First Time Home Buyer Washington State
Buying a home requires financial muscle from buyers, more so first time homebuyers who are just stepping into the real estate industry. When you decide to buy a home, it is important that you create an elaborate financial plan that clearly defines how you will purchase your first home. A first time home buyer in Washington State has a couple of financing options available to them that will help them buy their first property in the state.
There are various types of homes for buyers to choose from homes for sales Beacon Hill Seattle and other areas of residence in the state. Once you get pre-approved by a lender and establish the amount of loan you can get, it is then time to weigh on the potential financing options in the market.
Fixed rate mortgages
First time homebuyers in Washington State are often eligible for mortgages that are aimed at providing financial support. Financial institutions often offer two basic types of mortgages, which differ in the period of repayment. There are 30 year mortgages and 15 year mortgages.
A 30 year mortgage enables the buyer to repay the loan amount over a period of 30 years. This results in a high interest rate with small monthly payments. The 15 year mortgage will have a lower interest rate than the 30 year mortgage, but the monthly payments will be higher. The choice you make is highly dependent on your income. Notably, both mortgages have fixed interest rates hence you benefit from predictability and stability.
FHA loans (Federal Housing Administration loans) are another financing alternative for homebuyers. FHA loans come with a low down payment requirement of at least 3.5% of the price of the home hence many homebuyers are able to afford this option.
The FHA 203k loan allows buyers to purchase fixer uppers and the loan amount covers the price of the house and the cost of the renovations. This is a great option for buyers who are specific about certain areas of residence but cannot afford to buy new Seattle modern homes in such areas. The major downside of taking up a FHA loan is that you have to pay for mortgage insurance, which eventually drives up the cost of the home and the size of monthly payments.
A traditional mortgage plan entails putting up a down payment for the home and covering the rest of the cost through a mortgage. In most cases, the down payment is set at 20% of the price of the home. Buyers that are able to make a down payment of at least 20% or more are able to avoid mortgage insurance. A down payment of less than 20% often attracts mortgage insurance and this increases the monthly payments that the buyer has to make.
These financing options are available for various types of homes including Seattle condos for sale, townhouses, and single-family homes.