Buying a house in Seattle isn’t cheap. How can you save money and still get a great home?
Seattle is home to one of the highest percentage of high income earning professionals. Yet, it can still feel like an expensive market for most home buyers. Especially if you want a home instead of settling for a condo. So, how can you save in the process, kick outrageous rents to the curb and claim your own place?
Start By Saving On Your Home Search
This is a frequently wasted opportunity to save. All too often aspiring homeowners rush to start looking for homes for sale online or touring open houses, without first getting pre-approved for a mortgage loan.
Without taking this vital step first home buyers are just wasting time. They often end up disenchanted. You’ll spend hours every week searching and spending gas and looking at homes that aren’t even in your price range. It’s a waste.
Ask Your Mortgage Broker About The Best Loan Options
There are many mortgage loan options and features to choose from.
Talk to your Seattle mortgage broker about your choices, and what’s most important for you.
There are two main great ways to save on buying a house in Seattle here:
1. Reduce your upfront out of pocket costs
2. Reduce the interest and total cost of your home loan
By taking a higher LTV loan, having the seller pay towards your closing costs, or opting for a slightly higher interest rate and no points, you can reduce your down payment and cash to close.
Or by putting down a little more money and opting to pay points now, or to take a prepayment penalty, you can reduce your interest rate for the long term, and dramatically slash your overall house cost, and enjoy lower monthly payments.
Don’t Wait & Try To Time The Market
Even the best, most legendary investors of all time will admit that trying to perfectly time markets is virtually impossible. We have a lot more access to real estate data and knowledge of real estate cycles today. Yet, holding out and hoping the market falls another 0.9% before you buy a house can be a catastrophic mistake. It could go up 10% more and price you out altogether instead. Or a small rise in interest rates could mean you are effectively paying an extra $100,000 for the same priced home. Or maybe you’ll have to opt for a much tinier home in a far worse location. Lenders’ appetites for making loans, loan underwriting criteria, and new tax rules can all have an impact on trying to buy a home in Washington state.
Think 10 Years Ahead
Your neighborhood and home value is probably not going to be the same in 10 years from now.
If neighborhood quality is trending in the wrong direction, with rising crime and homelessness, that may not improve anytime soon. That can also suppress property values, increase property taxes or see the best educators and workers move away.
Or maybe you find a suburb or neighborhood which isn’t the trendiest today, but could be in 10 years. Look for areas where people and local government are interested in investing, revitalization, creating jobs, and decreasing crime. In a few years your home could be worth a lot more. The neighborhood is going to be much better. This can save you $100,000 or more right now, and add a whole lot to your wealth in the near future.
Find Balance in Property Condition
A dirt cheap severely distressed property that is barely livable might not be for everyone. The most hyped up fancy new construction may not be a good deal either. Like buying a car, you don’t want to grossly over pay, and you don’t want a junker that is going to cost more in repairs than you paid for it.
Remember that you will probably want to add your own touches and update over time. That’s true no matter how nice the house is right now. It can help to finance in some of these things buy purchasing a newer home or one with some important improvements in the last few years.
This will reduce the need for cash out of pocket in the next couple of years.
You can also choose a property that may need some paint, new cabinet hardware, a little refinishing, and fresh flooring. You may save a lot on the price and payments. Then take your time to decorate it just your way over time as you have extra money.
Get Referrals, Ask For Discounts
Ask your mortgage broker for recommendations to other professionals and services you’ll need to close on your home. This can include insurance agents, title companies, Realtors and home inspectors. Their relationship can ensure you are a priority client, and they’ll often give you preferred pricing. Ask each of them if they can do any better on their pricing. Don’t hammer them so hard they it is no longer worth it to help you close on your home. Though if you don’t ask, you don’t know. If you can save a couple hundred dollars with each of these providers, and maybe several thousand with a Realtor, you could be enjoying some pretty sizable savings.
Choose Your Mortgage Broker Wisely
Being sucked into a bait and switch mortgage scam by trying to be too cheap is the most expensive mistake you can make when buying a house in Seattle.
If your loan officer is just telling you everything you want to hear and their offer is way too good to be true, it probably is. The last thing you want is to be hit with heavy extra costs and rates at closing and be stuck in a home that is creating financial stress in your life every day.
Choose an Income Producing Property
You may be able to find a small multi-unit property or one with an extra suite or room you can rent out for extra income. Get a roommate, put it on Airbnb or find a coworker who needs an affordable rental. Have their income pay a nice chunk of your mortgage payment each month.