Seattle Mortgage Rates

Living in Seattle

Seattle is home to some of Washington state’s most iconic landmarks. From the breathtaking views provided by the Space Needle to the hustle and bustle of Pike Place Market, there’s no shortage of iconic experiences available to residents and visitors alike.

It’s also a smart place to buy a home. Unlike some other places around the country, Seattle is beginning to show signs of leaning toward a buyers’ market, according to a report from the Northwest Multiple Listing Service. On the one hand, the total number of active listings in Seattle has risen a whopping 68.86% year-over-year, jumping to 2,104 in June 2019, from 1,246, meaning buyers have more choice.

On the other hand, the median home price in Seattle has fallen 1.36% from $740,000 to $729,900 over the last year, which indicates sellers may have to be a little more flexible when it comes to negotiating on sales price.

The rules and costs of buying a home in Seattle

There are a variety of rules that regulate the real estate market in Washington state ⁠— and by extension, Seattle. We’ve laid out some of the most prominent ones below.

Home seller and buyer laws

Unless a property meets certain exceptions, such as being a foreclosure or having the deed transferred between family members, sellers are required to fill out a specific disclosure form. The form informs about potential problems with the home’s title, as well as deficits to its water and sewer systems or structure. It also covers known environmental issues or deficits with the homeowners association, if applicable.

Under Washington state law, a property may be foreclosed on judicially, with the court’s involvement, or non-judicially, outside of the court’s involvement, depending on whether or not a “power of sale” clause was included in the mortgage or deed of trust. If the clause is present, it may be foreclosed upon non-judicially. Otherwise, it must go through a judicial process. Deficiency judgements, where the bank can sue you to recoup their losses after a foreclosure, are allowed after judicial processes, but not after non-judicial ones.

Unlike most states, Washington is what is commonly described as a community property state. This means all assets and debts acquired during a marriage — including any real estate property — must be split 50/50 in the event of a divorce or annulment, regardless of whose name is on the title. However, any assets or debts acquired before or after the marriage remain separate.

Finally, Washington is also an escrow state, meaning state law doesn’t require buyers to hire an attorney to close on a home. Instead, buyers are allowed to use a representative from an escrow or title company.

Taxes

When property changes hands, most states — and many municipalities — collect a real estate transfer tax. In Washington, the state collects a tax based on the property’s sale price that is calculated at the rate of 1.28%. King County, where Seattle is located, charges an additional rate of 0.25-0.5% for a total combined tax of 1.53-1.78%. This means the sale of a $250,000 home would require payment between $3,825 and $4,450 in total transfer tax, depending on the where you live.

Once you own the home, King County charges 0.88% of the property’s value in taxes per year, according to Tax-Rates.org. This comes out to $6,423 in taxes on a home worth the median value of $729,900. At that rate, King County has one of the highest median property tax rates in the country.

If paying those property taxes is an issue, there are certain exemptions available for senior citizens, veterans and people with disabilities. You can check your eligibility for these exemptions at the King County Assessor’s website.

Conforming loan limits

The conforming loan limit for a single-family home in King County is $726,525, which is the maximum conforming loan limit for high-cost areas in 2019. These loan limits are set each year by the Federal Housing Finance Agency and represent the maximum amount you can borrow and still qualify for a loan guaranteed by government-sponsored enterprises Fannie Mae and Freddie Mac. The conforming loan limit for single-family homes in most of the country is $484,350, but it rises in pricier areas, such as Seattle.

Programs for homebuyers in Seattle

Fortunately, prospective homebuyers in Seattle have access to several programs that can assist them. Here are a few for you to consider. You can find more information about statewide homebuyer assistance programs in Washington here.

HomeSight

As a program aimed at community development, HomeSight offers first-time homebuyers the opportunity to purchase their home for as little as 1% down when used in conjunction with one of the program’s low-interest loans.

Who qualifies:

  • Be a first-time homebuyer or have not owned a home within the last three years
  • Adhere to program income limits
  • Complete a homeowner education class
  • Purchase a property located within a designated area

Learn more

The Seattle Downpayment Assistance Program

The Seattle Downpayment Assistance Program is a second mortgage loan program that can be combined with either a Home Advantage or Opportunity first mortgage. This program allows qualified buyers to purchase in Seattle with up to $55,000 in down payment assistance and have their payments deferred for 30 years, at 3% interest.

Who qualifies:

  • Be a first-time homebuyer or have not owned a home within the last three years
  • Complete a homebuyer education course
  • Adhere to program income limits (these range from $61,800 for a one-person household to $108,600 for a family of eight)
  • Contribute at least 1% of the purchase price or $2,500, whichever is greater

Learn more

Homestead Community Land Trust

Homestead is a community-based, nonprofit affordable homeownership provider that helps income-eligible buyers purchase affordable homes in Seattle and keeps these homes affordable for future buyers, too.

Homes purchased through Homestead typically cost less than the home’s market value. Buyers agree that if they choose to sell their home in the future, the sale will be affordable for the next income-eligible buyer.

Who qualifies:

  • Be a first-time homebuyer or have not owned a home within the last three years
  • Complete a homebuyer education class
  • Adhere to program income limits (these range from $61,800 for a one-person household to $116,500 for a family of eight)
  • Contribute at least 1% of the purchase price or $2,500, whichever is greater

Learn more

Rate shopping tips

Shopping around for a mortgage rate is one of the best financial choices you can make when you’re buying a home. Check out our tips on how to find the best rate for you.

Contact at least three lenders on the same day

Mortgage interest rates change daily. With that in mind, it’s best to make sure you talk to multiple lenders on the same day. This way, you can ensure that each lender is using the same base interest rate. By doing so, you can better make an apples-to-apples comparison between rates.

Give each lender the same information

Another way to ensure a fair comparison is to give each lender the exact same information. You should be prepared to provide each lender with your employment information and credit score, as well as statements for all of your other debts and assets. Ensuring each lender has exactly the same information helps you to get the most accurate quotes possible.

Add up all lender fees to determine the total cost of your loan

Besides paying interest on your mortgage, you’ll probably need to pay additional lender fees or the costs associated with handling and closing your mortgage. Lender fees vary widely, but expect to see an application fee, underwriting fees, a fee to record your mortgage and a fee for any discount points you take on in exchange for a lower interest rate. Adding up and understanding all these fees will help you compare lenders and avoid sticker shock later in the homebuying process.

Know when to lock in the rate

Once you’ve decided which loan program best meets your needs, you can ensure your lender locks in the interest rate for a specific period of time, often around 30 days. This will ensure you’ll be protected if interest rates go up before you close on your home. If rates go down after you have locked yours in, some lenders offer a float-down provision that allows you to take advantage of that lower rate.

The information in this article is accurate as of the date of publishing.