Buying a Home in Seattle: 5 Mortgage Questions to Ask Before You Make an Offer

Buying a home is one of the largest financial commitments most people will ever make. Before you move forward, it’s important to understand how your mortgage works and what questions to ask so you can avoid common—and often costly—mistakes.

Below are five essential mortgage questions every homebuyer should understand before purchasing a home, particularly in competitive markets like Seattle and throughout Washington State.

1. What Are My Closing Costs?

In addition to your down payment, both buyers and sellers incur expenses known as closing costs. These include lender charges as well as fees from third-party service providers such as escrow, title, appraisal, and recording.

Closing costs vary by transaction and may differ based on loan type, property, and third-party services. Closing costs are typically paid at closing and generally cannot be rolled into the loan amount on a purchase transaction.

As part of the mortgage process:

• Within three business days of submitting a loan application, you will receive a Loan Estimate (LE) outlining estimated costs.
• At least three business days before closing, you will receive a Closing Disclosure (CD) showing your final costs.

Reviewing and understanding both documents is critical so there are no surprises at signing.

2. How Is My Interest Rate Determined?

Your mortgage interest rate is influenced by several factors, including:

• Credit profile
• Down payment or available cash
• Loan amount
• Loan program
• Property type (single-family home vs. condominium)
• Market conditions at the time of lock

While interest rates are only one part of the overall loan structure, they play a significant role in long-term cost. During the early years of most mortgages, a larger portion of each payment is applied toward interest rather than principal.

Understanding how your individual profile impacts available options allows you to make more informed decisions when selecting a loan.

3. What Will My Monthly Mortgage Payment Include?

A typical monthly mortgage payment may include:

• Principal and interest
• Property taxes (often collected monthly in an escrow or impound account)
• Homeowners insurance (also commonly escrowed)
• Mortgage insurance, if applicable
• Homeowners association (HOA) dues, if applicable

For many borrowers, lenders collect and hold escrow funds to pay taxes and insurance when due. Condominium buyers should also account for HOA dues as part of their overall monthly housing expense.

4. What Type of Loan Am I Choosing?

Two of the most common loan structures are:

Fixed-Rate Mortgages

With a fixed-rate loan, the interest rate remains the same for the life of the loan—commonly 30-year or 15-year terms. This provides payment stability and predictability.

Adjustable-Rate Mortgages (ARMs)

With an adjustable-rate mortgage, the interest rate is fixed for an initial period (often 5 or 7 years) and then adjusts periodically based on market indices. Initial rates may be lower, but future adjustments can result in higher payments.

Choosing the right loan type depends on your goals, time horizon, and tolerance for payment changes.

5. Is There a Prepayment Penalty?

Most modern residential mortgage loans do not include prepayment penalties, meaning borrowers can typically make additional payments or refinance without penalty. However, it is always important to confirm this feature when reviewing loan terms.

Why Preparation Matters in the Seattle Housing Market

Buying a home involves coordination between multiple professionals, including lenders, real estate agents, escrow, and title companies. Being informed and prepared—especially through a thorough mortgage pre-approval—helps you compete more effectively and move forward with confidence.

A pre-approval provides a clearer picture of your purchasing ability and demonstrates to sellers that your financing has already been reviewed.

Mortgage rates change frequently based on market conditions. While general market trends may be discussed in the media, they are not a substitute for a personalized loan review based on your specific financial profile and loan structure.