Financing Your Seattle Home: Is Cash the Only Option?

Anyone looking to purchase real estate in Seattle knows that the market is one of the most competitive in the country. With minimal inventory levels and increasing property values, buyers are finding the conditions to be challenging. It's not uncommon to send through 3, 4, 5 or more offers on various properties before one finally gets accepted. Now, recent data published in the Puget Sound Business Journal indicates that 20 percent of real estate transactions are being paid for in cash.

That's great for those who have the cash available to secure luxury listings, but for many people, cash is not an option. So how can you finance a home purchase in a way that works for you, while also getting an accepted offer? 

Selecting Financing for Your Seattle Real Estate Purchase

Obviously a seller is going to be more motivated to accept a cash offer, because there is minimal risk of the deal falling through on account of financing. Cash is a guarantee, and during a competitive real estate market, it's often a preferable choice. But most people aren't sitting on hundreds of thousands of dollars in cash that they are able to use to purchase a property, so there has to be another way to present a competitive offer to sellers in Seattle that will ultimately be accepted. 

The trick is to find a financing option that is right for your current lifestyle and budget, and also to make sure that you have your financing in line before you begin looking at homes. Here's a few home loan options to consider:

  • Conventional Mortgage — A conventional mortgage is the most common home loan amongst buyers in Seattle. A conventional mortgage generally requires a buyer to put down a 20 percent down payment in cash, and finance the rest. A conventional mortgage is not subject to private mortgage insurance, or PMI. 
  • FHA Loan — An FHA loan is a home loan available through the Federal Housing Association. Buyers who choose this option do not have to have a high down payment amount, so it is a viable option for those without cash on hand. However, there are several additional requirements that buyers must meet during the real estate transaction, and they will need to pay for PMI which can increase their monthly payments on the loan.
  • VA Loan — A VA loan is a home loan available from the Veterans Affairs department, and is offered to those who have served in the United States military. Military members and veterans are able to secure home loans without putting down a significant down payment. 

Presenting an Offer in Seattle's Current Market

Sellers who list their properties on the market in Seattle and throughout King County will often receive multiple offers in a matter of hours. From the Issaquah real estate market to the listings in Snoqualmie Ridge, home sellers find themselves in a rather favorable position. This means that they can consider a variety of different factors when selecting the offer that is most favorable for them. If buyers don't have the ability to pay cash, they can still present a strong offer that is competitive in this market.

Buyers need to make sure that they are pre-approved and beginning the process of finalizing your financing. The sellers will want to know that the financing is rock solid, and that there will be no issues when closing on the property. You may need to guarantee that you can bring extra cash to the table if the appraisal comes in low, or to prove that you do not need to sell property in order to get the cash necessary to make the down payment. Ultimately, you need to assure the buyers that you can and will close on the deal, despite the fact that you need to finance the purchase with a home loan.

Being a buyer in the Seattle real estate market is an interesting adventure these days, but it's not impossible to discover and purchase your dream home. To learn more about the current market conditions and the right financing for you, contact our experienced real estate team today.

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