with its own eligibility requirements. For certain borrowers, fixed- and adjustable-rate mortgages can have less strict qualification requirements, but interest rates will vary significantly between lenders.
In contrast, government-backed options like USDA, FHA, and VA loans offer consistently low rates but have very particular qualification requirements. It’s important to note that each loan type comes with different term options, some offering more flexibility than others.
Loans with shorter terms have lower interest rates, but the monthly payments will be higher than loans with longer terms. The perfect mortgage for your individual needs will largely depend on your income and savings, so be sure to review your finances before negotiating rates.
Type of Interest Rate
While are a variety of loan types available, there are only two main kinds of interest rates: fixed and adjustable. Fixed interest rates remain the same throughout the life of the loan, so interest accrues at the same steady rate each month. These rates do not fluctuate over time, offering long-term stability and protection against market fluctuations.
Adjustable-rate mortgages (ARMs), on the other hand, have rates that can fluctuate over the term of the loan, making them a riskier investment for borrowers with limited income. Many borrowers are attracted to this option due to the low introductory rates offered by lenders, which will remain fixed for a set period before the variability kicks in.
Type of Refinance
Since mortgage rates fluctuate over time, some borrowers may benefit from refinancing their original mortgage to obtain a better rate and pay less toward overall loan costs. If you currently hold a mortgage with a higher interest rate than the market average, refinancing can help you pay less in interest and more toward the principal loan balance.
Rate and term refinance is currently the most popular option, as it pays off and replaces an original mortgage with one featuring a more suitable loan rate and term.
Considering these critical elements will help you prepare for the long list of questions lenders will ask during the mortgage application process. The best way to secure a good mortgage or refinancing rate is to collect as much information as possible to make an informed decision. But how do you go from being well informed to taking decisive action?
How to Get the Best Mortgage Rates in Washington
No matter where you live, landing the best mortgage or refinancing rate will boil down to research and preparation. For homebuyers in Washington, negotiating with multiple lenders is the best way to find the most suitable loan offer.
A study conducted by the Consumer Financial Protection Bureau (CFPB) found that nearly half of all mortgage borrowers don’t shop around for competitive mortgage rates when they buy a home.
This finding underlines the importance of comparative shopping, as interest rate negotiations can run much more smoothly with the right information and a good range of options to fall back on. Since every borrower has unique financial needs, the perfect mortgage will differ based on their savings and income.
If you’re looking to lock-in an affordable mortgage or refinancing rate in Washington state, consider these important steps:
Determine Your Eligibility
The first step to securing a favorable mortgage rate is to understand the scope of your finances and the range of loan options you qualify for. A good place to start is to determine whether you’re eligible for government-backed mortgages like USDA, FHA, and VA loans.
These loans have consistent eligibility requirements across lending institutions, whereas conventional mortgages (like conventional fixed-rate and ARM loans) tend to vary between lenders. You’ll also want to review your credit history and score to confirm you meet the minimum requirements.
Borrowers with high credit scores have an easier time qualifying for mortgages and negotiating rates, so if your credit score is low your options may be limited.
Compare your Loan Options
Once you’ve narrowed down your options, the next step should be to weigh the advantages and limitations of each loan type you qualify for. Try to align your income and long-term goals with the specifications of the different loan types, as each will afford different benefits and pose particular drawbacks.
Also, remember that taking on too much in monthly payments could put your finances at risk. If your savings are tight, a longer loan term might be the best option to reduce your monthly payments.
For homebuyers unsure about their long-term property plans, an adjustable-rate mortgage may provide increased mobility. In short, the mortgage you choose should support your lifestyle, not limit your choices
Negotiate with Multiple Lenders
The more you know about local lenders and their available loan options, the better prepared you’ll be for the mortgage application process. Comparative shopping can maximize your chances of a favorable outcome and help you avoid inflated interest rates.
Speaking with loan officers from different lending institutions can lead to finding a bank that considers you an ideal applicant and will offer you the most competitive rate for your financial profile. After you’ve narrowed down your choices, be sure to ask each lender about any extra perks and benefits they may offer, like reducing closing costs or back-end fees.
If you want to learn more, check out some of them that can help you get the best mortgage or refinancing rates in Washington.
Recommended Companies in Washington
With so many options on the table, starting your search for the best mortgage and refinancing rates can be intimidating. Don’t be afraid to contact multiple lenders with your list at the ready, as asking questions is always commitment-free. To help you shop around, here are some of the top mortgage lenders in Washington:
- Rocket Mortgage: J.D. Power’s Primary Mortgage Origination Customer Satisfaction list has had this lender ranked near the top for eight consecutive years. Rocket Mortgage provides borrowers with accurate and competitive mortgage rates, while also boasting one of the quickest application processes on the market.
- New American Funding: Unlike many mortgage providers, this lender consistently works with borrowers who have low credit scores and patchy credit histories. They’re considered one of the best options for home buyers with credit scores as low as 620.
- Quicken Loans: One of the most popular lending institutions nationwide, this lender provides a 90-Day rate protection service that guarantees borrowers won’t be surprised by last-minute rate hikes. Quicken Loans is considered one of the best options for first-time homebuyers.
- Better Mortgage: This online mortgage provider offers low mortgage rates backed by a 24/7 customer service model. Borrowers can get quick quotes any time and on any device, making Better Mortgage a popular choice for young homebuyers.
- CrossCountry Mortgage: This FHA Approved Lending Institution offers a wide range of mortgage options with a unique customer-centric service approach. In addition to conventional mortgages, CrossCountry also provides government-backed options like VA and USDA loans.